DILIP
Welcome to this podcast, NPCI's Innovators Playground, where we interview the best minds of the country. And the idea is simply how do we energise the youth of this country to build for the nation. We are going to spend time today with Kunal Shah, who needs no introduction. And it's going to be fun. You know, it's always great to talk to him, understand how things are going to shape, things are going to change. He is one of the visionaries I've met in my life. And I'm so glad to invite him and discuss with him about the future, India and the changes around us. Hi, Kunal. Welcome to NPCI's Innovators Playground podcast. Thank you for coming.
KUNAL
Thank you so much for having me. And this is a great initiative that you have started.
DILIP
So, Kunal I've known you last 13, 14 years now. And this is your second or third stint as a founder. How are you feeling? You know, so much is going around. What do you think? What's going to happen? How are we doing? Overall, I'm saying.
KUNAL
Being a founder is almost addictive. And you've seen this in the journey of NPCI from whatever started 17 years ago, that where you started to what it's become. There is no end to the excitement we feel for creating new things. And every year has been more chaotic than before. So, it's a thing that continues. And the rate of change of the world is increasing more. So, I think what I feel is that people respect leaders who bring uncertainty to become certainty. So, for example, ultimately, leadership is about providing certainty in uncertain times.
It could be for your customers, could be for your investors, could be for your team, could be for your family, any of that. Now the curse of that you have to absorb all the uncertainty.
How does 20 billion transactions happen on UPI?
You're providing uncertainty, but in the background, there are a lot of things that are happening. But I think what is exciting to me is there is so much more to do. And you can see now India is at the cusp of takeoff. And we all feel it. I wish I was younger. Sometimes I meet founders whose parents are almost my age now, which is where you start feeling even more the need to work harder because you will not be able to match their energy.
DILIP
I don't know about you, but I'm young.
KUNAL
That's actually true. I'll give that to you.
DILIP
No, but I think you said very rightly, you don't need leaders for the good times. You can work with managers also in the good times. But specifically, if we just have to deep dive on some of the issues, when we look at the technology evolution, there is so much action happening on the cross-border related issues, the tariffs and other problems.
I'm sure it has an impact on you as a founder as well. And you said that there is so much more to do. And that's how every day you look at a day zero. How do you drive that? Because you are like a chief energy officer of the organisation in that sense. Your job is to transmit energy. How do you in the ups and downs and there's always some bad days, good days, and that's the race going on.
KUNAL
So, I think the unfortunate part about being a founder is a very lonely job. You have to ensure that all the sad, stressful moments are more private.
And you're always giving positivity and optimism to the team because that's what they need to move forward. But I think what happens is every such big change brings opportunities. Let's talk about COVID.
The world had gone to a place where nobody knew what can happen, how will things be. We were all watching news and cases and everything. And it's funny, we have almost forgotten what COVID was. It was a very, very dark time.
KUNAL
And that time we took a call of doing IPL sponsorship.
And do our ad campaign when there were very few sponsors available to even sponsor anything that time because what if the match stops, what if something happens to players, all of that, all these risks.
And even our board was not very supportive that we are doing an ad campaign in the first wave of COVID. So, taking these bets and getting it right, that's the real talent and joy. I think ultimately there are two roles of a founder.
Are you solving the hardest problems of the company? And are you taking the toughest judgment calls when the data is limited? If you cannot do this again and again, you don't deserve the chair.
DILIP
Very well said. I still remember your ad, a very unconventional ad. And I think even the organic views were like 30, 40 million before we started actually promoting it.
KUNAL
That was again a content and view. We worked with people who had never built ad before. We started working on scripts that were harder to understand than easier to understand.
DILIP
Did you feel that was the edge content in some way?
KUNAL
All my life has been edge content that way. So, I think to be clutter breaking and to be noticed, you have to do something different. Because anyways people are busy doing what they are doing.
DILIP
How do you get that attention in so much of our information overload? Exactly. How do you seek their attention?
KUNAL
But we did something unique there. We realised that while our customers are in between the age group of 30 to 50, the influencers of the house who get people on tech are between the age group of 10 to 20. I call them the CTOs of the households.
Now we have to make an ad that sparks a conversation between the 30 to 50 year old and 10 to 20 year old, right? Where this person will influence them on tech and make them understand. And this person will be intrigued. Why is this ad doing what it's doing? For example, taking an Anil Kapoor or Govinda or Madhvi Dixit was...
DILIP
My favorite has been Rahul Dravid.
KUNAL
Yeah, perfect. So, I think it caused interesting conversations. And what the ad did is it forced conversations. And there were enough brand ambassadors of cred who say, oh, I'll tell you what it is. Smart people do not want to be spoon fed. So, our ads never spoon fed. Smart people want to be left with a little bit of mystery and they want to discover.
DILIP
The winning has to come.
Exactly. Exactly. And the whole ad format was you spoon feed to the point that it was just like “le lo ab” (Hindi for “here you go”). And that's not how smart people want to be seen in their ads.
DILIP
Fantastic. And now I think it's a great brand now. And how did the CRED name come from? I always thought about credit, but is there any...
KUNAL
Yeah. Well, so it comes from a vision of the company. And that may also give you a view on how we are thinking five years from now. See, ultimately, a society progresses only in the only way is when everybody demonstrates good behaviour. If there's defaulting behaviour, it takes the country backwards, even if it's 5% people defaulting. Right. Now we wanted to… we realised that there are enough penalties for bad behaviour that have been introduced. There were not enough incentives for good behaviour. Right. So we said, what if we created a world where all the people who demonstrate good behaviour of paying their bills on time are rewarded or recognised? And once that happens, could we create a platform for brands, say financial institutions and merchants to discover these customers because they are likely to also be credit worthy, more affluent and so on and so forth. So, our idea was very simple. Can we create a parallel world of credit worthy and the credit worthy word actually means more than credit, credit worthy is a virtue.
