Bangalore Startups’ AMA with Kunal Shah, CEO & Founder, Freecharge
Freecharge, one of the most popular online recharge sites in India started out with recharge for only mobiles but has expanded and offers recharge for TV and Data Cards as well. Freecharge was at the forefront of the ‘coupon revolution’ that took India by storm and also raised INR 20 crores from Sequoia in January 2012.
Kunal, founder and CEO of Freecharge.in has a rather unexpected academic background- BA, Philosophy and MBA — Dropout! Not someone you’d associate with a huge VC backing in India. A refreshing change, to say the least! At the beginning, Kunal founded a BPO company and scaled to 1200 people before taking Freecharge to the scale it has.
Q: What was the inspiration behind freecharge? — Nagesh Bansal
It was primarily the power of Free that I was fascinated with. Also I noticed Mobile Stores had 95% of their invoices of prepaid recharge. Just thought making recharge free would create tons of footfalls. So FreeCharge was born to create mass footfalls.
Q: What about Initial funding? How much were you losing initially per day?(If you can disclose) — Nagesh Bansal
We had a business called PaisaBack which was created before FreeCharge, that was primary source of funding FreeCharge. PaisaBack was profitable. We took Sequoia Capital as our partner few months into the journey.
Q: You would have faced tough questions justifying the valuation of the company in the initial days? How did you tackle them? — Kunal Jain
We never negotiated our valuation. We usually got decent valuation by the investors who we worked with. We believe that optimizing everything in business isn’t good.
Q: I heard that Snapdeal, with 40 million users, will be able to acquire an additional 20 million — from Freecharge. Don’t you think the user base would have overlapped and that the number could be a lot lesser than 20Mn? — Varun
We have a very small overlap in user base.
Q: Like Flipkart and Myntra, are you also considering moving away from mobile web and web? — Pranay Airan
No such plans. We want to be available on ALL platforms.
Q: Why is there a need to let someone be a CEO in earlier days when you are the founder ? — Vignesh
No need to let anyone be CEO. Its a call that each founder takes on their own. We took that call in year 3 of our company.
Q: In one of your interviews about FreeCharge, you’ve said that you’d out-innovate and constantly differentiate. In doing all that, apart from your team members, did you have any advisors or role models you contacted frequently to help you out? If so, who all were they? — Melvin
I think we heard everyone and tried everything that made sense. No specific role models.
Q: Followup question, how much traffic do you get on each platform for now? — Pranay Airan
90% mobile, 10% desktop.
Q: How do you look at Jack ma’s entry into the Indian market, Alipay buying 25% stake in Micromax, launching an incubator for startups? — Omkar Kulkarni
Foreign Investments is way most countries prosper. India is in a great time where east and west will compete.
Q: Kunal, Can you share some initial growth hacking techniques that you might have done to gain initial traction. That’s what most startups in the app space struggle with most, i.e discovery? — Shwaytaj
Long story. You should check the Quora post on that topic.
Q: How did Freecharge work in the initial days? Did you broker deals with telecoms or was it manually recharging? — Kartik Mandaville
It was hard to convince every partner, but we were persistent. we were banned by some telcos in early days too!
Q: In a city where there is a draught for techies, how did you manage to build a good tech team? Did you also set up an off shore tech/ product center? I face a challenge getting the right tech guys in Gurgaon today.— Varun Uneja
Early team of FC didn’t have a single techie! we had outsourced our first website. We built the team later in Mumbai and then moved to Bangalore 2 years ago. You can attract good talent by solving good problems and creating the right environment.
Q: Why don’t you allow multiple phone numbers and multiple plans to be ordered as a single order? Like add to cart types — Vamshi Vangapally
Q: What was the strategy in getting brands for coupons? like what was your pitch? I am assuming you went to them when you had minimal traction — Kartik Mandaville
Promise them traction and then deliver it.
Q: How did you resist from moving into other sectors/spaces, similar to PayTM? — Rishabh Verma
Plan B was always a distraction for us. We never copied anyone from day 1, many companies did copy what we did.
Q: How did you go about forming your core team, I understand you initially outsourced the product and then built the core team for freecharge. Is initial outsourcing of the product accepted by investors in future? — Rajesh Kumar
Growth hides all flaws ;)
Q: How do you solve the issue of some recharges not working for certain plans? — Arjun
We constantly keep updating our plans by checking failure and building a strong algo on it. We also have a fuzzy logic to keep trying for many failures and try to succeed those transactions.
Q: Did u face this chicken and egg problem while convincing partners about the number of users? How did you solve it? — Some major point — Vamshi Vangapally
We did face that issue, but companies do back entrepreneurs with passion and conviction. everyone wants underdog to succeed.
Q: So what were the main marketing channels/strategies which helped FC grow in the first few days? — Kartik Mandaville
Word of Mouth all the way!
