Deepak Kothari

2:46 Gaurav: Deepak, Thank you so much, such a pleasure having you here. 2:50 Deepak: Thanks Gaurav. Thanks for having me. 2:55 Gaurav: Deepak just before this, we were having this conversation. And you spoke about that how you are, you hail from Varanasi, and then you've been to Delhi and Mumbai. Let's dig deeper. Tell me about Varanasi and especially for the people who don't know, the piousness the sanctity, the wisdom, the polarities, the beauty that Varanasi brings in. 3:17 Deepak: Sure Gaurav! So my family comes from Varanasi and Varanasi is a beautiful city, because every one of the code says, It's ancient in tradition. It's ancient in history itself, and it's supposed to be one of the oldest living cities. It has a very different vibe. I mean, when you when you travel across the city, and you go into the ghats, and you spend time watching the sunrise, or like some of the people might have done watching the artis and the cacophony of sounds that you hear, and the warmth of the people there, it makes you realize that the city has a very different feel to it. I mean, you could either spend your time at the ghats, or for me when you know, I've actually traveled to Sarnath, where, you know, the Buddhist circuit sees a lot of travelers coming in. Both are very different, you know, both of the spectrum, but both have a uniqueness to it. And the language, the food, and the culture, you can see that they have an interest in you beyond just, you know, a commercial thing. The the ability to extend that hand to help. It's very different. And obviously, I started my journey in Varanasi and then moved to Delhi for my college and then worked in Delhi, spent about 10 years there. And then subsequently, I moved to Bombay, where I've been for the last 10 years. 4:43 Gaurav: I can so much relate with that. Because I remember, one of my first few visits to Varanasi. I was speaking in one of the conferences that was held in Varanasi. And after that we made time to go to the ghats, as you were mentioning. Metaphorically, on one side, the sun was rising. On the other hand, sun was setting, what it means is, that people came to celebrate the birth of a new life and their families. On the other side of the ghats, people came for the last rites of their family members. And you can see the complete circle of life. And as they say that you come from nature, you're going to merge into nature, one of those days, and it is so visible. And those poignant moments in your life, where you take a pause and start to reflect. If that's what the cycle is, why am I here? Who am I? What is my purpose? So those are the profound questions that start to emerge for you. You know, in my mind, it was the other way around. You know that people move to Delhi or Bombay, or one of those metropolitan cities, and then they go to Varanasi. And in your case, it's the other way around. And then you step into entrepreneurship. How did entrepreneurship happen to you? 6:05 Deepak: Sure. So I come from a family, you know, that's, that's been in the in the business for a very long time. So there was always this curiosity even as a child with a bend towards how businesses work, how a small trader does, let's say, you know, buying goods, or how does an exporter like my dad runs an export business, you know, manufactured goods and what are the cycles that you know, are there in a business from a business being completely, you know, a buyers business to a seller's business to nobody's business, where both the buyers and the sellers are going through a difficult time. So I always had that natural inclination to you know, look at a business and try and understand how things work. For me, when I came to Bombay, I started interacting with Sanjeev, my co founder, and the more we looked at this opportunity we thought there's something happening here, and we're either too early to the party, but it's not a party, that's not going to happen. So I'll take a step back and talk about what was the opportunity. This is back in 2014. Around the time of March itself, over Holi I had met Sanjeev. And gradually, he had just spoken about the fact that, can we look at digital payments for the offline merchants. So 2014 is all pre demonetization, pre UPI, pre GST and back in the day, you know, like, they say, India is a cash economy. Cash is king. And, but we could see, early signals that, you know, things things were getting put in place. For example, you could see that the smartphone penetration was kind of taking off at that point in time, Jio was, you know, on the anual, and data was looking to become very cheap. And with all those, what we could see is that, the consumers will start demanding convenience. And that's when we said that there is definitely something happening here, we should look at it, and, you know, look at it deeper. And I still remember the first set of conversation that we went out. So we just gone to the local grocery store. And you know, we'd asked him that do you accept digital payments? So he said that, you know, I do. So I said, What is your style of business, etc. So this is like your family run store, run by Mr. Gupta, Mr. Patel. And over the course of the interaction, he mentioned a few things which kind of had an impact for us. So he said that, see, I understand I'm in the business of selling convenience. But I said, What do you mean by that? Wow, he said, I'm not selling groceries. I said, but you are a grocery store." He said that the guy next