DILIP
Right.
KUNAL
In younger slang, it's called street cred. So, the word cred came from a combination of giving an identification to a group of people to be seen as good citizens and therefore be given the benefit.
DILIP
It's more like a signalling.
KUNAL
It's signalling. It's an identity. Right. And therefore, we never say a CRED is a brand. We say the CRED is a place where all these people aggregate.
DILIP
When we look at credit, for example, and I strongly believe the country can only prosper, truly, if we are able to support a very responsible credit to every citizen of the country, right, in that sense. So, whether it's a working capital for a vegetable vendor for two days or three days. I think the whole credit in a step-up model, the short, the fast and real time. I think it has to bond. What do you think about what is the next phase of your growth is going to come from?
KUNAL
Yeah, I think let's just talk about credit for a second. You cannot be long on a country without being long on credit.
DILIP
Yeah.
KUNAL
It has never happened in human history. It is unlikely to repeat again. Therefore, we have to understand that there are simple principles through which credit works.
DILIP
Yeah.
KUNAL
A credit works where people take it responsibly, both for borrowing and repaying. It is taken as a very serious promise. When we use the word like we are tolerant, we are all of that. It comes at the cost of somebody else. When we were tolerant with five people, we had to probably take money from 15 people to compensate for that.
DILIP
That's how the logic in today, the whole story of the segment which are… the cost of NPA is recovered from the...
KUNAL
Correct. So, what I'm saying is that unless we find a way to remove the problematic cohorts consistently, the cost of credit is unlikely to keep coming down.
DILIP
But Kunal, the way and the credit line on UPI, which has been approved by RBI, and I just think that if you are able to start small, I'm just saying that because many people will not have the...
KUNAL
No, I have the simplest idea. The largest transaction in this country is mobile recharges. 99% of the country is on prepaid.
DILIP
Prepaid, yeah.
KUNAL
In every developed world, there is no such thing as prepaid. It is mostly postpaid. If we just allow credit for mobile top-up, and let's say we supported that, build credit score through that...
DILIP
Or a Wi-Fi connection.
KUNAL
Something simple. We do not have to start saying shirt-lelo, mobile-lelo…advanced. We have to start with basic thing. Imagine 400 million customers.
DILIP
Electricity.
KUNAL
Yeah. And who's going to default on the electricity bill? So, I think we need to think... We have to remember one thing, Dilip. Digital payments started to kick off before UPI, only on utility. Not on shopping. Shopping was cash on delivery.
DILIP
And it's still 40%.
KUNAL
Exactly. So, credit is going to follow the exact same path. We cannot skip that path and say, I'm going to get people to buy mobiles and fridge and washing machines first. We have to start with simple stuff. Anything that is otherwise due and impacts your life materially. Who's going to default on the electricity bill? So, what I'm saying is, when we are making more and more things prepaid, by the way, I'm hearing that now electricity companies are taking the approach of going more prepaid. We are removing the credit testing behaviour by low ticket sizes. So, I think we should consider doing that. In terms of growth, I think a person who is in the business of credit… actually credit is the only business where instead of customer buying product, you are buying the customer. Because it's the only inverse business where you are giving away money. So, it means that you have to be sure that people who are giving you money to give lending further, you are protecting their money. So, you have to be careful. You have to take all the risk measures, all of that stuff. But if we have to truly imagine that culture of credit has to change where everybody takes it respectfully. For example, in many institutions like bank, you cannot join unless you have a good credit score. In the Western market, you cannot rent an apartment without a good credit score. If we made some of these things more normal and mainstream, today, an average person doesn't know what their credit score is or cares about what their credit score is. But if you look at the Western market, they're obsessed.
DILIP
But I don't think the countries that are smaller than the cities, they can do much more things much more differently than the country like us. I'm not even wondering what, you are considering 300 million. Our countries are not in mainstream cities or people like...
KUNAL
I believe that we have to start changing in cohorts, Dilip. First we have to get 200 million people to actively use credit every day.
DILIP
Do you see that... And I think it's a great number to aspire for. Today, we see the daily activity of UPI over 200 million. That's a great base to see whether the 200 million people can actually, in the next five years' time, use a small credit or whatever it is for a...
KUNAL
So, this is a very important point. When we think about nationwide solutions, we have to think in cohorts. If we want the solution that can only solve a billion people's lives together, then we are not being wise about it. We have to change the country by cohort, by cohort, by cohort.
DILIP
No, it's a good learning.
KUNAL
And let's say an example. Let's say I try to make an app that will work for only a billion people. May not be an app that appeals to anyone.
DILIP
You're saying it's an evolution in that sense.
KUNAL
And solve them in slices. Solve them in slices.
DILIP
Step by step.
KUNAL
And if you make it work for 100, 200 million, if their life changes, the next 200 million is ready.
DILIP
Of course, I am passionate and we have discussed this so many times on this whole trade for every Indian. It's like a great concept. And I'm sure the Prime Minister, Government, RBI is also thinking about it, in a responsible manner right? Because we can't create a crisis for the country. And that's where monitoring of the economy, monitoring of the people, monitoring of even the institutions.