Q: PaisaBack scaled to 1200 employees is what I read. How many people did you have to lead in freecharge? Do you wish that you could have lead PaisaBack with a smaller team and that would have been helpful? — Melvin
1200 employees was the BPO I ran, not paisaback. Paisaback was a 2 member team and making a decent 1–2 crore profit a year. Total team size at FC is 200. 100 are CS agents, 100 is rest of the org.
Q: Where did you make the differentiation as compared to Mydala and others like them? — Varun
We were never in daily deals business. not even for a day.
Q: Do you think that staying away from other spaces meant that this acquisition was the best case scenario, as there’s only so much you can do with recharges? — Rishab Verma
Every company defines its focus area and battles. Acquisition was done to stay pure to our path versus trying to become the dukan of everything.
Q: Freecharge moved from a simple super fast UI/UX to a more complicated UI/UX will bells and whistles which was a tad slower few months ago is that because simple is not yet beautiful in India? — Yashas Shekar
Not true. we keep trying things and often fail. we are moving to a super simple UI/UX really soon.
Q: Any tactics around to make word of mouth to make it more stronger like sharing on social media? — Kartik Mandaville
When you do something in your product that's brag worthy, users brag about it. And that’s how WOM happens.
Q: Whats the next big idea as per you in product startups across India? — Varun
Anything that solves problems of Indians and not Americans/Chinese replicas will always work in India.
Q: In today’s world, How many users would you think is good to convince a Ola kind of firm to partner with someone? — Vamshi Vangapally
Zero, if you can convince well.
Q: Why did freecharge logo change in this quick span of time? — Ashok
Just to stay more and more close to what we stood for and audience we appealed.
Q: Are you planning to invest in startups and take up entrepreneurs under your wing for mentorship? If so what will you be looking for and how can one approach you? — Harsha MV
Write to email@example.com
Q: Would this be the right time or would it be a few months afterwards, What next? — Harsha MV
Still around FC kicking some serious ass and aim to make a big big impact !
Q: Convincing big brands to tie up is something I am facing difficulty with — Arjun
If you want easy stuff, try a job☺
Q: You stepped down as the CEO to make way for Alok as the CEO. What were you looking for in the coming CEO and was it an easy decision for you take? — Harsha MV
Insecurity isn’t a virtue any entrepreneur should have. It was my decision to look for someone and get someone on-board.
Q : What’s your POV on Uber for X models? How feasible are those models for India? (Except taxi segment) — Hitanshu Bhalla
I personally dislike models that are stupid and trying to extend a model to everything.
Q: “Goldman Sach’s youngest partner”, How’s your experience and How do you look into the future with that experience? — Omkar Kulkarni
That was an error. they put my pics in Goldman news. I have never done a job at any bank.
Q: I read that your co-founder was never full-time and was the first investor really. So was FC more of a single founder story? How tough was it doing things alone? — Rashmi R Padhy
Sandeep was with me at all times. Didn’t have a full time operational role. Nothing is easy, but always was blessed with a good team that was always smarter than me, I just worked harder than them.
Q: How is your current business growth after joining hands with Snapdeal? — Ashok
Growing well, more action coming soon.
Q: Whom did you turn to for help when you guys needed a boost? Who were your mentors along the way? — Harsha MV
Talking to customers helped me more than any Gyaan baba. I encourage everyone to do same, all this AMA babagiri won’t get you anywhere.
Q: Name one startup you would wish to acquire in the Indian startup ecosystem just coz you feel it’s worth it. — Varun
Many dude. can’t leak them or they will become pricy.
Q: In continuation with it are you ready for the role of mentoring startups facing the issues you faced a couple of years back — Ananth Nagraj
I have been doing for last 4 years. I can’t mentor anyone as not that smart. But I do help asking dumb questions, which usually helps companies.
Q: On that “you dislike models”, just curious to know..assuming that you’ve read the ‘popular’ books (Eg., lean startup, business model generation), do you disagree with anything said in those books? — Melvin
Too much reading makes you smart as well as weak. Get into the battlefield and learn as you go. Over preparing hasn’t worked for a lot.
Q: Lol, Kunal…a friend (ex Redbus) told me you’re sharper than an ivy league guy on the block. Accept my compliments! If you are still in Mumbai, would drop by soon. — Varun
I am good at faking it. thanks !
Q: Congrats on the acquisition, Technical question reg company growth management — given longer time to exits and a bad IPO market, what were you doing pre acquisition? how did you manage shareholders and maintain employee motivation ? — Abhinandan
We were growing well and had 100M in bank when we decided to join hands with SD. Team was consulted before we took this step. We haven’t had any departures post this deal, team is busy working on FC 2.0 !
