The Kalaari Podcast | Nischal Shetty on building and scaling products

When it comes to startups, there is no fast track to success. Almost all startup teams go through a variety of crises and challenges Behind The Scenes. Having been a part of many startup journeys over the last decade at Kalaari, we believe that there are valuable lessons to be gained from the journeys of others.

Nischal Shetty, Founder and CEO of WazirX, recently shared his perspective on how to take a product-first approach to build a startup

1. Get feedback from users early on- even at the idea stage
2. Understand the core problem deeply
3. Play to the strengths of the founding team

Read the full transcript and watch the video below

Vani: Hello, everyone. It’s my pleasure to invite you to this episode with Nischal Shetty, CEO of WazirX on his Behind the Scenes journey as a founder and leader. Thank you Nischal for joining us. I appreciate you taking the time to share your learnings and lessons with everyone.

Nischal: Thanks for having me on the show, Vani. A pleasure to be here.

Vani: Nischal, you have built many products. I’ve always thought of you as a product first guy. And as you’ve built many products, you’ve seen changes in technologies, changes in regulation. How do you navigate the vision and map that to identify trends and challenges and continue to evolve your vision?

Nischal: As you rightly said, when I started my first company, Crowdfire I took a product-first approach and that’s some of the learnings I got online from reading about all the great companies that were being built. But over time, what I’ve realized is, even if you have a great product and you don’t have a way to get it out to the hands of the people, failure is more or less imminent. So what I did with my second startup, WazirX, was focus on marketing first. Be more driven in terms of how do you take this to the hands of the people, rather than think just about the product. But coming to, how do you choose the right market?

I think over the years now, building these products, I’ve realized you need to try to play to your strengths. The strength of us let’s say entrepreneurs in India is more or less focusing on solutions for the Indian market, because you’re just so close to the problems around you that no one would know it better than you to solve it.

Compared to global products what happens is that’s a lot of disconnect in the audiences that exist globally. This time when I started the second product, I played to my strength of being in India and seeing what the Indian audiences wanted. And for some reason, crypto happened to be one of those things that I picked up, but it could be anything. My idea was I would do something for the Indian market and that’s how I went about playing to my strengths of being in India and an entrepreneur here. So yeah, that’s how I ended up with WazirX and I could see the speed and way I could grow fast. What took me five, six years in my first product, took me about 18 months from launch to acquisition. So yeah, I think playing to your strength is something that I think everyone should do in India as entrepreneurs.

Vani: And Nischal a lot gets said about first-mover advantage, but WazirX wasn’t a first-mover necessarily. So what are your thoughts on how to still succeed, which you have, even if you’re not the first-mover? What does it take?

Nischal: Yeah, see, I think there are both pros and cons of being the last to the market. I think one of the cons is there’s a lot of, I would say expectations from the market because the market’s already used a lot of products.

So one of the things that is very important is that your product is already on par or better than the existing solutions, which means it’s going to take longer to launch. So compared to my first product where it was more or less innovative, no one had a solution, I built it in four days and I launched it. But the second product it took me three months to build. Slowly, steadily understanding what the existing solutions were and we launched, but I did not want to stay back.

So what I did was I started marketing early before even going to market. I spoke about it first and then the launch happened. And I could do this because I knew there was a market already, there were products already being used.

So there was an audience. So I didn’t have to do any of the hard work of trying to tell people this is useful. When we finally launched, I saw the usefulness of being the last to market was that I didn’t have to sell the product to people. They knew, they were already using it. All I had to do was build the product to be better. And when I say product, I think one of the things I’ve learned is product does not only mean the ‘product, product’.

What your app is or your website. It’s a combination of your website, your marketing, the way you communicate with people as a founder. So I looked for cracks in the market and the easiest way was, let’s say in our sector, if I was to localize it to the crypto industry in India, back then, before we launched, none of the mobile apps had a rating of more than 3.7

That was the top rating in the ecosystem. A clear indicator that people are not happy with the solution. Then I used to look at all the founders and their Twitter feed, and I could see that a lot of people were complaining all the time. So that gave me an understanding that the market is still open.

Then there are some markets let’s say, for example, search. When you think about Google search you know it’s a solved problem. Now you cannot really compete there. But then there are sectors where there might be 10, 20 players, but you still see discontent in the users. I saw that discontent in the crypto ecosystem and which is what motivated me to say that I probably can build better. Before this, I used to think of discontent as being saying, these two features don’t exist. I will build that and I’ll probably beat this player. But I don’t believe it’s about what features don’t exist or how you can build a better.

