Anshul Rai, CEO and Co-Founder Happay chats with Sanjay Swamy, Managing Partner, Prime Venture Partners.
In this conversation, they chat about how Happay pivoted from B2C to B2B, expense management industry in India, keeping the customer need in mind while designing product and Happay's expansion plans
Listen to the podcast to learn about
2:25 - What is Happay & how has it’s journey been till now ?
5:20 - Learnings from B2C that helped Happay in it’s B2B journey
8:10 - How big is the expense management market in India?
12:15 - What’s next for Happay?
13:20 - What would Anshul Rai of 2019 tell to Anshul Rai of 2014?
Read the complete transcript below
Sanjay Swamy 0:22
Hi, this is Sanjay Swamy, Managing Partner at Prime Venture Partners. Welcome to the podcast series by Prime. Prime is an early stage VC fund investing in technology and product focused businesses. Today, we have with me Anshul Rai, Co-Founder and CEO of Happay. It's a company we've worked with from the very, very early days. Anshul, Welcome to the show.
Anshul Rai 0:42
Thank you, Sanjay.
Sanjay Swamy 0:44
So, let's start with your name, Anshul, in era where the last name Bansal has been one of the most hot names in the startup ecosystem. How come you go by Anshul Rai?
Anshul Rai 0:53
Yeah, I guess in India, whatever you put it on your 10th class certificate becomes a name, irrespective what your name is. I guess in my case, my 10th class teacher was apparently filling our application form for the board exams. She realized probably the name is too big, Anshul Rai Bansal. She just decided to drop the last name Bansal. And from that moment onwards I was Anshul Rai. (Laughs)
Sanjay Swamy 1:16
Moral of the story in India is, doesn't matter what's on your birth certificate, what matters is what's on your 10th standard certificate. Anshul, we've been working together for a long time, it's really been awesome to see how the company from two people, literally two founders when we first spoke has evolved to now probably 300+ employees. It's been a wonderful journey. Very few people know, that the first time I spoke to Anshul, I was in Las Vegas for the Money 2020 Conference. And of course, people question me, what were you doing in Vegas? But we had a Skype call, and I actually fell asleep on the call. I only told this to Anshul about three years later. And then he said, so what do you think and I woke up and said, sounds interesting let's meet when I'm back in India. And who knows maybe if I was awake what would have happened. But, anyway, it's awesome to be here. So, Happay when we met was a B2C company, and you had 40-50 thousand users on the product. And very quickly, after we started working together, at some point you decided and came and told us that we should pivot and we should now be a B2B. Actually, before I get into that, why don't you tell us a little bit about what Happay is today and then we'll trace the journey back.
Anshul Rai 2:25
Sure. So, Happay is where today we help businesses manage 100% of their business spends through one single platform, whether it is their employees to any expenses, their operational expenses, or their large ticket size B2B transactions. So, literally from planning of an expense all the way to accounting, we automate the whole process for them. And from one single platform to manage every single rupee that is going out of their bank account, other than the treasury functions. Our focus is, India Mid-Market and Large Enterprise. So, we have customers like PWC, Emami Group, V-Guard, Symphony coolers, and Oxford University Press. These are India mid-market, large enterprise customers, who are our clients.
Sanjay Swamy 3:03
So, you started off with the smaller businesses in India and then moved to the mid-market and then to the larger customers. But, actually where most people recognize Happay as being a business expense management solution platform, you started off from the consumer side.
Anshul Rai 3:16
Sanjay Swamy 3:17
And then made the change. What made you do that when B2C was seen as the most hot and exciting thing to do?
