Sameer Nigam Founder & CEO, PhonePe chats with Sanjay Swamy , Managing Partner Prime Venture Partners.

Listen to the podcast to learn about:

02:30 - Betting on opportunities

03:35 - Moment of Serendipity

05:00 - Smartest decision made

07:30 - Growth phases of UPI

10:30 - The most competitive sector in India

12:45 - Why PhonePe is succeeding

15:12 - Zero MDR

18:40 - Value Vs Cost

21:10 - Competition is a good thing

25:00 - New opportunities for Fin-tech entrepreneurs

30:45 - Why India needs hyperlocal apps

34:00 - PhonePe’s acquisition by Flipkart

38:15 - 2020 Sameer’s advice to 2010 Sameer

Read the complete transcript below

SANJAY SWAMY 00:22

Hi everybody this is Sanjay Swamy, welcome to the next edition of the prime podcast, first of all, very happy Diwali and hope all of you have had a great Diwali by the time this airs. My guest today is the CEO and president or head of the company that’s the defending champion in the UPI transaction space, PhonePe. Last month it was number one, and it’s a great pleasure to have Sameer Nigam CEO PhonePe on the show today. Welcome Sameer.

SAMEER NIGAM 1:00

Thanks for having me Sanjay and a happy Diwali to you.

SANJAY SWAMY 1:04

Thank you very much. So Sameer, you’ve been a FinTech entrepreneur for a while now and obviously PhonePe has been an amazing journey that we’ve all had the privilege of tracking, enjoying and using the product as well. I wanted to cover a few areas with you today. Certainly talk about a little bit about the payments landscape and also backtracking to the early days of PhonePe and then of course, certain non-payments opportunities in the FinTech space that are in adjacencies around PhonePe, notably lending investing and the buzzword of new banking, get some of your thoughts on that.

And then of course, some general thoughts around entrepreneurship, PhonePe had an unusual journey with an early exit and clearly you had a lot of opportunity and I’m sure founders would love to understand the thought process around some of that. So let’s start with the payments space itself, PhonePe jumped in right at the start of UPI and clearly took a huge chance on UPI well before it had launched. And we are seeing other opportunities like this in other areas and founders obviously try to transition smoothly from the present to the future but you took a very bold bet on betting entirely on something that didn’t exist yet.Tell us about the early days, the thought process and what were some of the considerations and how founders should think about this.

SAMEER NIGAM 2:36

I think for us, the first thing we do when we look at any opportunity is where do we fancy our chances given just the mix of founders. When we started out Rahul and myself we were all engineers at the core. And we fancied our chances on platform level disruption, a little more than I’d say marketing or brand level disruptions. What I mean by that is, in the Flipkart group itself where you have a company like Myntra, it’s a brand and experience led play, look at companies like Cult by Mukesh or CRED. I think those are experiential differentiations, I think when I look at what we are trying to do, We compare what we’re trying to do with the likes of Tencent and Ali or Google or Facebook and others where you’re trying to build for a billion people.

That’s what excites us and when we were exploring areas to enter, both Rahul and l had just come out of a very, very, exciting stint at Flipkart for four and a half years. We’d seen scale. We’d seen massive disruption. And we were very clear that the next thing we do, if we’re really going to dig our teeth into it, needs to solve for at least half a billion people, ideally a billion.

That was the mental goal even then. And in that space, when we looked at the Indian landscape, we felt that payments and banking were the two areas where we felt there was an opportunity to fundamentally really transform. Banking was closed or is closed, it’s a license play. And also again, I think for a bunch of engineers who are used to destructing fast in the consumer tech space, banking is not a very natural place to enter. Payments was, because of UPI. We’d already decided that wallets were not our main bet. We were already talking to a bunch of the banks on building a UPI light brokering layer on top of IMPS. When I think moment of serendipity is what I’d call it happened, Nandan sir and Mr. Hota from NPCI and others held a joint hackathon here in Bangalore, and we happened to attend it. We’re talking about this unified payment interface and they said, find one sponsor bank and you can play.