KUNAL
And use of credit.
DILIP
I'm saying it's very important in this whole process. So, are you very bullish on how your next steps are?
KUNAL
Yeah, we are simply thinking about when we are focusing on an audience that is actually credit worthy, we are saying that the credit worthiness spreads in many, many things. Let's take an example. We have noticed that the same customers demonstrate the best behaviour on car insurance. So now what we do is we make it easy for car insurance companies to identify these quality customers and potentially drop the rate. Same thing we can do for tomorrow, secured loans and so on and so forth. The goal is simple.
DILIP
I think you're right. I think unless there is an arbitrage. I think more than anything else, I'm just saying you were talking about the behavioural restrictions. I was just thinking that even if the market is able to create the commercial arbitrage, that itself will drive the number in a big way. And that arbitrage has to be significant. Let's assume that there is a 50 basis point advantage on a...
KUNAL
It will happen because the moment you bring hyper efficiency, these cohorts don't want to talk to people, deal with paper, all of that stuff. They are very digital first. You bring the cost structures down. You bring the way of NPA's in control. You understand them better. Suddenly life becomes better.
DILIP
They prefer things. They are bringing huge efficiency in the whole... Because finally it's a correction business. If you're in today, you look at autopay.
KUNAL
And that's the power of this. When you get these tools in place, align the thing, technically the world should be hyper efficient. So, the hyper efficiency will come when you take in a cohort and say this cohort you can give hyper efficiency. So similarly, for example, let's say life before and after DigiYatra or now the new immigration tool I have been using, you just go through without having to deal with any officer looking at a document, all that. It's achieving the same goal, but it has significantly higher efficiency. And Dilip, there is one interesting nuance. There is no country that has become prosperous without becoming obsessed with the value of time. Now this is a big change we have to make as a country. I don't know if you know, but most Indian languages have no word for efficiency. The word efficiency does not exist in most Indian languages. You will see everybody when they use even in Hindi, they will use the word efficiency as efficiency only. There's no word. So, what I'm saying is that this has to become our culture. This has to become our vocabulary. And otherwise, we cannot expect prosperity.
DILIP
Yeah.
KUNAL
Prosperity comes when we respect time. We value time. We value efficiency and not throw people at problems, not throw “haa chal raha hai, dekhte hai parso milte hai” (Hindi for - it’s going on ok, let’s see, let’s meet soon) type of situation right. And that nuance, for example, I'm telling you even now when I tell people I'm running six minutes late, they laugh. “Ye kya hota hai (Hindi for what’s this) - six minutes late? Aao, kabhi bhi aao (Hindi for come whenever you want)”. I value my time. You should value your time. And I'm telling you every city of India you will feel time differently.
DILIP
Differently, that I have seen.
KUNAL
So that's the difference. And you will see which city is more prosperous by the way time is felt. You will see that pattern.
DILIP
Coming back to the CRED’s business, how do you see what's going to be drive for the next three years or how are you going to make up 2x, 3x?
KUNAL
So, our view is simple. We find an efficient way to acquire the highest quality customers by making their life simpler in terms of managing bills, managing their cars, all of that stuff. On top of that.
DILIP
And you're doing pretty well on that. I see.
KUNAL
Thank you. Yeah. So, we probably are now the largest bill payment platform in terms of value at least. And we are now scaling this in different categories. We have also become a fairly decent sized platform for cross seller financial products on our platform. So personal loan insurance, all of that. We have actually become quite decent in scale on that. So, our goal is very simple. Can we make it hyper efficient and solve the problem of the top 30, 35 million customers and make it easy for them to live their life and manage their life on our platform, cross sell by allowing a bank or an NBFC or an insurance company or a brand or a merchant to target these customers, right? And eventually make the whole equation kind of create into a positive flywheel because it's been identified. So, think about this as building a new neighbourhood in a city where everybody has been curated for every party to benefit from each other.
DILIP
So it's something like a CRED Club kind of a model. Right. And today you're trying to ensure that they get a lifestyle, they get support, they get all their transacting needs. You know, vehicle related support, a variety of things. So, you're looking at like...
KUNAL
Cross assets. So, if you think about their life, there are these I determine life in two types of transactions that are boring transactions and interesting transactions. Ok, what is that boring transactions are like paying your bill, recharging your phone, fuelling your car, taking care of your chalan and all that stuff are boring.
DILIP
Tell me what is interesting?
KUNAL
Interesting transactions are having a conversation with someone planning a vacation, spending time with your family, reading a book, watching a good movie. They're interesting transactions of life. So, I think the human goal is to reduce time and money on boring transactions and increasing time and money and interesting transactions. Right. And at least the top 30, 40 million customers care about this a lot. Right. So, we are in the business of finding this equation to work for you.
DILIP
But what I'm saying is while you're building the correct club, right, there is a discretionary part of it and there is a non-discretionary part of it. I'm saying both come in together.
KUNAL
Absolutely. No. So that we have to be completely responsible for all of those aspects. Like I said, boring, interesting, discretionary, non-discretionary are different lenses to the same thing. What I'm saying is that ultimately people should be able to depend on you to make their life better. If they can do that again and again, there's enough money to be made in all businesses.
DILIP
How do you see this whole tech usage in CRED? I'm sure you monitor it by yourself and you're fairly now…
KUNAL
Yeah, I think the biggest advantage of running a startup is that you can keep bringing the average age down.
DILIP
Yeah.