Just look at the people who are using the product. If there is a large discontent, I think you can build and beat the players. So, I look for discontent in the existing audience.

Vani: If you think about pivots, right? And you know a lot of founders and you engage a lot with the startup ecosystem, perhaps many startups fail because they don’t identify that they need to pivot and they don’t do it quickly enough, right. And I can understand why, because it’s really difficult to let go and say now I’m gonna do something else.

But you seem to have managed pivots very easily. Was that easy for you or just appears easy? What’s your suggestion or advice on how to go about pivoting one’s business and why and when?

Nischal: See, I think pivots are never easy. Neither from entrepreneur’s personal point of view, not from your team. See what happens is as an entrepreneur, you are showing this amazing journey forward, this amazing story of how you will win the market with the product. You have motivated your team, your investors, everyone around you, including yourself. And then one fine day you realize that maybe this is not the way forward. Maybe we have to take a different path. Then going back to people you know first.

I think the first thing you have to understand is you will look like a fool and maybe that’s where most of the founders probably don’t want to. So I think one thing I’ve done is let my ego be aside when I’m building companies. It’s not me building, it’s just one of the many who are building something. So it’s not Nischal for me. So when I see failure, I want to accept it. I want to tell everyone that maybe I was wrong and that’s a better path. And then steering everyone in that direction is probably the hardest, once you have first mentally made up your own mind. And I’ve seen that time and again, but then I realized it’s just that temporary moment, because after that, when things go right, everyone realizes that it was all done with the right intentions.

So yeah, I think that’s a temporary point in time where it will be the hardest for you to take that decision. But how do you take this decision is very simple. Get your emotions aside and just keep some targets for you. I’ve always done that for myself. That in the next three months or six months, this is the metric I want to achieve.

And if I’m able to achieve even 70 to 80% of the metric, I think we are probably on the right path. But when your metrics are, let’s say 10, 20, 30% of your expectation, it’s pretty clear because after that you are just going to then go ahead with hope.

And I’ve tried to avoid hope in all of these successes that I’ve had. It’s always a metric driven approach. So that’s how it’s become easier for me. The metrics don’t lie. So it’s time to change when things aren’t going the right way.

Vani: No, I think that’s great. And I think any successful company, in fact, if you dwell into it, they somewhere had to make some hard pivots that may or may not today be as obvious. But I can’t really think of a company that had a straight-line success from their original idea. Those are rarer. But leads me to another question around monetization and other

holy cow kind of a topic because people belonging to different ideas on that.

You have always built very capital-efficient businesses and focused on monetization from the beginning. So talk about that. So for me I never set out saying, I’ll build a capital-efficient company. For me, I think the situations have demanded it.

Nischal: When I started out, this was the early day, where in India as well, funding was not really that abundant the way it is today, it’s easier. And I think I was a single developer sitting in my room, deciding what to build. And it just came naturally to me that if you do not have revenues, you are not able to grow. And that’s how I took the first approach to building monetization into the product early on. And if your code is going to be about giving a particular service for which you can charge people,

I think you should charge early rather than charge too late, even if you want to charge

less but charge early, because you know that this is the core of your product, that people have to pay to use it. And this was not where I was changing human behavior. This has been happening for a long time. People are being for financial services. People are being for SaaS was always a thing. So I never innovated in that aspect. And I don’t intend to innovate when I build a company in terms of whether it should be a paid product or a free product. And I think that’s how decisions should be made for entrepreneurs.

If you’re in a market where let’s say you’re going to be more content oriented as a product, if you charge you will be blocking your growth and that’s trying to change human behavior.

I’m not going to pay for reading something online, which is why so many of the paid online content experiments have been failures. So I think don’t try to change behavior when it comes to monetizing your product.

Vani: Most founders, don’t build in a regulatory uncertain environment. And in your case, you had great progress and then the crypto ban happened. And of course you have gone past that. So how did you work through that from your own self-motivation and designing a new strategy and also keeping your team engaged through the short-term trough if you will?

Nischal: So I’ll be very candid out here. I did not think about regulation when I got into the whole crypto thing. It was thrown to me, I think three weeks after we launched the whole banking ban in India came about for the crypto thing. And I’m not one to give up just because regulations dictate otherwise.

I knew that if it is legal in India to do, I would do it. And now when I look back on hindsight, I see a lot of these are large businesses have built around the absence of regulation, being an advantage rather than a disadvantage. I think Uber, Ola, and Airbnb are some great examples wherein their parallel offline industry there are regulations, but they can exist without regulations. And when this whole episode happened back in 2018 of the RBI banking ban, I realized we had that opportunity to build something in parallel without…

So we were not breaking the law. And that is very important. And I think there are two things.