And I think the smartest decision that we made ever, we just shelved all our work on IMPS. We stopped talking to the banks and we just started saying, okay, if the NPCI head, the RBI governor and really smart people at iSPIRIT are evangelizing something so disruptive, the odds of success are going to be defined not by the regulatory landscape, the odds of success are going to be defined by whether smart entrepreneurs can really create good experiences on it. Because the first part, a very rare moment in life is already happening. The government’s aligned, the regulators aligned, the banks are going to have to do it.

So it was a very unique time and in hindsight, I’m actually surprised that a few of the incumbents did not bite harder on UPI. We were surprised when we came out of the gates, that it was really just us and the banks. Perhaps people did not think that all the big banks will join UPI fast enough. And then again, a second moment of fortune was demonetisation happened only a couple of months after, and there was a desperate need for money transfer. And I think UPI caught everyone’s imagination in that window. So I think like all successful entrepreneurs, you have to be at the right time at the right place, but I think you have to just also recognize this. There’s a bunch of luck that goes into it. Especially when you’re entering new sectors.

SANJAY SWAMY 06:34

Terrific, and from the day you decided to do that to the launch, as well as you said, focused a lot on sort of exclusively working on UPI, and from the launch and of course, as you said, demonetization, which was sort of a shot in the arm for the overall digital payments industry. But then cash came back and there was a lot of talk of people, sort of moving back to cash. And yet digital payments kept continuing to grow, I would say quite steady and quite rapidly.

And then over a period of time, of course now with COVID and things like that, nobody wants to touch cash for other reasons. How have the last few months built on the early wave of UPI? If you were to say, what was the first phase of the growth of UPI post the launch, and then subsequently now the recent boost.

SAMEER NIGAM 07:29

So I think the first two lockdowns, we saw an artificial, but sustained boost as far as all digital bill payments and recharges, et cetera are concerned but obviously massive chilling factor during the lockdowns on all retail transactions online and offline, e-commerce wasn’t allowed, offline shops were shut, but a number of unique customers coming on to digital payments did absolutely explode from March, it was March 24th all the way into May and that’s continued. In fact, just having a casual chat with Dilip recently at NPCI and telling him this is the first time in four years where I think digital payments and particularly UPI payments is now growing because of massive network effect at the societal level, 10,15 million new customers coming on board the platform every month. I’ve seen cashback go to near zero across the ecosystem, which is very healthy.

That means people will have sustainable business models soon. More and more players are still entering and yet everyone is growing simultaneously. That’s a very healthy sign. This reminds me of the telecom ecosystem when there were like 14, 15 players, all just sort of carrying the message to the last mile in India. I think between demonetisation early on and COVID now, we probably compressed the 10 year cycle into a six, seven year cycle. I genuinely believe digital payments will reach 500 million people by 2022 end.

SANJAY SWAMY 09:13

And I think we’ve seen that in other areas as well. Digital education, healthcare, telemedicine, things like that as well. But you touched upon two, three things here which kind of have represented a slightly choppy sort of ecosystem level, a journey that you’ve had to deal with. So for example, right from the beginning, there was some uncertainty around what the business model is and would be for UPI and what role payment service providers or apps would get to play, what they would get to share in and most recently, of course, zero MDR has been a big talking point. And then you talked about entry of new players from time to time and including some other large players and again, most recently with WhatsApp payments.

So two things, one is again, your thoughts on some of these things and have there been inflection points and of course, in PhonePe’s case, you’ve also had the moment where in Yes Bank was temporarily unable to function and you had to over 48 hours transition quickly from them to ICICI bank as your support partner. So can you talk about some of these moments and topics, what your views are and general takeaways for founders when such situations arise.

SAMEER NIGAM 10:33

Sure, I’ll break them down into sort of two or three different areas. Some are payments specific, some are not. So the first is, I think just market forces and competition, this is by far and away, the most competitive sector I’ve seen in India. And we’ve seen the e-commerce wars between Flipkart and Amazon for some years now and we’ve seen the food wars, and we’ve seen the cola wars and all of that. But this is truly an open ecosystem multiplayer sort of battle for supremacy like we’ve never seen.

Telecom is about the only industry that comes to mind as being that competitive with so many players competing at the same time. So I think for us, we chose very early on and maybe a bit of function of age, but we chose very early on to welcome it because I think what one has seen is if there’s not enough interest in the open market, there probably isn’t a large enough market.