door is also running a grocery store, I'm selling the convenience, where somebody from the neighborhood will call me and I'm just going to deliver what they want and I run a credit on account for him. That's my business. So that's what got us thinking that, you know, if India is this economy, where people need this convenience, right, then as customers, I mean, I remember. And at that point in time, we were also customers, there were a lot of interactions that were not, I would say happy, right? And I'll bring a few of those interactions. Your newspaper person delivers the newspaper effortlessly every day, right? You open the door, you pick the newspaper, your milkman does it in certain cities. So a lot of the cities, the grocery guy does it. But the interaction that happens with them, right? When it comes to the payment aspect, it is not convenient. It's not good for them. Because it's a little demeaning for them, right. And it's not because we want it to be demeaning, but they come at certain time, which is odd. So they'll typically try and catch you on a Saturday or a Sunday, or they'll try and you know, catch you late at night. And at those times, you might be having a quiet moment with the family. And that's when we realize that this interaction is neither good for both parties. So if it could happen seamlessly. That's where we saw the opportunity and started the first product, which is digital payments. 11:15 Gaurav: Wow. You know, what I'm listening is and especially the first part of the story that you sharedwhere. On the face of it, the person is in the business of groceries, and there's a business behind the business, and that business is of convenience. And what you just mentioned right now as well, that how can I bring in convenience in exchange of monetary value that's happening between two individuals? Just curious. Deepak what you spoke about is that you've always been curious the way business is done. And you have actually experienced that in your childhood because you come from that family. In my recent conversation with Mr. Ramkumar Narayan Ji, He mentioned about curiosity as well. Now curiosity is one thing but making a business out of that is something else. What was that moment in your life, when you decided that you would like to get your hands colored with entrepreneurship? 12:10 Deepak: I think if I can take it back all the way to when I was in school, so between my journey of Varanasi and let's say Delhi and Bombay, I also spent about 10 years, 12 years actually in Dehradun, though I was in boarding. And I remember this was maybe back in 99, or about 2000, 99, actually. So every year we'd have the founders day where you know, the school would invite somebody as a chief guest to come over. It so happened that year that it was Mr. Narayan Murthy who was called over. In 99 I would say Mr. Narayan Murthy, obviously, and being in a boarding with with limited access to information and the digital age not having reached where it is today, where information is available at your fingertips was practically an unknown commodity for us at that point in time if I can use that word. And I think that one hour that is spent on the day where he spoke. And the way he spoke and, and his journey is something which I think changed my perception about entrepreneurship, changed my perception about businesses and their ability to have impact. Certain facets that he spoke about the fact that, the insurmountable challenges that they had to face made me realize that, as an entrepreneur, you're literally trying to create space out of vacuum, you see an opportunity, which which, you know, nobody else does. And therein lies, you know, your your passion, sometimes it could be colored, sometimes it could be making you move towards, you know, a mirage but as an entrepreneur, that that self belief that, what you're doing has meaning and can can have an impact, is what I think excites me and makes me wake up every day and come with that same amount of passion to work. But I think the bulb for entrepreneurship, possibly, you know, lit up for me at that point in time. 14:17 Gaurav: I love your choice of words and the metaphors that you use, specially when you said, to create space on a vacuum. The journey from vacuum to space is not that easy Deepak, at least for me. What are those internal interferences that you had to deal with, that allowed you to create space out of vacuum and how did you manage to get over that? 14:39 Deepak: I think when we started talking about the idea, and you know a lot of times people say is it, is it about the idea. And, you know, I think now it's been often repeated that ideas are worth dime a dozen, right? It's it all boils down to execution. And for us, it was about saying that, okay, you know, is the idea scalable? And how big is the opportunity, right? And how big is that, say, the canvas. So I remember there was this, you know, teacher in school, as Mr. Manafort used to say, aim for the stars, and, you know, you'll reach the treetops, if you aim for the tree top, you're possibly not gonna get off the ground. So for us, I mean, the way we looked at it, if the opportunity is very large, even if you're able to make a significant or a small dent into the opportunity, right? I mean, what you'll be able to take away is significantly large, but if the opportunity is small, it's obviously you know, you'll have to really nail it to get a very high market share. We started digital payments, and what we