KUNAL
Right. The advantage of that is you can actually be significantly ahead on tech because if you notice one thing, younger people don't need too much training to become more tech savvy. Right. In fact, if you see younger people are naturally born into tech and understand tech intuitively. Right. So, what we think about is that ultimately purpose of tech is to make you more efficient and achieve more things in a very short period of time. Right. And what we think about is AI or not any of these tools. We like to work with people who are impatient, want to get more things done in less amount of time and have a huge tendency to build. Because if you just want to exist, then you're unlikely to make a change. We have to do something differently. So, what we do is we constantly look for people who have this drive and passion. And in terms of doing things differently, we believe that as a company, we are a platform for great talent. You create a stage.
DILIP
Yeah.
KUNAL
And then they will do well. Provide an extraordinary stage for great talent and they will perform. But the moment I think we have a slightly paternal instinct that, oh, “aisa hona chahiye, aisa karna chahiye” (Hindi for it should be like this/that), all of that. I think good people don't like that.
DILIP
But you see the usage of AI and tools fairly. Yeah. Is it a part of DNA now?
KUNAL
I have noticed a very interesting pattern.
KUNAL
I see us somehow, even in the smartest people, only a small percentage of them are truly adopting them.
DILIP
But why? Why is that? Is it a hard work issue? Is it a mindset issue? Yeah.
KUNAL
So, I feel that when their own work can be automated, let's say I'm a painter and I can see an AI can do a better job on some of these things. You don't want to accept sometimes, and you will always find some nitpicking fault. “Ye stroke perfect nahi tha, ye nahi tha, (Hindi for - this stroke wasn’t perfect) it doesn't feel the emotion” and nobody's here to replace it. Why can't you use it to make your art better, your code better, right? Or why can't you use it to audit your code? Right. For example, one of the things I started doing is I used to interview people all the time. I made AI audit my interviewing skills. And that is very powerful, right? I'm not saying, oh, AI will interview for me. Yeah. That should be possible.
DILIP
I get your point. Yeah. And actually that's what is happening back in value as well, right? Today the guys were able to, who were really bright people and able to use AI. They are able to go to the 100X model.
KUNAL
But the mindset is treated like a tool. The moment you say, oh, AI is going to do this, this, this, don't make, don't humanise AI.
DILIP
Yeah. Use it.
KUNAL
It's a tool like any other tool.
DILIP
Use it ruthlessly.
KUNAL
Correct. But back in the day, like if you remember, people will say, “WhatsApp nahi Email kar do” (Hindi for don’t send a WhatsApp message, email me). But it's more efficient. Just move.
DILIP
So can I just make a statement and maybe I need your help to validate that. So are we saying that if the top talent of the company starts using AI ruthlessly and unapologetically, I think they have a chance to become 100X and contribute back to the company.
KUNAL
Absolutely.
DILIP
In a crazy way.
KUNAL
Not just that India has a unique position. We have the youngest population. We are probably the largest users of AI, right? But not for productive reasons yet. Right. We are using it for less nonproductive reasons right now. I mean, editing images and doing fun is how everything starts. Back in the day when the internet came, you and I were early users of that. We were not doing some scientific research on it. We also did a lot of fun on it. And then we got serious about what this tool can really do for us. Same way, you can actually think about, for example, nobody thought about, oh, I'm going to get a smartphone and WhatsApp to come into a company's WhatsApp group. No. We are connecting with family. And so the simple users will start the thing. But when the younger people realise that they can do so much more, the question is, are we becoming more ambitious or not? That challenge is a very unique challenge.
DILIP
The ambition part is also very important in this whole process.
KUNAL
Because it also has a tendency to let's say the internet can be used for doing time-pass all day long.
DILIP
Yeah.
KUNAL
I don't know, Dilip, you've been tracking this data and that we are almost close to 37 GB of usage data per month per capita right now in the country. I think it's just insane. This is a crazy number, which I wonder, like, how are people productive? Because to use that much data, you have to give a lot of hours to your screen, which means, are we being productive?
And do we understand what is being productive? And do we therefore have a higher ambition? So, my challenge is that every tool comes with pros and cons. You can leverage the way you want. And I think we need to shape the ambition of the whole country to become more ambitious. I think my biggest challenge right now is that the average person's ambition is extremely low for the opportunity and the time that they are born. Imagine they have the internet, AI, all the tools, everything, prices have crashed for the smartphones. You can learn anything, anything you want in 24 hours on the internet. All of this is available right now. Where is the ambition now?
DILIP
Yeah, I think I just feel it must be overwhelming to them as well.
KUNAL
It is. It is true. Dilip, every major change is overwhelming. What do you do with that?
DILIP
Yeah, but I think I was talking to somebody and such a big technology shift, right? People are comparing this whole transformer model and LLMs to the stream.
KUNAL
Yes. Yeah, it's almost like electricity.
DILIP
Yeah, I think it's just crazy. And I have somewhere, when I was talking to somebody, somebody said any big change, any big shift really helps the top talent more than it helps others. And I think that's a little scary as well. Yeah.
KUNAL
So Dilip, first of all, we have to think about one truth of life. There's always been the 10% who have always done better than the 90% of humans by a huge margin across humanity, across human history. The need to force equality, right, it should be about increasing the average. Because the 10% who suffer mostly, right, trying to achieve being the super ambitious people, imagine a scientist, right, who's just like probably dying.
DILIP
Yeah.