Our first venture for Rahul and me was in the music space in India. And while the talent that we were competing with in the digi music industry was not as great I’d say. The market was a hundred times smaller as well. We just didn’t know it then. And I think, I learned the hard way that unless you have a really, really attractive market, the best people don’t come in and try to compete and vice versa.

So I think one needs to understand in the world of tech one, if you’re in the distribution business, If your clients are, or your partners are digitized, the next competitor just comes in, integrates for free. That’s just the nature of the beast. There is no sustainable difference in the world of distribution or aggregation anymore, anybody can do that. Which takes us then to payments specific or UPI specific battles, what is the role? What can you innovate on? So in payments, for example, I think one of the reasons why we are doing well, we’d like to believe is, our end to end success rate is higher than all our competitors today. NPCI is publishing the data, so it’s not a false claim.

Now there we spend tons and tons of time building very, very sophisticated kill switch systems, risk and fraud systems, traffic routing systems. And what that does for us is, it gives us IP, not platforms or APIs it gives us unique IP that overtime starts differentiating you. And I think that again is not payment specific.

If you think about food tech and you see the big players, someone’s got a better experience and an aesthetics and design, someone’s got better mapping solutions and more real-time tracking capabilities. Ultimately the same food is being delivered from the same restaurants by pretty much the same fleet at times, people deliver for multiple companies. So I think you’ve got to find your spot and say, this is where we’re going to win. For us in payments, we believe once every merchant has been onboarded, since all QR codes are interoperable, since all apps have intent, the winner is going to be the one that offers the best experience.

When a PhonePe customer tries to scan a QR, does it work more consistently and faster and better than any other app? That’s the very narrow window for innovation there. Now again, if we were playing in a more narrow sphere, we would want to be able to have more differentiation than just that much. When you’re trying to do something, that’s at the utility level. Uptime, security and trust, I think are sufficient but very, very critical to solve for. Those itself carry the day. The third you talked about, so I think when I come back to these two open market forces, I think the Indian payment system is truly open, not just UPI. We’ve got multiple networks, now you have more NUEs coming in, you’ve got 40 odd wallet players. So there’s all these mini or largish closed loop ecosystems in parallel, you’ve got net banking. So we have literally dozens and dozens of payment options for an average consumer. I think zero MDR is a bad idea. I’ve said this publicly because it stunts market forces from playing out. There will be many domestic players who can’t afford to take a 5 to 10 year view and say, I’ll make money at the end of the day, let me just keep growing. So in fact, ironically, the first set of companies that will die out are going to be the domestic homegrown companies because they can’t fight the big ones.

SANJAY SWAMY 15:40

It also stunts a possible entry of new players because with my venture capitalist hat on I have to think beyond models. So we also have to have a much longer and deeper pocketed point of view.

SAMEER NIGAM 15:55

I don’t think the VC backed model works anymore in payments on UPI because again, VCs have a fund cycle of eight to 10 years. You can’t wait for seven or eight years in a fund, make a big outsize investment and hope that the revenue model might emerge when today the loss is at zero. It’s only the strategics that can play, because they’re hoping in seven to eight years you and I will become the product.

And this is in fact, the second problem I have with this model. On the one hand, India is saying the consumer’s data is private. The consumers data must be treated as private property, and we don’t want consumers to get exploited. On the other hand we are actively inviting very, very large tech giants to come and offer services for free or near free with the view that they’ll make money some other way. I keep hearing some other way all the time from Delhi to Bombay and this is a very, very strange dichotomy. You don’t want homegrown entrepreneurs to charge their customers, what the customers are willing to pay. I’ve seen this with surge pricing in taxi cabs. I’ve seen this with convenience fees for movie ticketing. I mean, it just a series of really bad decisions that keep coming in one after the other, where you and I, are from an age group where you would have stood at movie theater in movie theater lines and waited and waited, and then ultimately not got tickets or be forced to actually buy them in black, 30 years ago.

