Being born in a business family, children are expected to take the reins of the business and move it forward their way. Sometimes it is challenging for the younger generation to adapt to that notion or a matter of time to adjust. However, it becomes a bigger challenge when the unexpected happens and the decided path divulges. Amidst all, the business leanings remain the same. The story resonates with Kunal Shah – the brain behind FreeCharge, Paisaback and CRED, a venture capitalist, an entrepreneur and a true patriot of the technological revolution in India – whose Gujarati family business of pharmaceutical distribution in South Bombay tanked.
However, the business and entrepreneurial ‘germ’ ran deep in 10-year-old Shah, who was given Rs 5 everyday for working in his father’s business and later depositing the money in a bank. At the tender age of 16, he saw his father’s business fail and a well-to-do family plunging into financial distress. The incident taught the 16-year-old about failures and instilled a sense of courage to gather motivation, refuel and restart.
Kunal Shah was bestowed with responsibilities at a very young age. Being the eldest child, he had to support his family and his education. By the time he was in high school, he had his hands dipped in part-time data-entry jobs besides side businesses like selling Compact Discs (CDs) and mehndi cones, teaching computer science to neighbourhood children, and running a cybercafé from his house.
Contrary to the usual expectations of B.Tech followed by an MBA, Shah decided to pursue a Bachelor of Arts (BA) degree in Philosophy from the Wilson College in Mumbai. Was it a choice or a compulsion?
Shah did not give importance to the degree choice at that time as his priorities were different. Philosophy was the only course that had the option of evening classes and suited the entrepreneur’s schedule. The timings allowed him to work part-time to help ease his family’s financial conditions.
Having said that, the young chap graduated with flying colours and gained top scores. Though Kunal Shah was forced to choose this course, he actually enjoyed learning about the works of Socrates, Aristotle, Confucius, Immanuel Kant and John Rawls.
It’s interesting how everything in an entrepreneur’s life has some learnings or lessons. Being the only fintech founder with a non-engineering, non-tech background, Shah emphasised in many of his interviews how studying philosophy moulded him into a problem-solving entrepreneur who knows how to bring viable solutions to the table.
Few years after graduation, Shah joined Mumbai-based Narsee Monjee Institute of Management Studies (NMIMS) to pursue a part-time Master’s in Business Administration. This time, the decision was a choice! A choice to plunge into a full-fledged entrepreneurial journey. Shah wanted to learn the intricacies of entrepreneurial strategies, consumer behaviour and functioning of the vast world of business on the sideline of his job as a junior programmer at a BPO. He clearly joined the course to learn and not to add a degree to his resumé.
It is sometimes funny how certain movies can have an ever-lasting impact on a person. One of them being 3 Idiots. Shah found himself connected to the lead character Phunsukh Wangdu, played by Aamir Khan. Both attended college not to gain a piece of paper but to enhance knowledge and understanding. Getting into the ‘character’, Shah dropped out of college within a few months of enrolment out of sheer frustration with the way business principles were being taught. He wears the ‘drop out’ tag proudly on his LinkedIn profile today.
He, however, continued to follow up on one particular subject of his interest – consumer behaviour and marketing. Interestingly, he carried the ‘philosophy’ of – making a great product is not enough, marketing is the real deal – and took the entrepreneurial plunge.
Shah chose to pursue BA in Philosophy from the Wilson College in Mumbai as it was the only course offering evening classes.
The Brave Diver
While working at the BPO, Kunal Shah grabbed the interest of one of its investors Sandeep Tandon, who had just returned from the US. Tandon quickly recognised Kunal’s prowess and promoted him up the rungs of the ladder, even though he did not qualify for the medals of ‘employee of the year’.
Meanwhile, Shah worked for Tandon’s Mumbai venture, Tandon Advance device Pvt Ltd, which was mainly involved in healthcare insurance and accounts payable projects. Shah helped Tandon expand the business to more than 1,200 companies and was promoted as the new business head. In 2009, a wish to commercialise and monetise the concept of ‘free’ crossed Shah’s mind which led to the inception of PaisaBack.
The start-up allowed users to get cashbacks at localised centers of companies like McDonald’s, Barista Coffee, Dominos, Croma etc, through the website. The entire company’s model depended on cashbacks and right from the first month, the start-up was filling up pockets.
