A startup founder must ensure that transparency prevails every step of the journey, says Sameer Nigam, Founder and CEO of PhonePe. Trust, he adds, is vital to success.
Warren Buffett says the measure of success is whether people close to you are happy, and love you. At Flipkart, an unusual startup has made a dent in the payments ecosystem. Many people wrote off PhonePe when it was launched in 2016. However, Flipkart acquired it because of the disruption that Sameer Nigam and Rahul Chari brought to the payments system through UPI.
“When we built the platform on UPI, we realised we needed a government level ecosystem to make us scale. By moving back into Flipkart, we did not want to get to the valuation game. We realised that if we have to pay the valuation game, we need a strategic runway.”
“We did not go after valuations,” Sameer Nigam, Founder and CEO of PhonePe, said. He added the path that they have taken is to try and stay away from raising large amounts of capital. As of now, PhonePe has more than 100 million customers.
“Nowadays valuations start forcing you to justify the valuation. The path we have taken is to stay lean, stay away from capital and grow fast. We don’t do valuation because we are 100 percent owned by Flipkart. We focus on the cost of acquisition, and what we are capable of building and scaling up.”
At the recently concluded TechSparks 2018, Sameer looked back at his own learnings and gave lessons in disruption and success.
- Be open to working with large companies: Early stage entrepreneurs have to merge with larger companies; this is a model that evolved in the US. Strategic mergers are key to success and are much more important than valuations.
- Transparency trumps trust: Founders must understand that blind trust is never scalable. It is about ideas and a founder must ensure that transparency prevails every step of the journey. People should know what the founder’s strategy is.“We publish all our metrics, including our EBITA. Yes, the data goes out, but if you are good enough nobody can beat you in the market. This trust creates an openness to succeed. People need to know what mission they are part of,” he said. “Transparency brings trust with employees, and they partner with you in solving problems.”
- Get bright entrepreneurs on board: Sameer said his leadership team is filled with entrepreneurs. “We are 400 people, but we have 20 people that were ex-entrepreneurs,” he said.The founders of Zopper, Trupay, and Walnut are part of the business and engineering teams; they are spread across the country. “You solve and employ for skill in engineering data sciences, and design is key for the success of a company,” Sameer added.
- The learning from Flipkart: Sameer said learning how to scale was great at Flipkart. The team grew from 600 members to 35,000 members in 2015. “Everyone should have clarity in their role. Power centres are not important; all teams should align motivations to the same purpose. Flipkart taught me to understand human behaviour and how to manage people,” he said.
- Shaping an ecosystem: Think about building ecosystems to grow. WeChat, Google, and Amazon are creating their own ecosystems, and have the whole world on their platforms. In India, Paytm and Airtel had so much money that PhonePe had to figure out how to run to create its ecosystem.“We were doing 50,000 transactions a day and our competition was doing 5 million transactions. The thinking was around how do we grow.” PhonePe was a very capital efficient company and they partnered with a lot of businesses instead of going and spending to create an ecosystem. “It’s great to see people who are okay with partnerships. I recommend startups to be open to change.”
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