So today, if somebody charges 15, 20 rupees for the convenience of booking online, buying them in white and going to a theater. I think it’s preposterous that people say that you can’t charge a convenience fee and if you don’t, well then these people need to make money by making us the product. And I think, that’s where, I think zero MDR is just yet another manifestation of this sort of a problem where I think the government wants very, very broad based cheap to consumer solutions, but it’s trying to be prescriptive.

I think data is showing, telecom battles have shown us, FMCGs have shown us if the market’s deep enough people will sell shampoo in ₹3

sachets, it never happens anywhere else. People reach the last mile if there is money to be made, you can’t artificially take them there. So I think it’s not payment specific, by the way, I think this happens across the board. You can’t artificially control the market and say, you still need to service the last mile. It won’t happen.

SANJAY SWAMY 18:39

Right. It has to be viable for everyone. It’s actually interesting Sameer as you may recall, I was a mobile payments entrepreneur with M-Check from 2006 to 2010 and we’d done a study on how much would you pay for your electricity bill to be paid through your mobile phone. And most white collar people said zero, but most blue collar people were very happy to pay 10 to 20 rupees because they said it’s 20 rupees of bus fare and half day of income loss for me to pay my bill today. I would gladly pay and we were looking to see, would they pay three rupees? So, value versus cost are two very different things.

SAMEER NIGAM 19:20

And I think it’s slightly deeper, if you ask the second why of the white collar people, we’ve done these surveys category by category, the white collar people actually have drivers or office staff or some spot boys. They will give them some change and ask them to go and pay the bill, and then they’re forgetting that that cost exists. And I think even in digital payments, we see adoption during COVID or even in steady state in tier two and beyond is much, much higher Sanjay, because the distance you traveled to pay your electricity or your gas bills is also much higher, you don’t have the kind of density here as you do in Bangalore where we are, or in Bombay or Delhi.So you’re spot on. I think the convenience is much higher actually, as you go further into the bottom of the pyramid.

SANJAY SWAMY 20:19

Right, because it’s the first time a new option for them. And the alternative is very, very expensive. So tell us again, while you said new players will have difficulty entering, but we still have of course established, as you say, the large MNCs who have an option and the most recent entrance now is WhatsApp pay. How do you see that impacting the market or the established players such as now, yourselves, where you all are “incumbent”, at least in the positive sense of that term? What do you see as opportunity and challenges out of some large players like this entering?

SAMEER NIGAM 21:08

See, I think all the OEMs have already entered. Samsung, Xiaomi et cetera, into the UPI ecosystem over the last three years.That didn’t really hurt us too much. I think Google given all of its distribution and the preference it gets on its own platforms. Both, I think really stands out, but on WhatsApp we’ve been kind of welcoming it since we heard it for a couple of selfish reasons, to be honest, one doesn’t apply anymore. Two years ago when they were announced, not enough people even knew about UPI. And I fundamentally believe that one or two people in a category carry the cost of educating the market. If they had entered in 2017 or 18 and all the cost was being borne on educating the user about how to set an M-PIN and how to onboard yourself on UPI, et cetera. We could have spent less on category education and spent a little more on incentivizing switching cost. In my mind that ship has sailed. We have 250 million registered users of our own. We have over a hundred million every month. So I think that is less attractive.

Having said that, they still have hundreds of millions of users that have not tried any of the UPI or other payment apps yet. They are a very, very sticky use case. And I do feel it may still be in our interest. And I say ours as PhonePe, as an entrepreneur, I’m also taking a selfish view, if WhatsApp can convince all their customers to try and make a digital payment, even if it’s just a one Rupee payment.

People get over that mental hurdle. I believe like in any other category, people will explore choices before settling on one. I think where I don’t share the phobia of things that other government bodies and regulators do is that if people try WhatsApp, they’re going to get so mind blowing experience they won’t try anything else. If that were true, Swiggy would never be competing with the incumbent Zomato and Amazon would never compete with an incumbent Flipkart, etc. I think even when experiences are really good and NPS is high, when a category is taking off, people typically do end up exploring two or three apps in the category before deciding where they want to spend most of their dollars on or spend most of their time at. So I think WhatsApp coming in, on boarding the next 300 million people or helping with that journey is a good thing. I’m excited.