could see was some of those elements, right? That you saw in the West, with a possibility where it could be replicated in the Indian market. So the first thing when when we spoke to Vikram, who's the managing partner at IvyCap Ventures, who was an early backer for us, and that sorts of someone you know, who would change the way we thought about it, he said, go and talk to everyone about this idea. Because everybody's going to, add something from their perspective. A lot of times, you know, what people think is that you know, I have an idea, let me, let me stick to the idea. Let me let me keep it hold and not share it right. But there was a perspective where he said that, if you go and talk to 100 people, they will actually help. How do we say… refine, calibrate and streamline your idea and make it more powerful. And for us, you know, that that happened, I would say, around the August, where we spent about, you know, four months in terms of, you know, just spending a couple of weekends, discussing about the opportunity, the way we viewed it, what were some of let's say, you know, the layers to it. And in August is when we incorporated ftcash, and I think 2015, March is when we launched the first product. 17:04 Gaurav: Wow, I understand that you work primarily with micro merchants and small businesses. Just wondering, how did you come up with this name called ftcash? What's the story behind that? 17:23 Deepak: So I think, we realized that the name has to be one, intuitive. It has to kind of have a communication to, you know, what you're trying to do in terms of business? So, ftcash, I mean, the idea was that, you know, since it has the word cash, it automatically integrate, I mean, communicates that, you know, you have something to do with money. And the genesis for ft was at two levels. I mean, one was a tagline back in the day was, you know, faster than cash. So it was more like, Gaurav: Faster than cash… Deepak: More like an acronym that, you know, we're going to have it faster than cash. And our logo actually was a F and a T, which was inverted, which is kind of like, you know, saying that, if you look at the logo, it symbolizes that we are at the intersection of finance and technology. So we are effectively trying to change the way these micro businesses interact with finance, leveraging technology. 18:35 Gaurav: Wow. Now, that gives me a lot of clarity. Thank you, Deepak, for sharing that, specially one thing faster than cash. And the second one is the intersection of finance and technology. You know, while going through your website and the kind of work that you are doingDeepak, I came across this sentence, and that stayed with me when you said that lending is not about credit assessment alone. It's about understanding the intent of the merchant, managing credit risk and focusing on the loan recovery process. What does that mean? And why do you feel that way it is? 19:10 Deepak: See, a lot of times, what, what people think is that, you know, lending is about, like you said, giving out money, but that's the easy bit. I mean, you could set up a table in Chandani chowk, and you will have a line all the way to Qutub Minar. If I can use that analogy of people who want to borrow money. Gaurav: Absolutely, yes, yes. 19:35 Deepak: Demand is not the problem here. You could lose the shirt off your back if you were to go out lending without putting the necessary risk controls in place. And that's one of the reasons why this really large bottom of the pyramid segment, which is of micro merchants, businesses, which constitute the backbone of our economy, not having access to financial services, because large institutions and financial institutions like banks and larger, you know, NDFC’s have not been able to fit them in that black box, which is to say that, this is this is what I need from you. Let's let's understand what is a typical product for let's say, you know, loans, you need a car, the bank is going to finance the car for you, they're going to pay the car manufacturer slash dealer, and once a month, they're going to dip into your account, and they're gonna withdraw money. Now, that makes perfect sense for somebody who draws a paycheck because you get your salary. So you know, the bank is dipping into your account in the first, you've not had enough time to actually blow up this money. But that same model of an EMI does not make sense for your neighborhood retail, Mr. Gupta or Mr. Patel, because they actually make money every day. And effectively what the bank is telling them is that you save for me every day, I'm gonna come to you on the first because that's my model. And you make sure that you have enough to pay me on the first. Now we all know that Mr. Gupta is never going to make enough money on the 30th or the 29th combined to pay his EMI on the first. So what we are all saying is that you have to save. Now, practically even as consumers, right, some of us are good at saving, some of us are good at managing finances, and some of us are not. So effectively, we are prepping a large segment up for failure, which is why we believe that lending is not about giving out money. It's about risk management. And that's where we have married our payments business, which you know, enables the customers of Mr. Gupta and Mr. Patel to pay him and our lending business. Because the payments business is actually what gives us data. Ensures that on a daily basis, at my portfolio, I have visibility on which accounts are under stress. Which accounts are on degree and which accounts are actually in amber. 