Anecdotes from an Entrepreneurial Journey

In this edition of the #InsightsPodcast series, we are joined by Kunal Shah, Founder and CEO of CRED, and Founder and former CEO of Freecharge.

Freecharge was part of the first wave of ecommerce startups in the country, along with the likes of Flipkart and Paytm. It was acquired for $450 million by Snapdeal in 2015, making it the biggest startup M&A in the Indian startup ecosystem at the time.

In the podcast, Kunal starts off with talking about his early days, and how he started working at the early age of 15 to help his family tide over a financial crisis. He juggled a full-time job while pursuing a bachelor’s degree in philosophy (which he chose based on class timings given his work commitments) and some freelance work in the evening, making him financially independent at a very young age.

He talks about his journey from a being a freelance designer and programmer to building a small SaaS company that pivoted many times to eventually become Freecharge. After the acquisition of Freecharge, Kunal had a couple of stints in investing, before deciding to start up again in 2018 with Cred.

In true entrepreneurial spirit, Kunal jokes about how he has done almost everything under the sun — from selling music CDs and mehendi, to running a SaaS business and even a BPO company. He also had a laptop import business for a while before finding his calling with ecommerce.

On how he achieved the product market fit for FreeCharge, Kunal says it started with the simple idea of offering a mobile top-up (which was the largest selling product at the time) free of charge to draw enough customers on the platform to potentially build a business. This was very much on the lines of the ‘loss leader strategy’ adopted by grocery stores to attract footfall. Kunal says he saw big opportunity in the mobile recharge space, which had a use case for 99 percent of the population who were on the verge of getting comfortable with online transactions, thanks to IRCTC.

That, along with reduced interest among merchants who were selling mobile recharges offline due to diminishing margins, made it a no brainer for these transactions to move online. As Kunal puts it rather nicely, “I saw recharge as the gateway to a transacting India.”

He calls himself a mediocre founder who found a great product market fit, and adds, “Terrible product market fits, even with the greatest founders, can never create value. Fighting headwinds never creates value, you only burn fuel.”

In the podcast, Kunal also talks about how it is challenging to get investors and team members on board when dealing with original ideas that do not have any global models to serve as comparables. Interestingly, it is these original ideas that have disproportionate wealth creation opportunities.

Kunal also gives the listeners a glimpse of the philosopher in him as he explains how platforms with a high frequency of transactions almost always win because the trust and habit built over many transactions enables such categories to expand faster in a mistrust democracy like India.

He also speaks of his famous Delta 4 theory, which encapsulates the need for new products to create significant delta in value creation for the customer through superior product/ service experience, making the switch from old behaviour to new behaviour irreversible, instead of giving massive discounts to infuse the delta in value creation for customers which is not sustainable without systematic change in consumer behaviour .

Answering a few questions from the audience, Kunal shares some words of wisdom for fellow entrepreneurs to succeed in a rapidly changing world.

“Founders that try to fit in don’t raise the bar. So, if you want to be an outlier, don’t try to fit in.”