SANJAY SWAMY 23:54

Great. And, and I guess I have mentioned to you this personally, when PhonePe was out and then BHIM was launched. I had installed PhonePe on my mom’s phone. She’s now 84 years old. So a couple of years earlier, and after a few weeks I asked her, which one of the two should I uninstall? And she unflinchingly said, uninstall BHIM, because PhonePe does everything, but it does a lot more for me. So I think people will start looking beyond the basic money transfer experience and the richness of what the platform can bring them beyond just moving money. Once that becomes something that they’re comfortable with, it’ll always keep opportunity for players to innovate and differentiate.

SAMEER NIGAM 24:43

God bless your grandma.

SANJAY SWAMY 24: 44

It’s not my grandma, it’s my mom. She’s one of your most frequent users. Anyways, switching gears Sameer, we’ve talked a lot about payments but FinTech as a space of entrepreneurship has really blossomed in India and it’s still very early days if you look at the market penetration and adoption of these services. Whether it’s around lending, which has had various aspects of it being straightforward, credit lines, loans, checkout financing, vertical financing like education, healthcare, you name it, SME, focus things around credit, invoice discounting and so on.

And then you’ve had investments with companies doing mutual funds, stock market investing through mobile apps, et cetera. And the new kid on the block, which is insurance, which is also starting to get a leg up here. What is PhonePe’s view of some of these opportunities and how do you see yourself playing in that right now? And where do you see the opportunity for entrepreneurs to either build stand alone companies or partner?

SAMEER NIGAM 25:57

So I think there’s room actually for both manufacturing financial products, Acko is a good example of manufacturing in the insurance sector. There’s new AMCs people are applying for, I think Zerodha has applied recently. I do think it’ll be super cool if a bunch of fintechs actually get to the manufacturing side. Right now, most are in the brokering or distribution space. I think for us as a platform, distribution comes more naturally and we don’t want to get into manufacturing, so we’ve taken a partnership approach. But we are trying to sort of do things differently in that we are identifying the right partners who are willing to actually build sachet products, unique products, like our super funds product, where the new to mutual funds or new to insurance customers, don’t have to think as much. And the experts can help them actually find the right answers.

It’s a very, very interesting market. So insurance, you talked about, insurance for me I think that’s the biggest opportunity as far as Fintechs are concerned, if you’re interested in distribution plays. Because in fact, there’s a lot of very creative products that the existing insurance can put out if they know what the customers want. Unlike lending, collections and NPS are not a big concern. It’s a very high margin category. If you price it right, I think you can make a lot of money, insurance worldwide makes a lot of money in most mature markets.

I think insurance is one that I’m super excited about. I think a lot of fintechs and startups should explore that sector. Mutual funds again, I think slower bake, but I think mutual funds like fixed deposits and FMPs in India will grow faster than the stock market retail investing will, just because people are a little more conservative and would rather have experts sort of hedge the best for them than invest directly in. But I don’t think mutual funds are, say, a 200, 300 million user market in the next five years. One way we’re seeing some very interesting models. So I like the Rupeek model, for example, I liked the idea of being able to take my gold and get collateral loans against it. I like the idea of selling digi golds. We’ve sold now to over 8 million, I think about 8 million people have bought gold on PhonePe. And again, very interesting dynamics now Paytm is also selling it and Gpay is also selling it. So you’ve got three of the payment platforms selling digi gold, and now there’s like an absolute explosion. So there’s a multiplier effect sometimes in the market as well.

We’ve seen gold purchases online really explode. And those are not things we had thought about when we started out at PhonePe. You don’t think about selling physical gold online. I think there are sectors like remittance, which will open up, I think the biggest opportunity for transformation will be around creating financial products and offering financial services in the P2P segment, actually in India. I am waiting for UPI limits to also go up. And the corporate APIs to really sort of start improving because RTGS is going real-time. NEFTs are going real time.

The minute money can move at larger volumes safely through a set of APIs, then I think things like payroll, things like, salaries for gig economy workers, things like opening up accounts, Casa accounts for businesses. I think there’s massive disruption ahead. Massive.

SANJAY SWAMY 30:01

Wonderful. And I think the first salvo, there was a power strike with UPI now being allowed for B2B payments, although the limits have not yet been raised, hoping that’s a matter of time.