KUNAL
And they take humanity forward, right, they solve the average problem, right? Yeah, they should be getting benefit for taking that effort. But imagining that everything should become equal is not a good thought, we should say, is the average going up? Is the average per capita income going up? Will there always be delta between top 10 and top 90? Across human history. Yeah, across human history, it's been the case. So, if you think about life in that exact way, unless we do not think in that exact way, what we'll end up doing is trying to force people to become equal and innovation will not happen. Yeah, we'll go to other places where innovation is respected.. So, I think the nuance that I'm going for is, we have to say, how do we build things that create inclusion? How do we create things that make every single person benefit from it? If the internet was built only for the top 10%, it would have not worked out. Who's taking advantage of it top 10%? Same as with AI. Same as with any other tool.
DILIP
Any other tool. It's built for all but the top 10… And I think this leads to my next question. I think India is such a big opportunity for us now. Next 22, 25 years, Vikasit Bharat in 2047, 2050, we are going to be a developed nation. What do you think we should really focus on? What should we monitor? What should the youngsters do? People, the engineering graduates who are in college are trying to complete their education.
KUNAL
Yeah. That's a two-dimensional question. I think what should the country do and what should be used to do? So first there is no developed nation without an extraordinary healthy female participation of labor. Yeah. And you have spoken about it. Yeah. So, we need to really take this into a very serious metric and it should not be a checkbox metric. We should be able to demonstrate, for example, that today 90, 95 percent of all loans are taken by men, even till date. Yeah. Right. 90, 95 percent of all wealth is concentrated right now in mutual fund stocks in one gender. Right. We have to change that actively. That's when we will become a developed nation. Number one. Number two is innovation should be our core DNA. We should be able to give 20 examples of what we have built the world uses.
It should not be something that we have to think, if I ask somebody which innovation that we made the world uses right now, we are buffering right now. It should be easy to answer for the whole country. Right. The third thing that we have to think about is that really go into efficiency of time and value of time.
Unless these three things happen, I don't think we are going to get into a mindset of being a developed nation. Yeah. We have lots of tailwind factors, but they will fizzle out unless these core things work out. In terms of what the youth should be doing, I think first is they have to truly respect the privilege of the time they are born in.
DILIP
Yeah.
KUNAL
They couldn't have been in a more luckier time to be born in. Right. Yes, it's overwhelming. But I think they need to worry more about substance than status. I have seen them getting obsessed with
DILIP
With the likes.
KUNAL
The likes of the thousand followers they have. To me, that is coming at the cost of substance. Something else.
DILIP
Something you're paying price for something. Because if your attention is there, it's something somewhere else you're missing.
KUNAL
What happens is when we start thinking about how to please the thousand people you don't care about, eventually your life gets shaped for that. Right. But unless you have substance, substance is skill, ability to solve hard problems, people who will rely on you. Right. If you are that person,
DILIP
The size of the impact you're making.
KUNAL
Exactly. Unless you're thinking about that, your life is going to materially change. Right. Second is
DILIP
There are no flukes. There's no luck.
KUNAL
Yeah. By the way, we often think about luck. Luck can get you to a place, but it's unlikely to keep you at that place. Let's say you're playing poker, you might get lucky with one hand, but you're unlikely to take the money home.
DILIP
Yeah.
KUNAL
If you know there's a skill behind that. Right. So, I believe that that is part of operating. Another thing is generally obsessing about the journeys of successful people versus the end state of successful people. I see a new obsession about celebrating the end state of everyone. Right. Oh, Elon Musk this that.
Please read on the journey. And that's the journey of every successful entrepreneur of the country. And I believe that I wish that our content changes like we have, we have made content for every mafia, every scamster, movies, content, but there are very few content for risk takers of the country. Right. And I think the last one is a core risk taking.
DILIP
Yeah.
KUNAL
Unless we understand the concept of risk taking. By the way, this doesn't mean you have to become an entrepreneur. Risk taking is taking risks with yourself, your career, being more ambitious, demanding more…
DILIP
And there is so much to build for India. You know, I'm saying we are just living, you know, and we, we needed everything as of yesterday.
KUNAL
Every single thing has to be still made. Good news is the younger crowd is traveling abroad now, which we did not travel till we were much older. Right. They are able to see the difference of what is much better. They should aspire to make that happen in our country. It's the easy escape. Oh, I'll move out. That's an easy escape. Right.
DILIP
But can I tell you one thing? You know, the moving out is actually an escape in my own assessment, at least now. Because India, you know, you should always, you know, you spoke about and I just want to summarise what he spoke about. You spoke about focus on substance. You focus on risk taking.
DILIP
And what else?
KUNAL
No, I mean, I mean, I don't know. Risk taking, learning, compounding, not focusing on status, all of that.
DILIP
Yeah. So I think one yardstick which youngsters should think about for the next 25 years, where the opportunities are going to be, where the opportunities are going to be in India or whether they are in Europe or the US. I think anybody can answer this. Anybody can answer this.
KUNAL
No, I think Dilip, this comes from having an academic mindset to understand things. Where is the growth rate? Where is the opportunity? Where is the rate of change high?
DILIP
It's actually a no brainer. But again, you know, with those weak movements, you're going to think about an easy life or a little bit more money in the starting point that is, you know, you want to take.
KUNAL
We have to do enough to make sure that they understand this stuff. Right. Today, they're influenced through, I don't know, more short videos here and there. Right. They're not having enough real conversations with real people. And I think that is shaping those mindsets right now. Right. Because I feel that most of the youth is being parented… I mean, the internet is a parent.
DILIP
Yeah.