22:11 Gaurav: Wow. That gives me so much of clarity. But at the same time from now, if I were to look at the complete model, from the perspective of those merchants and small business owners, for them, getting the money and pouring into their businesses is an emotion right, for them it's life. What are the measures that you as an organization are taking to ensure that we value that as well? Right? That they continue to stay connected with their emotions, and we ensure the security and the privacy of their financial data, that it should not be used for any other purposes, and they continue to grow? 22:50 Deepak: So at the beginning of the business, right. We actually had this very similar question with a lot of the merchants that you know that were actually, like you said, handing their emotions over to us. Because when you're trusting somebody to you know, process the payments for you, you're effectively giving them your customer phonebook, you're effectively telling them, these are my 100 customers. And we had a lot of questions where when merchants said that, you know, what, if you were to enter this business tomorrow, you know, my entire customer base? Or what if you were to pick up the entire data and just give it to my competitor? So I think we made a promise, and we've tried to live up to that promise by saying that, at no point in time, are we ever going to move towards catering to the consumers. And when I say consumers, I mean, you're not talking about people like you and me who are buying from these businesses. We believe that, you know, our ability and our our systems are better designed for catering to these businesses. And we will continue to cater to these businesses by providing them products and services. We said that we're never going to use the data. So the data is always siloed. It's actually encrypted. It's never processed, to find ways in which let's say or some organizations talk about cross sell, etc. What we said is the only way that the data helps us is actually to mitigate the risk on that individual merchants loan account. So just like you know, a doctor's gonna take a blood test and draw blood from you, right. I mean, finance is is the blood which which throws flows through a business. The very fact that we, we have a direct line into that finance, right, which is the payments of that particular merchant gives us an ability to know if a business is actually going to catch the flu much before the business catches the flu. And that allows us to work closely with the business. So that if a particular loan needs restructuring, if let's say, a given merchant is seeing a downturn, we're able to work closely with him to resolve his given situation. 25:00 Gaurav: Yeah, yeah. Thank you. Deepak, now let's look at the responsibility of a leader who's leading this organization, who is driving this organization. In this case what do you think, how are you able to bring in these values of confidentiality, honoring trust, honoring promises to the last person in the organization. How do you ensure that and what are the non negotiables in the company? 25:29 Deepak: Let me start with a second question. I think some of the non negotiables for us, is integrity. We will never compromise in integrity. So your first question of, how do we communicate this to the last person who's doing it, I think there are two ways that we try to do. One is, every person who's actually on boarded onto ftcash, and every onboarding, one of us actually, you know, has a small session with all of them, to explain what our vision for the company is, trying to explain what our mission, what our values are, so that people understand what we stand for, and what we are striving towards. The second thing that, you know, we try and do is keep our ears very close to the ground. So even for example, today, I make it a point to try and actually read some of the emails or listen in on some of the calls where customers are calling in with grievances, so that the person at the last mile knows that, you know, the customer is going to be heard at the highest levels of the management. 26:35 Gaurav: But I'm sure Deepak that must be a difficult task, because in the digital world, where data is what do you call as the new oil, right? Making sure that we honor confidentiality, and making sure that the person adheres to the policies of the organization, that's a huge task. So one thing that I'm listening is the onboarding process. Are there any other measures that you are taking in the organization to keep up to that those standards? 27:06 Deepak: In terms of confidentiality of the data, let me say that the data is housed in cloud, where nobody has access to data, unless, for example somebody needs to call a given customer, or there is an inbound, let's say, you know, call which is coming through, which needs to be addressed. So each individual at a given point in time has access to one data point. And not let's say, access to data points and maths, which actually ensures that, even the possibility or the probability of breach of this confidentiality is actually minimized and reduced. The other thing that we do is actually the data which is even stored in cloud is actually encrypted with the highest amount of security which is there. So for example, We are a payments organization, so all personal information in terms of the name, the numbers, email addresses, etc, are all encrypted. 