So Sameer couple of things around PhonePe specifically around the app marketplace, that’s something that you launched probably a couple of years ago, and obviously has picked up a lot of steam over the last six to 12 months. What’s the thinking behind that and who should consider this as something that they should be integrating with. By the way I used the word app marketplace generically, you have a certain branded name. This would be great for you to talk about.

SAMEER NIGAM 30:48

So today we are just about 300 partners. It’s behind where our ambitions were. Our ambitions were to have 5,000 partners onboard by now. We’d launched in early 2018, the problem on that one, to be honest, is we ourselves are not yet convinced that without some regulatory intervention we can explore as much as we’d like to. And I’ll tell you what I mean by that. So when we launched the tab itself was just called apps because these were web apps and between Apple and Google at different times, we got so frustrated with the number of take down notices, Apple wouldn’t let us even promote the app or rather update the app unless we removed the word apps. Between the two of them, we probably had six or seven take down notices, or just months at end where the app doesn’t get updated because they don’t want us to onboard gaming apps. They don’t want us to onboard any subscription services. Anything where their eventual 30% margins are at risk and now it’s come to a head finally, after all these years, so earlier they wouldn’t really come clean on why it was an issue. Now they are actually coming clean saying we want to be the only ones. There’s a direct relationship with these apps and we want to charge them.

So switches had a bit of a rough journey in terms of the app store and play store rules. I’m hopeful that in the next three to four months, now that everything’s out in the open, entrepreneurs know where the platform stands, the platforms know where the ecosystem stands. We will have a new normal in the next four or five months. And CCI is investigating.

I think once that story unravels, then I would go all out and I would go into every tier 2 or three city and tell entrepreneurs, build hyper local apps, build apps for your local markets, your local economies, your local categories, because India just simply does not have enough applications for its own market. We just don’t have the depth, like you’d see in the States or in China for the local markets. And I think we need those. We need regional apps. We need apps that are created just perhaps for solving for a city. I would imagine that somebody in Agra has a very, very good idea about how to plan travel and tourism for Agra for tourists that come in. Why can’t I find an app like that? There are so many different, small examples I can think of that are viable businesses. We’d want every one of them on PhonePe. That’s what we created switch for. Create a web app, don’t waste your money on digital distribution, list yourself and we will help the audience to reach you.

SANJAY SWAMY 33:47

Got it. Great. So probably one more topic and then, I am just looking at the time as well. But one very interesting thing in PhonePe’s journey was a very early exit to Flipkart, almost pre-launch I think and obviously you and Rahul are seasoned entrepreneurs, you probably could have easily raised further rounds of capital, probably had a few people knocking at the door and yet you made this decision which kind of seems counter-intuitive for most founders. Especially in India we have these diehard founders, even if things are not going well or are just going to hunker down and focus on just trying to rebound. So what made you take that decision? Obviously there was a level of comfort with Flipkart itself but it was very unusual at that time. And what would you advise founders if these opportunities may arise where a relatively larger player might suggest, let’s acquire you guys and work together and you can continue to build out, kind of like how PhonePe has, what went into the thought process and decision making?

SAMEER NIGAM 35:06

So it was two or three things at the same time. One Binny had, when he used to be my boss at Flipkart, when I was there, had a very good personal rapport with him. He’d taken over as CEO recently. He was looking to place a few big best. And when we spoke, payments, the wallet players had started really sort of growing fast, PAYTM, MobiKwik, FreeCharge at the time and several others. If you remember Amazon pay, Ola money, I think everyone was entering payments. Then he said, I think Flipkart deserves to have a play in the payment space. But we’d like you guys to actually come and drive it. We told them, we think that payments as a platform is a very different business than payments as rails.

And we think that the play we’re going after can be much bigger in terms of horizontal breadth and coverage than Flipkart could. So we want to run it independently. Now that conversation is a leap of faith conversation. If you don’t know the other party, it’s very, very hard to take that leap of faith. So I think one, that conversation between Binny, Rahul and myself, I think it was a personal one and may have been unique to our circumstances.