KUNAL
Their mentors are digital. Right. And they're talking to Chat GPT more about every problem of life versus real human beings. Right. So, I think we have to understand that there are certain things that have to change.
DILIP
And you rightly said right now, Naval (Ravikant) says the top three things in life. Right. First is where do you live? And second is what you do. Right. So, I think if these are the top three and how much time the youth is spending to actually make this decision, right, it's very important to notice and observe.
KUNAL
But I do believe that we have to go back to basics and say, are we doing enough to make them more ambitious?
DILIP
Yeah. Yeah. Actually, you spoke about that being more ambitious.
KUNAL
They will figure out how to be more ambitious. Are we talking about being more ambitious? Are we telling them to say, you should be a millionaire.
DILIP
Yeah.
KUNAL
You should not aspire to just survive and do this job.
DILIP
And actually, ambition can be on both sides. Right. Again, driving the point that one is you create something big or you make enough money. Right. It should be either of them. If you're not doing both.
KUNAL
I think the key point is scale. If you do not make people imagine what scale should be.
DILIP
Yeah.
KUNAL
Right. How many people truly appreciate the scale of UPI? No, I'm envious of your job, like to be able to be making this impact for the country and in such a big manner. And I think, therefore, you see a lot of us support NPCI and wish for it to be successful because as a citizen of the country, this is transformational.
DILIP
Yeah.
KUNAL
Right. So, I think impact comes when you have wild ambition. Dilip, when I met you in the early days of UPI, you kept talking about a billion transactions a day. As much as it is a ridiculous thing to say, that drive is what causes the energy.
DILIP
I moved to a hundred billion a month now. And actually, I'm telling you it's possible. It's quiet possible. I'm not denying that one. It is quite possible. And I think the country must aspire. If anything, less than that, you know, will be a short.
KUNAL
I am pretty certain it will happen because we have reached a critical point where I think life cannot operate without this. And I think as more use cases, as more thinking comes into this and as…
DILIP
And actually you made a point and I'm thinking about it. You said that, you know, UPI solved all the boring cases now. I think NPCI needs to focus on all the interesting stuff, and I can assure you some of them, you'll see it in the in the Global FinTech Fest.
KUNAL
I'm excited to see it. As always, the demos are always exciting. But I think the key aspect is if we have to imagine a world where we say ultimately wealth happens when two things are done. You identify what is the motivation and you make it efficient to deliver the motivation. When you combine this again and again, you can keep creating impact or wealth.
DILIP
No, no, I think the for the youngsters and I think impact or wealth or both together, I think this should be one single question asking them.
KUNAL
The key ingredient for impact and wealth is combining motivation and efficiency. Only when you do both, for example, you can make something efficient and nobody cares about it, neither will you have impact or wealth. In fact, you will destroy wealth. Right. Many 90 percent of startups are that nobody wanted this problem solved. “Apne uska badhiya solution bana diya” (Hindi for you made a great solution), nobody cares about it. Right. If you combine the highest motivation and make it highly efficient, you will make impact and wealth all the time.
DILIP
No, no, fantastic. Kunal, how do you see the future now? And we want to just recreate the future for five years or 10 years down the line. What are the things you think? I have some view of the future and maybe I will. We can discuss this after you…while this is an interview, I’ve spoken a lot.
KUNAL
No, no, I would love to get your view on this because you see a very different vantage point and you've seen the country change for now decades. So, my view is that the rate of change is accelerating. We underestimate the amount of change we are going through in a very short period of time. Right. Smartphones are not too long ago. The Internet was not too long ago.
DILIP
And now yesterday we heard that, you know, the Google CEO announced the 500 million model running on the phone. Every phone.
KUNAL
Correct. So many things that are happening in a very short period of time, which also means that we will have to get used to rapid change and adaptation. Right. I believe that the set of people who will do well, who love change. This is a very interesting point. Most people hate change. But unless the cohort that loves change grows, we're unlikely to have a good time. Number 2, what's going to happen is that many things that were impossible are going to become possible very easily now. Right. And there are very few periods in human history where these windows open up, where suddenly everything that was impossible. For example, I'm sure when steam came, a lot of things were impossible.
DILIP
Impossible.
KUNAL
It was suddenly possible. And suddenly we're going to go through this wave, which means it changes humanity's course completely. I do believe that the world is way too overwhelming. I think there's going to be an impact on the birth rate. When the world is absolutely hard to predict all of that, it's very hard to commit to, let's say, raising a family, all of that. So you're seeing an impact across nations where you will see the birth rate is getting impacted. In fact, you will see that there's a direct correlation to, let's say, the higher the average IQ of the country, the higher the birth rate tanking. Right. So, there's a correlation that is going further.
DILIP
Yeah. Right. And there are examples like South Korea.
KUNAL
Yeah. There are many, many examples. So, we are going to go through this interesting time where there is super humanness coming while the birth rate is tanking, which means there is a divide in humanity in a very different way altogether. Right. We are lifting the average technology. For example, the cost of energy is on a decline that we cannot imagine. Now that is one of the biggest currencies that stop a lot of progress. Right. The energy costs.
DILIP
And it's going to be so important for the AI era. Right. Because AI is all compute and energy gain.
KUNAL
Imagine for the first time, the smartest brains are working on electricity problems right now. When was the last time it happened? Maybe 100 years ago. Which means like if you look at the solar cost, it has dropped by maybe 30x in the last few decades or whatever, and it's likely to drop further. But coming to the core innovation, I think we have to imagine many more things. We've spoken about the power of tokenisation.