Q : What do you think about food startups gathering all the attention and apparently being the “next big thing”, are VC’s not taking risks anymore and just going ahead with proven models? Will these startups gain same level of success like some top ecommerce startups in India? — Hitanshu Bhalla
All humans (including investors and entrepreneurs) are prone to the herd mentality.
Q: How did u guys manage to convince McDonalds at the start? Did you have enough users? Coz I recall you saying that, aim the biggies and if they are in, the rest would follow — Adhitya Kothari
We didn’t have a product when McD came onboard. we built it later. We got them by persistent meetings and conviction.
Q: What if Mobile carriers stop giving commission per recharge? I heard they might soon. Have you thought about any other revenue model ? — Abhishek
It will make our job a lot easier, as we are the only recharge model that made money per transaction.
Q: How did you manage marketing funds in gaining early traction just after launching? And at the same time team expenses? — Adhiti
We had profits from earlier startup PaisaBack and financial support from Sandeep (co-founder).
Q: About FC 2.0 , would it be something in the lines of PayTM wallet(FC wallet! )Just a wild guess?
or something better may be?
Q: Will freecharge be open to Freecharge wallet APIs. We wish to reward our loyal customers with Freecharge credits. Is that in your product map now ? — Abhishek
Q: How did u manage to build the traction at initial stages? There r certain challenges we & I am facing when on the field trying to tie up with the brands — Aditya Kothari
Long Quora post on that topic by Naman. check it out.
Q: In early stage in one of FC tv interviews, one of the founder said, you were planing to have kiosk/recharge booth at railway station & such places? What happened to that idea? — Saket Jojodia
Dropped it as it was not making sense in smart phone world.
Q: What was your initial promotion strategy, how did you make sure that lot of people know about FC in its initial days — Tara Supreet
Q: Do you meditate? — Rajee
No, but would love to.
Q: Has being a graduate in philosophy been of any help in your success at freecharge or elsewhere? — Pravin
I think philosophy taught me how to think well and get to the root of things.
Q: If you were Kunal Bahl, would you acquire FC? — Viresh
Yes, may be much earlier.
Q: How many meetings was with McD? Just to get a ball park — Kartik Mandaville
Total of 30–40 merchant meetings till we got 2–3 live.
Q: Any bad experience you can count on and would like to share with us? — Omkar kulkarni
When we couldn’t scale our tech team in Mumbai, had to keep trying and then move to Bangalore. It took some toll on our company.
Q: So if growth solves all the problems..Any pitfalls to focus while growing ? — Vignesh
Growth should be sustainable
Q: I personally don’t understand why Snapdeal would invest that kind of money to acquire FC. Whereas with the engineering & product head count that they have, they could have created a smilier app easily and perhaps invested one fifth of that acquisition amount in marketing it; perhaps would have to wait for another 6 months, but then wouldn’t that have saved a lot of investor money? — Varun
If you think FC scale and product can be created in 6 months time, you are mistaken.
Q: How did u manage to convince Mc.Donald’s when u didn’t have a product? — Aditya Kothari
Every entrepreneur needs to have special skills of convincing and persuading people (merchants/team/investors/co founders/end customers).
Q: I read somewhere that you guys applied for a patent. Was it awarded? the concept of recharging online — was tat what you guys had applied for? — Harsha MV
We didn’t pursue it as we were told its pointless as people would copy it anyways (which they did) and we won’t get a legal respite.
Q: About the philosophy part, suggest a book (or preferably a person to interact with) to start on that. Or in other words, how did you get in touch with philosophy? A Quora post or article explaining that story? — Melvin
Maybe some day. But for me it was a canteen conversation with graduate students (while i was still in science), felt their topic was a lot more deeper than mine.
Q: for you what’s the #1 thing that you wanted your cofounders to have? — Tara Supreet
Everything that i wouldn’t have.
Q: Did you think of creating a community / forum at any point in time? If yes, what went against it? forum for recharge related issues / discussions/like best plans around, to get more engagement?
I guess we should. we didn’t consider it. thanks for the suggestion !
Q: What was the Initial investment you and your partner had? Like the article says Shailender came to u guys and wanting yo invest. Y Sequoia? — Adithya Kothari
We didn’t really put any capital as our first start-up paisaback made money. Sequoia because they agreed to invest in first meeting without a deck and business plan.
Q: Can you shed some light on how you hired people? What do you look for? — Harsha MV
We just look for people who are more smarter/talented and motivated than average of the company.
Q: Let me rephrase it, what qualities did you think you did not have & your co-founders had it as their #1 skill — Tara Supreet
Experience. Sandeep is 10 years elder to me.
Q: Why are your retail offers are not up to mark?, Offers are kinda disappointing! — Ashok
We are working to make them better. We haven’t been super good at it lately.