I think the second, which I think there’s a lot more happening now. I think well-capitalized companies or profitable companies and MNCs all are finding it is harder to move the needle when you already have a big incumbent business and therefore you’re better off finding good teams investing behind them and letting them do their thing. I mean, at Phonepe’s size five years in, we are looking at small apps and teams that could actually do something disruptive. We’d capitalize them. And I think entrepreneurs should look at that very seriously because the cost or the amount of time spent by founders, especially in the early days on raising capital at the right time for the right value is exhausting.

And we had two term sheets. We had a decent amount of capital committed to us, even before we merged back with Flipkart. We just felt that, I think we were going up against people like Paytm who’d already, I think, raised about a billion dollars by then. And we felt that $10 million for example, is a $1/200. Capital is a variable in distribution, that’s an important variable. Flipkart was willing to commit a hundred million over three years, as long as we actually perform well, this goes to point number three. We backed ourselves. So I don’t know whether this model works for very young first time entrepreneurs, who are not sure about whether they have the well-rounded team that can do what it takes. Because we backed ourselves, that model kind of worked for us. It gave us the ability to just focus on building and growing really, really fast without having to constantly raise. It gave Flipkart, I’d like to believe a really good story and a leg up in the payment space fast without having to take their existing leadership and be de-focus them.

I think it gave the investors a really good outcome, this far at least. So I think it has been a win-win, I would like to believe it has. I’m sure there’ll be more opportunities in the market like us. I think when you know you’re trying to go after a billion user market and you know that you’re going to need a few billion dollars of capital, de-risking that access to capital is also a CEO’s job. That was my job, and Flipkart was a very, very good partner in crime for that.

SANJAY SWAMY 38:43

Awesome. Great Sameer, I’ll close with one last question for you, you learned so many things over the years. What are the top three takeaways that you wish you knew when you started out? In other words, what would Sameer Nigam of 2020, advise Sameer Nigam of 2010.

SAMEER NIGAM 39:09

Oh well, that has been a journey. Three ventures. So, I wish then somebody had told me, make sure that the market you enter for your first venture is large enough where even if you actually ended up with 1% market share, it’s viable. There are several such industries. Banking’s a good example. The 50th biggest bank still makes money. We had no clue, we were in music. The third biggest company doesn’t make money. So that was just a hard learning in the first venture.

I think the second one and I think this was a Sachin special, giving major props for calling it, it was around culture and this is about like working in startups where on most days in early stage things look gloomy before and you’re really just looking at the light at the end of the tunnel, but it seems to be a moving target. Sachin Bansal had once told me, I think most people would trade happiness for satisfaction. So happiness is overrated, solve for people feeling a sense of satisfaction and accomplishment, that actually is still very, very true. We see this at Phonepe, we all work like it’s still day zero, we’ve been working through COVID like it’s day zero. But again, you get burned out, you get tired, but I think there is a huge sense of satisfaction.

I dare say, if I asked most people, are you happy with what you do? The answer may not be the same. Happiness is short-term, satisfaction comes over a period of time. I think that is something I wish people had told me when I was getting into this journey. Because we started going in thinking everything’s going to be awesome and you’ll get everyday satisfaction, like your code compiling every 30 minutes.

And I think the third one I would say is very specific to India. And you may hate me as a VC, but I would say that good advice to early stage entrepreneurs is don’t put too much of a premium on how much you’re VC’s understand about the market, because if they understood more than you, they probably would be in the market themselves. And I think that was another very interesting learning over the years, take it with a pinch of salt. Take it as advice, but not gospel.

SANJAY SWAMY 41:37

Fabulous. And on the third one, I will say that we’re often seen as operators turned VCs, I mean what didn’t work in our time might very well work now or what might have worked then might not work now. So it’s just another point of view that we can share, but ultimately the uncertainty is what makes entrepreneurship both exciting and fun. And if everything was known, then people would take bank loans and build things out.

Sameer, Thank you so much for your time. Really awesome to talk to you and congratulations on the amazing success of PhonPe and here’s to the next couple of years of excitement in this journey. I’m sure we’ll talk quite often.Thank you.

SAMEER NIGAM 42:23

Pleasure is all mine Sanjay, thank you for having me.

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