Even though the PaisaBack boomed, it could not compete with companies like CouponDunia, MySmartphone, Groupon India and others, who had already established their foot in the market. The shutter was rolled down. This was, however, just the beginning for Shah.
Start-up 2.0: Freecharge, Company with Zero CAC!
In 2010, Tandon and Shah came together once again to build FreeCharge, which moved away from the conventional business model and introduced something new to disrupt the system.
FreeCharge was an online payments services portal used for mobile recharges, bill payments and more. At the time, investors were not positive about the fintech industry and were hesitant to place their bets on the same. Eventually, Freecharge’s first cheque of $3 million came in 2011 from Sequoia Capital.
In the subsequent rounds, the founders managed to raise $120 Million. During this time, Freecharge was already having 14,000-15,000 transactions a day, making the investors pleasantly happy and surprised. The entire concept of the company was fresh and new and was deemed as the pioneer in the sector.
When asked about customer acquisition cost, Kunal Shah replied ‘Zero’, with a smile on his face. The investor from Sequoia Capital immediately handed over a cheque! There was zero expenditure from the company for signing up customers because the entire concept was online !
Shah and Tandon never prepared a presentation for their investors’ meeting, vouching on their start-up’s strength to sell itself. FreeCharge recorded Rs 2.19 billion worth of transactions in 2012, with amounts of over Rs 6 million recharges a day. In 2014, the company made history by raising $33 Million Series B Funding from Sequoia Capital, Sofina and Ru-Net, the highest for any start-up in a single round to date. Shah also led the acquisitions of Wishberg and Preburn.
In 2015, Snapdeal offered $400 million in cash and stocks to the founders for acquiring FreeCharge. Kunal Shah was on top of the charts with his valuation booming to the higher millions. In 2017, due to Snapchat’s assets offloading drive, Axis Bank bought Freecharge for $60 million and made it a complete payment system.
In 2009, a wish to commercialise and monetise the concept of ‘free’ crossed Shah’s mind which led to the inception of PaisaBack.
Choosing Innovation over Wealth: The Unicorn Maker
After adding $400 million to the bank, a lot of people decide to hang their boots or maybe take a temporary break, some yoga retreat etc. Shah did the same. He took a break after the FreeCharge deal and travelled extensively.
His entrepreneurial bug, however, refused to let go of him. Once you dive into that pool, everything comes under evaluation from a business point of view.
During his break, Shah observed that countries with a higher trust relationship with the citizens prosper more. The thought ushered a plethora of ideas in the entrepreneur’s mind. One of them is CRED, the noisiest fintech start-up valued at $2.2 Billion in a short span of two years.
Kunal Shah learnt that it’s impossible to make money from the masses when their per capita income is not going to allow them to pay for convenience. After giving it a fair amount of thought, he turned his attention to the untapped users in India, the ones who use credit cards and pay bills on time, without any benefits whatsoever.
CRED was founded in 2018, a platform that caters to credit card users with a score of 750 and above. The platform has a meticulously well-designed app that rewards users on timely payments of their credit card bills and manages their expenditure.
The start-up has been making a lot of noise with its extravagant advertisements featuring famous personalities like Jim Sarbh, Rahul Dravid, Jackie Shroff, Kumar Sanu, among others. CRED has conquered more than 35 per cent of the total credit card users in India, raging with graphs that are not coming down. The start-up has managed to raise $215 Million from Sequoia Capital, DST Global and Tiger Global. Despite a lot of murmurs around the business model of the start-up, it has achieved a valuation of $2.2 Billion within 2 years.
Despite the negative murmurs around the business model of the start-up, its sustainability and advertisement extravagance, Kunal Shah continues to hustle. His confidence is backed by the strong line of investors placing their valuable money in the same.
With two successful and one almost successful start-up, advisor to a plethora of companies and a venture capitalist, Shah has done it all at the age of 37. Media-shy Shah was always a risk-taking entrepreneur from an early age of 16. He never gave up, be it his family’s financial difficulties or raising money for his ventures.
As a venture capitalist, the entrepreneur has invested in renowned start-ups such as Unacademy, Razorpay and Pianta. He has been an advisor to many companies, including Bennett Coleman and Co. His faith in consumer behaviour and marketing has never failed him, as he smartly coupled it with strategic decision making. No wonder he is regarded as one of the most innovative thinkers in the 21st century.
“If you fully accept the worst that can ever happen in your journey, fear won’t ever be an obstacle in starting-up,” – Kunal Shah.