Q: Did you guys negotiate better margins with the Service Providers? What are the general margins fora 100Rs recharge? — Harsha MV
We negotiated with scale. they are under 3%
Q: About the herd mentality; FC always focused on India, but silicon valley is being ‘told’ (I wouldn’t know for sure, not yet) as the best place for startups to be. What made you NOT take up the “Go with the flow” convention, philosophy would be one part, any others? — Melvin
Why look elsewhere when India has so many customers and growth to offer?
Q: Man u sound like everything just came your way! Is it like Sachin making a boundary look simpler or was it actually simple! — Vamshi Vangapally
I guess showing up everyday on nets no matter how your previous day was is the trick. Grit wins when talent taps outs.
Q: What is that one question which is worth asking successful people like kunal and which nobody is asking in any forums ? — Vignesh
Good one, can’t think of an answer.
Q: Why did you think joining hands with SD made a better idea? What were you looking for? or was it just an exit! — Harsha MV
Freedom to operate as separate brand and rapport with Kunal ( I know him from pre-SD and pre-FC days).
Q: How much did you personally invest initially in Freecharge? — Omkar Kulkarni
Zero. I was broke.
Q: Last query from me, what are your next plans? — Tara Supreet
Make FC even bigger.
Q: How did you get covered in media when you were still selling coupons in a few college? (just went through Quora answer) — Kunal Jain
Journalists are everywhere !!
Q: Scary reality! With a total loss of Rs 36.42 Cr for FY and working a 400 Mn USD deal, do you think you rode the internet bubble well? — Varun
Losses are not measure of success/failure. Bubble is when traction of customers is not there. Here customer growth is exploding.
Q: Harish gave a talk at MetaRefresh about why door-slam with mobile only policy hurts. Shamik Sharma (CTO, Myntra) gave a talk on why mobile only is the way forward. What’s your personal (not Freecharge’s) take on the mobile only theme going around ? — Rajee
Be on all channels.
Q: When is your company’s IPO? — Abhilash
we sold to SD last month yo☺
Q: Did you guys get any other offers that you declined/walked away from? — Harsha MV
Q: I have heard Flipkart announced its move “to acquire credit/ debit card details of end users and give an extra 10% discount” to negate the 20Mn extra user base that FC brings to Snapdeal. They intend to capture double the user base of FC in a quarter; do you think thats possible? — Varun
We shall see.
Q:How much has the business affected after Ratan Tata’s investment in your competitor PayTm ? — Omkar Kulkarni
Ratan Tata is investor of SD as well.
Q: Of the Data from Transactions, and such a vast customer base, What could have been further plans for FC, if SD does not exists? — Aman Pratap
Scale, scale, scale.
Q: What’s your opinion on Net Neutrality ? — Ashok
I am all for neutrality. But I would love if India had no cost to access internet or calls.
Q: Is it true that your and Kunal’s personal connect help clinch such a huge deal, which has 1500 Cr + of stocks out of the net sale? — Varun
Many things, and yes one of that was that rapport.
Q: How did you go about in your initial days getting traction for your startup? What all organic/inorganic marketing strategies did you use? Which one gave the best ROI? — Abhishek Nagi
Q: Can we expect FC to become more than a recharge app? Like be a wallet? — Shree Harsha
Maybe we will. We believe wallets will be irrelevant if 2FA goes away. Consumers are currently lured to wallets due to promotions, its not a natural behavior yet.
Q: What next for Kunal other than FC? — Omkar Kulkarni
Build more awesome stuff. I am just 35!
Q: Do you invest in early stage startups? If yes, would love to pitch. May I have your email ID?— Abhishek Nagi
Yes, if I can understand them. firstname.lastname@example.org
Q: What areas would you like to advice entrepreneurs?— Abhinandan
Do more and learn from experiments. All gyaan on AMA is pointless.
Q: What are your current interests in? Any growing industry you think at present? — Aditya Kothari
Mobile and B2C.
Q: Whats the best way to reach out to angels/investors? — Viraal
Best is for them to find you. If you are chasing them, they won’t invest in you.
Q: Any thing interesting in B2B space? Any gaps you see not exploited by entrepreneurs ?— Joyjeet Sarkar
Q: You acquired PreBurn. What happened to that? — Mahesh
Working on some cool stuff.
Q: Do these big VC firms scout for information from you on the pretext of being interested in investing in you if they’ve invested in a similar start-up like yours? — Viraal
I think they have better things to do. But I maybe wrong.
Q: You are the fastest typing machine man. Did you take typing classes as a kid?☺ — Harsha MV
Started my career as data entry operators and paid my college fees.
Thanks a lot Kunal for taking time and being around. We wish you all the best for FC. We wish you do something bigger now that you are with SD!
That brought our AMA with Kunal to a close!
Final words from Kunal: Thanks guys. appreciate it very much !
We want to thank Kunal for taking the time to chat with us!
We’ve set up a Twitter handle — @blr_startups. We’ll be tweeting updates and such out there.
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