Anshul Rai 3:23
Yeah, I guess, B2C is still hot.(Laughs) So, Sanjay when we are doing B2C, what happened was that we scaled that product to almost 200,000 users, without spending a single dollar on marketing. And, the funny story is that we were two Co-Founders, and we used to have 60 interns at that time. The way we scaled our business, and the focus was on peer to peer transaction space, target segment was college students and young professionals and that's why these college ambassadors, the 60 interns that we used to have, for some reason made sense at that time. What we realized is at that time, was if you look at the consumer payments space as such, there's a lot of innovation that has happened in last, I would say 20-30 years. If you look at the B2B, the way ecosystem has evolved, the way businesses were managing their spends almost 20-30 years back, hasn't evolved much. So, we realize there's a bigger opportunity in a B2B space. And that's when we pivoted from our B2C platform or what we were doing at that time, to what we are doing now. To what you were saying, on day zero, you cannot build a large enterprise product. So, when we pivoted from B2C to B2B, the initial target segment was SME. And over time, we realized that our product probably adds a lot more value to a more mid-market customer, a large enterprise customer, then really a SME customer, and that's when we kept moving more up the ladder. And, we still keep trying to do so trying to focus on larger enterprises.
Sanjay Swamy 4:57
Now coming from a B2C DNA, most B2B Products typically have a very boring sort of user experience and the design seems quite different historically. But coming from a B2C, what were some of the things that worked well, that helped you look at B2B with a more different point of view or refreshing point of view? And what were some of the challenges of that change?
Anshul Rai 5:21
I think one biggest learning from B2C is that, B2C companies study their customer segment really well saying what is really the pain point? How should I solve it? And some of the B2B companies I've seen as people build a product, and then they think that there's a problem and then they try to push that product to a larger base. I think the way we also have evolved as a company is, we had some hypothesis, we built something basis that hypothesis. We went to the customers, we saw what their reaction is, how are they responding to our product, and then built more and then scaled more on that. Instead of, building a humongous product and then just pushing that to a larger base. I think that probably comes more from a B2C DNA where we're saying is that option coming?, Are people actually really using the product? How you look at cohorts? If I look at our cohorts today, how people are using the product, we really study some of those things, just like a consumer company. Couple of challenges from a B2C to B2B is really from a team perspective. The team that caters to B2C and that team can that can handle and that can scale a B2B businesses is very, very different. So, if you look at our background, both me and Varun, we haven't scaled B2B businesses ever. And we had no background, doing enterprise sales, account management, how to navigate internally, literally to sell within an account? How to do account based marketing? How to build some of these things like a platform and then scale. These are some of the learnings that we have had. Fortunately, we have an amazing team there are lot of people who have helped us on our way, some of the people who've spent all their life in scaling enterprise businesses, have really joined us and, this is really helping us in our journey. That's a really big difference that I see between a B2C and B2B. As the employee DNA is very different, the company DNA is very different, things that you need to scale, the businesses are very-very different.
Sanjay Swamy 7:10
So one small anecdote of our time together, very early days, we looked at in what would it take to issue a card on Happay and I had taken Anshul with me to meet a very large bank, and they pretty much ended the meeting in the reception lobby, because they told me he's so young, and he must have been 24 or 25, at that time when we think, but of course, the things have evolved a lot now in India, as well. Even for the youngsters and we're seeing much younger and younger founders, but, it's something which traditionally in banking, at least tech founders that work with banks are much more, spend a lot more time in the industry. Coming back to expense management, most people are used to drudgery of having to file expense reports and Happay is trying to change some of that by almost eliminating the concept for certainly making the expense reports a lot easier to do, a lot more interactive and so on. How big is this market in India and what's the state of the art in the rest of the world?