28:10 Gaurav: You know, I'm sure pandemic would have given you a lot of clues to evolve as an organization, since 2015, to where we are today, 2023. Just wondering, how has the organization evolved and what are the future plans of the organization? 28:26 Deepak: The pandemic obviously, we like to call it internally like a stress test and it was a stress test, which was obviously very stressful, as the word suggests, but it did help us realize that, you know, a couple of things. One is that, the business model, that, you know we had, we had evolved in terms of providing access to loans to these merchants, where we collect daily, from the retail merchants through the payments that they are doing. And this daily health check that we do, allows us to be the first lender to, you know, realize that there is a mistake, or there is there is a problem with the underlying merchant. The pandemic actually helped us realize this is what is actually going to help us. Because, during the course of, let's say, the pandemic, obviously, the retail segment was the hardest hit, they were under severe stress. So we could see that, you know, a lot of these merchants come up with ingenious ways around, you know, how they were evolving their businesses, some of them, you know, started, who completely dependent on the retail shop, opened up WhatsApp groups with their end customers, and trying to sell on these WhatsApp groups to them, to the points where, you know, some of the merchants who had borrowed from us actually reached out to us and spoke about how we could, you know, restructure some of these loans from them. In terms of our journey, so I think the pandemic only made us stronger, given that it helped us realize that this segment that we're dealing with is resilient. There will obviously be, you know, these cycles where stress will creep in. But it kind of stress tested our underwriting models, it stress tested, what was the maximum spike on credit losses that one could see. And it made us realize what we until now call, as you know, okay, we believe that this is sufficient to cover for credit losses, is actually sufficient now, because rather than back testing a model or testing a model in a computer lab or on in like a corporate environment, right, you were on a real live environment where the economy had come to a standstill, business had been severely impacted. So I think that was the one positive for us. In terms of our journey, where we, where we see ourselves growing from here, I think, you know, we started with digital payments. We've added lending, where today we are lending to small businesses, and layering digital payments, by you know, providing them a digital infrastructure, which enables them to accept all kinds of digital payments. I think the next product that we're launching is Supply Chain Finance, I mean, we like to call it sachet loans, whereby they can use these loans to tide over small inefficiencies that come about on their day to day business. Unlike a salaried person where you know, it's like clockwork, every first you get your paycheck, a small business has like a pulse rate, right? It goes up and down. So the idea is, for that down, for those couple of days, or let's say you know, weeks, they do require a little bit of hand holding and support, is where we believe this supply chain finance product is going to work beautifully. 32:14 Gaurav: What a beautiful evolution from digital payment, to landing, to digital payment and the next one is what you call a supply chain financing. Deepak if you were to take a pause here, and if we were to genuinely appreciate the organization for two things that you're really proud of, really proud of, what would those two things be? 32:36 Deepak: I think one is equality of opportunity. When we started the organization, we tried to say is, we'll have a very flat structure. And we will allow merit to dictate progression, as opposed to, let's say, just tenure or time spent in an organization. And I'm happy to share that, we've had people in the organization who joined us, I would say, as executives in different departments, there was someone who joined us in sales, and grow through the organization, in a completely different department, purely on merit, to now someone who's who's leading the operations for us. So I think, this equality of opportunity, which obviously, is sometimes not possible for large organizations that have processes etc. Is something which I'm really proud of. The other thing that I would say that we're really proud of is our customer first approach, from the product that we that we roll out to, let's say the processes that we roll out, it's always about trying to think how you can make it easy for the end customer. And let me give you an example, I remember the early days, when we launched, we said that, we know that all businesses have a day off, where, you know, once a week, everybody's off, so why not inbuilt it into the product, whereby let's say, you know, five floating days in a month, you know, you don't have to pay the EDI. So we'll bump it for the other days. So instead of collecting 30 equated daily installments, I'm going to collect it over 25, such that for the five days that you're off, you're not let's say playing catch up. 34:35 Gaurav: Wow. So, to that extent, you will willing to get into the details and make the necessary changes. And that's what we're calling as the customer centricity and just out of curiosity, how many customers are we serving right now? As of today? 