One is you are in an unregulated market. The other is you’re breaking the law. I think breaking the law is something that you should never attempt, but being around it, being close to the vicinity of something where there is a gray area, I think that’s a great area to

be in a progressive industry because when regulations come, you will be one of those early movers who will get to be part of that regulated environment. My team in the beginning was definitely de-motivated. But these are examples of large business being built is what I actually gave to the team. I told them, “Look at Uber, Ola, if they did not try to build a better transport system, worrying about not having licenses for operating in cities, people would not have had a better life right now for traveling. So that kept us going. And we took it one day at a time.

Because there was a question in India, will there be a complete ban on the market? And this is all hearsay. And I said that nobody really knows, so why try to pre-empt that? Because I saw some of my competitors leaving the market, going away in anticipation that this will get lost.

But we stuck around and it turned out to be well. So I think it was a good decision.

Vani: When founders think about M&A, selling their business, or working within the structure of a larger business, there’s all kinds of emotion versus logic. Logically, we can come to the right or wrong answer, but emotionally it becomes very difficult to take that step. And many times business that could have had better value loses out because of that.

And again, one more area you seem to have ‘sassyed’ without too much trouble or turmoil. So what are your thoughts on how founders should approach M&A?

Nischal: In our case, for example, I can only speak for my experiences. My motivation was how can I scale faster in a direction where I want to take the company. And when I started speaking to Binance, which is a company that acquired our exchange, I realized that they’ve done this faster than what we’ve been able to achieve.

And the rapid scaling that they were experiencing was something that I wanted to closely experience. And I realized that getting acquired by them will help me apply the same

principle, the same learnings, and also get access to a lot of knowledge. Crypto is very nascent in India. Not a lot of people understand it, not a lot of knowledge about it.

So I wanted to be with someone who’s seen more than me, who knows it, who’s done it. And this seemed like the perfect fit for me. So I did not go with the approach of let’s make some money, let’s sell it, let’s relax but instead on how can I grow 10x? And seem to be a good decision because now we have been able to expedite our growth, thanks to a lot of learnings from them and a lot of help from the acquiring company.

So I think that was my motivation, hyper scaling. Some want to go and raise money for that, some want to get acquired, whatever it is. You can see Instagram, for example, while they scale on their own, but I think they’ve achieved 20x — 30x after they got acquired and Facebook added fuel to the fire. That’s the same thing I saw with Binance acquiring us.

And it’s been going great now. Yeah, I think it was just a motivation to grow nothing else.

Vani: And Nischal when you think about founders that you respect or in suggesting your ideas on what makes a founder successful, what are those three, five, 10 traits that you think makes founders successful?

Nischal: I think the first thing is founders who know how to get the word out to the right people. I realize that founders who are very upfront about being vocal about what they’re building, taking it out there to the audiences, hustling, I think those are qualities that are needed to succeed. Because you might be building the best product in the world, but if you’re not talking about it, no one’s going to care about it.

So that’s the number one thing. The other is I think not micromanaging, which is really something that with experienced founders get to understand. Some get it in the early days. For me, it took some time. And micromanagement comes because you love what you’re doing and you want everyone to do it in that way.

But I think over time, it’s hard to scale that. So micromanagement and whatever related to scaling, which is being hands-off. I think that is something that founders should probably inculcate in themselves, right from the early days.

Here in my second startup, I did it from day one. Some of the things that I know I can do well, I still don’t get into it because that’s not my focus area and the teams can just grow themselves. So that’s been the second motivator. I think the other thing is I think founders should also get mentors, mentors, advisors, so that they understand what they lack, because it’s very hard to look within to see how I can improve myself. And when you talk to mentors, mentors can be, I’m glad that you are helping us out.

So a lot of times when we have these discussions, we realize that we are doing something wrong or we are not going in the right direction. So you get time to reflect. So being able to reflect on your activities and what you’re doing, either through yourself or your mentors and advisors, I think that’s the other thing that helps founders really go in the right direction.

Yeah, these are a few of the things, I think key things for founders.

Vani: I think you’ve done very well in the last decade and or less than a decade, the achievements you’ve had and all of the wonderful learnings you shared with us. Wish you the most success over the next decade and I’d be cheerleading and watching to see your next phases of success. So this has been a great episode of insight and learnings.

Nischal: Thanks. Thanks a lot for having me on the show, Vani. It’s always a pleasure.

You can check more podcasts from this series on our website here and also listen to audio-only versions of the podcast here