DILIP
Yeah, but I'm just saying that, you know, and we'll go to the tokenisation and you spoke about the innovation. You see, you know, two days back, I saw, you know, we are moving towards the right thing. So, for example, in the world of AI, if energy and compute is going to be the core strengths, or the IP in that sense, today you saw that we have started chip manufacturing. We saw the first set of new chips coming out. And I think it's getting there. I think being in India, it always makes us feel that we are late. But somewhere, you know, I think the change is happening and the change will accelerate in my assessment. It just needs that inflection point as you spoke about.
KUNAL
Yeah, I think when we get clear on one of the fewer things, Dilip, we talked about focus earlier before starting this podcast? Right. Honestly, if I had to tell you, Dilip, what will it take from 20 billion transactions to 100 billion transactions, you may have a list of 500 items, but ultimately it will be five things that will drive everything.
And I think if you look at… if somebody asked me how the country became prosperous, go to any country's history that became prosperous. There's only five to six things that are done again and again and again.
DILIP
Just relentless focus on.
KUNAL
What I'm saying is that the playbooks exist. Right. We are not the first country trying to be prosperous. Right. We were prosperous. Other countries became more prosperous through a different playbook. All we have to do is do that same thing. And I think the moment we operate with this mindset, operate with clarity, we give signal, clear signal to everyone that what will cause progress.
DILIP
Fantastic. Fantastic. And you spoke about tokenisation and you want to speak about it.
KUNAL
Yeah. So, we've spoken about something that obviously NPCI could make a big change is, today look at so many assets that we have right now let’s say real estate or gold or FD or many of these assets, all of that today, unsecured lending is big. But what if you could leverage any of these assets that you have. Right. That was hyper efficient. Today, if you have to do a loan against property, it feels like a massive thing to do. Right. Or let's say a loan against jewellery or loan against any asset that you have. What if that was magically easy and seamless and India has shown to UPI…
DILIP
And when you compare that with US right, US has been able to monetise their asset dramatically at a very high leverage compared to what we have done.
KUNAL
Exactly. And I think we can leapfrog that completely because the moment you take credit to become unsecured to secured, the cost drops, the reliability of the system thing, the banks become more resilient. And suddenly what ends up happening is that we have all these assets being leveraged to fuel the growth further. Right. Today, a lot of our assets are not being leveraged. My belief is that today…
DILIP
And tokenisation is the right solution for that.
KUNAL
Exactly. So, and I think we have the right people, right infrastructure, right thinking and right intent to make some of these things happen because the moment that asset class or those asset classes get unlocked, we're looking at a completely different world.
DILIP
Actually, it has to be real assets. Real assets which actually means to people, which people possess, which people have.
KUNAL
And becomes super-efficient.
DILIP
No, no. And I think getting them on a chain is simple. You know, I'm saying you can do, you can lock, you can have visibility, you can have verifiability.
KUNAL
Adoption will be like this because the moment you say, oh, you have access, you have created value, right.
DILIP
But I think along with RBI, I somewhere feel that most of the assets are dealt by the large financial institution banks. I think along with the regulators, also the large institutions have to take a liberal leap forward. When UPI started, right, why of course it's the government, RBI, but some of the large banks really backed it up in the initial period, right. Otherwise we wouldn't have got that validation, right. You know, today that validation, the conviction which NPCI had to build, of course, you know, from a vision perspective, Nandan was always there. But you know, some of the large banks backed it right from day zero and that gave us a lot of confidence. So, I think the banks might want to really review this asset tokenisation part.
KUNAL
I think it will happen because everybody wants growth and we have to find there are few things that cause large amount of growth.
DILIP
No, I somewhere call this as D5, right. You know, the Western world called it as decentralised finance, I call it digital finance. I think now that CBDC both wholesale and retail is in good shape, I think there is no better time than looking at asset tokenisation.
KUNAL
But I think, Dilip, the moment we think about everything that should be done and inefficient, the moment we obsess about making it efficient, we will make the biggest change, right. Like it's loan against property is not invented by us, it existed from the time immemorial right now. But it has been so inefficient. Even today, taking a fresh home loan is not very efficient. And I think we would think about every single thing removing friction from every way.
DILIP
And technically everything can be too. If it's a living will, everything can be tokenised.
KUNAL
The most crazy use case is to imagine you can tokenise human and their income for the future and you can actually invest in humans also. Yeah. If you take an absolutely crazy, crazy thought.
DILIP
No, no, anything which is real, which you can feel. You know, and one more thing I think Kunal is I'm absolutely passionate about is credit. The credit because now and I'll tell you why I'm so passionate now. Because the UPI’sation of the country has almost, we are almost there, right. And of course, we need money to grow and get it to every Indian. But I can surely say that one third or close to half a country is almost there on the digitalisation aspect of it from a finance perspective. I think it's a great story for credit now. Yes. You know, whether it's a satchel-ised, whether it's small, whatever shape and form, right, it can start taking that form. And as we go to Viksit Bharat in 2047, and I think this credit to every Indian, right, is going to play a big role in that whole journey. Without that, I don't know how it's going to really…
KUNAL
I would make one more statement. Imagining when there's a beautiful infrastructure in UPI made, trying to make credit happen through other roads may not be as wise in my view, right. The plumbing is already in place between banks, between consumers, between merchants, between brands. Credit is just a new type of fuel that needs to move through the same pipelines, right. And if we can somehow just focus and take a goal, right, and say, if this is the single input metric that we're going to drive, even if it means with small credits,
DILIP
Small, yeah, I actually I'm a big believer of small, right, because otherwise it will become a very, very risky, right. And I'm just saying.