34:49 Deepak: So in terms of customers, you know, we're serving close to about 40,000 plus customers, in terms of merchants. 35:02 Gaurav: That's a huge number. And, you know, in this journey, what is it that you had to go through? What is it that you had to let go off? What is it that you had to embrace, so that you can hold on to the space for yourself, for your team members, for your customers? Dealing with the compliance, dealing with governance, there are so many stakeholders that you have to deal with, what is it that you have to go through as an individual? 35:25 Deepak: I, for one, strongly believe that, you know, we're all on a journey of our own and we're all evolving human beings, right. I mean, and different stages of our life. I mean, you know, we're learning different things. I would say that, over a period of time, obviously, as the organization grew, I remember our first office was actually I think about a 50 square feet office, where, you know, we had about seating for five people, it was actually in one of the malls in Mumbai. And we would get in, when, let's say, the mall would open. And they would literally kick us out when the mall had to close. Because the person had to shut, turn the lights off. To over a period of time, when you know, we grew, the organization grew, the teams grew, we had to let certain teams manage by themselves and provide oversight, provide the comfort that you know, if they needed support, we'd happy to do that, to a point where I remember, one of the advisors told me something which kind of stuck with me, and then just the other day I saw a picture, which which kind of, you know, reinforced that message. So his advice was that, you know, as a startup, there will always be a lot of fires. He said, as a founder, you have to let some fires burn, and you have to focus on which fires to put out. That, for me, actually allowed me to, you know, have my sanity, as a founder, a lot of times you're always on, trying to, you know, obviously solve for multiple things. But there's only so many places that you can get to. So the ability to prioritize, as a leader was was very critical. 37:24 Gaurav: Yeah and it's much visible in all the responses that you have given Deepak, you are very clear about creating the equal kind of opportunities for your team members, for all the team members so that you can have a flat structure and the second one, when you said the customer focused approach, you were so clear. And also in addition to other when when you spoke about the, if a task is not adding value, or it's not helping us to mitigate risk, we are not going to get and we are not going to invest in that. So for as long as your priorities are clear. Once you know that why you do what you do, and especially when we started this conversation you gave a beautiful example of providing convenience right. So for as well as you're able to build a system that can provide convenience and impact. We are moving in the right direction. Thank so much and Deepak, if you were to revisit and start everything from scratch, what is the philosophy that you will still stick to and what you would not even attempt? 38:28 Deepak: That's a tough one but let me take a stab at it. I think the philosophy that we would still stick to is other two things that I spoke about, which is customer centricity. And, you know, why they convenience to the customer. And the one thing that I would continuously, you know, try and stay away to away from is, is the fact that a lot of times you get pulled into a race, you got to pull yourself back and say this is not my race.I think, in our journey, there have been certain moments, when I would say that, we might have gotten sucked into it in the heat of the moment. I think demonetization was one, where we can look, thought that digital payments was on an upswing we needed to do certain things to, you know, catch that upswing. I think in hindsight, maybe we, we would not have taken that path, we will continue to run our course, because a lot of times when, let's say, you know, you're running in a race, then you're looking as to who you're running with, and where you are. But if you realize this is your journey, this is your path, right? I mean, and you have your North Star identify, so far is that is concerned, right? I feel it's always good to have markers for yourself to know, where you want to get, but I think a lot of times you know, in this digital times and age, right? You tend to get, you know, sucked into, like I said, right, this if I can use the term rat race, which, which I think is best avoided, because you then tend to make decisions, right? Which, which rationally, you might not have done. 40:28 Gaurav: Yeah and if we know how to make the right, make the decisions, I will not say right or wrong, which is an alignment to our North Star, we'll be able to hit the nail on the top. Thank you so much Deepak, an absolute pleasure interacting with you. I've got only one question for you, which I don't need an answer from you on that. My question to you would be and it's coming from a sheer space of wishing you and ftcash loads and loads of success, loads and loads of impact in the world. And the question is, what shift does Deepak need to bring with them, so that the organization can start to vibrate at a very different level? That's a question for you as my gift. So thank you so much for your time. 41:20 Deepak: Thank you. Thank you so much Gaurav.