Anshul Rai 8:06
The way we look at expense management or spend management per se as a vertical is, we strongly believe that the most of the industry, the way it has been running is all post transaction processing, which means that after the transaction has happened, they try to see whether if the policies are violated or the budgets are violated, and then some kind of processing that they do to take care of. Most of the CFOs keep provisioning quarter on quarter. None of them have really have real time visibility of what's happening because in most of the cases, either the budgets are being violated, quarter on quarter. So, the way we look at the industry is we think that all this should be eliminated. So, the budget should be verified even before the transaction happens. Why do you really need an expense report? In fact, the first product that we launched, it had no expensive reports. He said, I am giving you a plastic, I am giving you a card, a payment instrument which can enforce your budgets. Why do you really need to create an expense report? What we realized is that it's a transition, It's a journey that you have to really walk with your customers. On day zero, you cannot suddenly bring such a huge customer behavior change. And there are many such examples where we have been able to eliminate expense reports, but you have to start with them. You have to start where they stand today and take them with you through this journey. From a vertical perspective we think that not just in India, I think that's the state globally. The only difference is that it is little automated in other countries or more developed countries than India and in India it is still on Excel sheets and manual paper based processes. From industry wise in India, everything is changing very rapidly. Four years back, the company auditor would not accept digital receipts. Today, most of the auditors would accept digital receipts. A lot of corporates and CFOs would say that, we do not want to put any systems let the employees spend their Saturdays and Sundays to file these reports. So, that has again changed. I think that suddenly people realize, what should be done to make sure to bring the employee efficiency? The third most important thing is which I strongly believe that, India never had any concept of employee experience. No one cares, how are you treating your employees? And it's not just about the salaries and the perks, it's about what systems you put in place, what products you put in place to make your employee's life better. So, there's no such concept as such, or never used to be at least. But, now you're seeing that with the new generation coming in into the finance departments and into this new generation CFOs and CIOs, who actually want to automate everything, bring this new kind of change, where they actually really care about their employees, and it's happening very, very rapidly in India. So, we see this market is growing very, very well for us.
Sanjay Swamy 10:45
Terrific! So, switching from expense management you recently launched the invoice payments piece as well right? Tell us about that. How that's going and what do you see as the synergies between that and expense management.
Anshul Rai 11:09
So, i think from the beginning itself, our product vision was always, that we wanted to build a platform from where the CFO or the finance team can manage 100% of business spends. And yes, we started with the employee expense management but vendor wasn't very obvious evolution of the product. Second thing is imagine if you define a budget, if I define a budget say my marketing team cannot spend more than 3 crores in a quarter, hypothetically. Now, in that case, the marketing team will actually consume that budget through their hotel bookings, through their flight bookings, through their food expenses, but they will also utilize the same budget to pay to their event manager as well. And that payment would ideally be done through an invoice. So when you're helping the corporates to manage their budgets very efficiently. You have to make sure that you are covering each and every transaction type, which potentially can be part of that budget. When we started with expense management that we have to bring our invoice solution. We're officially launching it now. But, there are many large corporates who are already actively using the product.
Sanjay Swamy 11:58
So, the idea here is that look, it's a business expense it might be done on the card, it might be done through an invoice, but it's really coming out of the same budget and a CFO should have a single dashboard to view all of these things. Fabulous! What's next for Happay what do the next two years hold?
Anshul Rai 12:14
So, I think two things one is obviously look at our portfolio today, we are growing very very strong from Indian market perspective. But, we still do not have much of a global MNC per se as a customer, look at India, India Mid-Market large enterprise, we are very strong. Two areas of focus for us is now, one is growing that base, pretty much covering every industry vertical in India, making sure that any large corporate who is today thinking about any automation, in the spend management space must be thinking about Happay. Second is going international, so, I think it is important specially when we focus on a Mid-Market and large enterprise space. And, when they have people traveling all over the world, and then they have multi country presence, multiple offices in different countries, with employees in those countries. How do you give them a single platform, a unified platform from one central space or from wherever their headquarters are? They can very efficiently manage all these countries spend. So, taking this product to global markets and expanding our India base, these are really our two focus areas for next two years.
Sanjay Swami 13:15
One last question, what would Anshul Rai of 2019 tell the Anshul Rai of five years ago or six years ago, when you started the company?
Anshul Rai 13:23
I think experiment more, sometimes I feel, we probably could have experimented with new stuff more and more. We want to be more agile, sometimes what happens is when you're catering to your current customer base, sometimes you need to take a step back and really look at the bigger picture saying, what should we be doing. So, I would say experiment more, experiment faster is a learning that probably has come now after last four or five years.
Sanjay Swamy 13:48
Anshul, thanks a lot for being on the show. Congratulations on building Happay, into such an amazing company and all the best for the coming years.
Anshul Rai 13:55
Thank you, Sanjay.
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