KUNAL
Random recommendation, like we give DBT anyways, what if DBT came in a form of credit, where you are given access to credit and you take the risk sometimes, but suddenly what happens is that when you're able to get more people to be given the support to take credit for the first time. See early days all of us.
DILIP
But I liked your idea, the small, you know, you actually contextualise this, right, you know, you said gas electricity, gas connection, mobile recharge. So, it's very contextual.
KUNAL
My simple view is payments did not take off through shopping, payments took off in this country and till date majority of the transactions are utility. You cannot short circuit that path. Credit has to 100% go down the same path. We are trying to make it happen.
DILIP
Then only it can go to the masses.
KUNAL
Exactly. I'm saying “furniture le lo, ye le lo” (Hindi for - buy furniture and other things)
DILIP
Yeah, I get that.
KUNAL
Every Indian’s problem, every Indian problem is their LPGs connection, their electricity connection, their fuel for their scooter, creating mobile recharge.
DILIP
So, I jokingly say, you know, when we believe there is so much to do, right, technically more than us regulator, it's more job for the regulator and government to think through and make because it's a very, very tricky path, right. I'm saying the job for them is harder than us.
KUNAL
It is true. But Dilip, if we can take risks sometimes and make one of these things work, because the good news is, let's say we suddenly, let's say, focus on you on telecom right now and convince the telecom department and telecom companies to participate in this creation of credit for every Indian and make only one goal, convert every prepaid connection to a postpaid connection through a credit bureau approved credit. Yeah, we will change the country. So, I think that we just take simplistic steps that can have a large range impact. But if you are going to say, oh, we have to power it for merchant and buying curtains and all that stuff, that's not India scale impact.
That cohort already is buying stuff through credit to make it work for every Indian, right. You have to go to basic stuff, the transactions that they depend on, repeat and are small in nature. Then you will see the impact, right, because once you start leveraging credit, you will repay, start auto pay, very simple, start recharge, give credit, do an auto pay mandate. Very powerful.
DILIP
I also think, Kunal, that the contextual payments has a big story. We have not even touched the surface. We started some part of it with the UPI circle or a delegated payment. And a variety of things can come in there, the EMI QRs. I think this whole context, contextual payments is going to be also a very big thing. And I strongly believe this whole LLM story can complement big time because there is no better tool than really meaningfully derive the context or the LLMs. So, the payments with the context and with the aid from LLM as a tool can be a crazy story also.
KUNAL
I would put context on the contextual payment as the following. Ultimately, we have to understand people don't enjoy doing payments.
DILIP
No, I remember you said boring versus the interesting part.
KUNAL
In an ideal world.
DILIP
And actually I am driving towards an interesting part because that's where the context comes in.
KUNAL
Yeah, so what I am saying is that the payment is the less important step of that. The ideal world should be, for example, let's say we go to let's say for a conference in Bangalore and we're staying in a hotel, like we sign our room everywhere. We are enjoying the restaurant. We are enjoying the meal over there. We sign our room everywhere. Nobody's enjoying going to make a payment. The true context of life to me should be that we should be focusing on how do we enhance the experience of life and make the payments disappear.
DILIP
What happens in the background.
KUNAL
My wish for you is that the best payment should be not seen.
KUNAL
It just happens in the background and my life continues because I can assure you there's not a single human being who's enjoyed making a payment.
DILIP
I get that. Kunal, some fun time. Rapid fire. If you have a month off, what will you do? Can you spend a month off by the way?
KUNAL
Thankfully, I have it practiced between my two companies. I get obsessed with learning and reading and watching content. So, I would want to just binge on things that I have not been able to do. But it's very hard to take a month off.
DILIP
I think we must try sometime at least. Most underrated skill for the startup founder?
KUNAL
Wow, that's a tough question. Leading. It is one of those unusual things where you can be competent. But a lot of smart people fail because they don't know how to lead and their ability to lead in uncertainty.
DILIP
Leading in uncertain times. The book that reshaped your mind?
KUNAL
It’s hard to point out books. But I do believe that most people should not try to ask for book recommendations. We will otherwise become all the same people. I think books are these interesting places where you can find your own path. And every book's purpose is only one thing. To make your brain porous for the next book. But if you try to take somebody else's book, let's say you're taking the book recommendation of somebody who spent 30 years building businesses successfully. Your brain is not ready for the book that they are reading. So, my suggestion is that you should be following your curiosity and only have one principle. Have a deep need to understand why do things happen and the way they happen. And now even books are not needed. You can Chat GPT 30 times a day. You are probably better than reading a book.
DILIP
Outstanding. But I still recommend youngsters, please read. It will help a lot. One social norm that you are ready to change or challenge.
KUNAL
Oh,
DILIP
In the context of India.
KUNAL
Default respect for elders. Respect should be earned and not be given as default.
DILIP
So are you talking about this whole sir, madam.
KUNAL
Yeah, we are a very power distance culture. Seniority means respect, should not be the case.
DILIP
Thank you so much, Kunal. It has been a great learning time for me as well. And I have to write down what you spoke and at least practice in my own life. But thank you so much. You have always been the source of wisdom. So, thank you so much for joining NPCI's Innovators Playground podcast.
KUNAL
Thank you so much for having me.
DILIP
Thank you for watching Innovators Playground. Please do let us know in the comment section if you have any questions, any suggestions. And once again, thank you so much for watching this.
