Exclusive | When you grow, you have friends, frenemies, and enemies. The truth is I am a shopkeeper's best friend: BharatPe's Ashneer Grover

BharatPe co-founder Ashneer Grover

Soon after becoming a unicorn, financial service provider for merchants, BharatPe, is all set to venture into consumer business with the launch of PostPe, a new lending app by September.

In this part, Grover talks about the evolution of small businesses in India, the benefits fintechs are reaping after conventional banks failed to reinvent themselves, and the rejigs at the fintech firm. He also opens up about the allegations of running a one-man show amidst a tough work culture.
Edited excerpts.

How many merchants are you targeting across 200 cities by the end of this financial year?

Grover: Roughly 10 million.

Why did you make payments free for merchants?

Grover: India has a late-mover advantage and not early-mover advantage. We are the latest entrant in this market. QR was taught to people by Paytm and PhonePe, and Google Pay taught them UPI. When customers understood all of it, we smartly got into it. But we were very clear about one thing from day one: we knew we had to keep payments free. I want to make cards also free.

Do you think every small business require a loan?

Grover: Here's what I think. Either you need loans, or you have money and don't need loans. But those who have money doesn't know what to do with that money. I am offering them 12 percent interest. You invest and earn. On the other hand, those who do not have the money, I am offering them loan.

What's the status of NPAs?

Grover: Given the fact that we have gone through two phases of COVID lockdowns, our performance has been extremely good. So, we end up collecting – the only non-collection we have had is close to 4 percent, and the average loan tenure is 8 months. So, even if I annualise that, we are talking about a 6 percent-kind of a non-collection, in delinquency money. We have a lot of scope to grow the market.

Is it too early to turn profitable for BharatPe?

Grover: You should be unit- economics positive. I told you no, if I will lend money, I will end up earning 25 percent on that loan. Now I can either keep that money and show profit or grow the market, given the opportunity I am sitting on. I get uneasy if I am not growing at 10 percent on an average.

10% in the terms of transactions?

Grover: Overall, and this is the number on the lower side. Last year, we grew six times. We started last year with $1.5 billion payments. Currently, we are doing payments of around $10 billion. Month-on-month growth is very important for me. As it is, I am not looking to go for an IPO right now. I have a lot of options in front of me. Let Pine Labs, Paytm do IPOs. By definition, they will get indexed on showing profitability, quarter on quarter. The moment they get into that mindset, they become tight, in terms of money being spent. That is my opportunity to go out and capture the market, right under their noses.

I am very sure that I don't want to go for an IPO in the next 3-4 years. Let everyone else do it, I am happy for them. Take the startup ecosystem forward and grow the market. For our business, there's no point going public in the next 3-4 years.

Almost seven years, every startup gets to offer exits and I have already given all my investors exit options so far. I don't even have that moral obligation.

How do you see small businesses evolving in India?

Grover: During COVID, the traditional lenders have become even more conservative. Nothing has happened in the last two years. While coming to our office, you would have seen that people have started travelling. There's a sense of normalcy. Now, for a guy in the bank who hasn't been to the office for 1.5 years, the world is still at a standstill because he hasn't stepped out.

We are the only guys who are growing the book, because we are on the streets. We see what's happening in the market. We see transactions are happening and are increasing lending accordingly. Traditional lenders have pulled back their hands in the last two years, leaving the market up for grabs for the fintech players.

They certainly have not reinvented themselves…

Grover: Conventional banks, conventional NBFCs… for them, it's a Black Swan event. According to them, everyone's book is bad but the truth is that this is the time when lending is required the most.

During your last funding round, Suhail Sameer was made the CEO while you took up more of technology and strategy role. Was this decision driven by the investors or was it your decision and why in the first place?
Grover: I think it’s a decision which has evolved over time. I want to believe in the institution. People should know BhartPe for being BharatPe, not know BharatPe because of Ashneer Grover. Over time, when we build an institution, the founder has to step back and not be the face of the organisation. And what you have to do is get the people who are performing well and keep promoting them ahead of you.

As a founder, you think, you will do everything, you have the divine sight whatever you touch will become gold... and that is where the organisation starts degrowing. That’s where the problem starts. The first 2-3 years a business is constructed by being stubborn. If that works and scale comes, thereafter it grows through logic.

I was very clear that I don’t want me to come in the path of the growth of BharatPe. And Suhail has done amazing work in the last one year and we have built a great equation. So now, when he had raised this fresh amount of capital, and received approval from the RBI, we want to get into consumer lending as well and have a lot of things to do.
So now, it is more focused between the two of us, where we can give our best to the organisation. So now, we have basically distributed the task. My task is to ensure we have enough products and good talent, including engineering talent and that’s why the BMW bike idea came from my head. I am building the shape of the products and making sure there is a strong technology behind it. I am giving it to Suhail to now go to the market and run and scale it right. So I am the manufacturing and he is the distribution in charge.

Your line of thought completely contradicts some of the recent reports that have come out alleging that you are running a one-man show. A lot of CXOs who have exited the company have spoken about the work culture. Would you like to take this opportunity to clear your stance on this issue?

Grover: When you have such a fast-growing organisation, people are going to get left behind and I’m being very, very clear that, in business, you can’t be emotional about things. There are no points for being nice. Not saying that we are not nice otherwise, I’m the nicest person when it comes to giving you salary, autonomy to run the business, giving ESOPs and liquidity on ESOPs.
Speak to my existing people the amount of freedom they have, the amount of value they have created and the actual cash value, not paper value, you will understand what has brought BhartPe to where it is, right now.

No hiring will ever be perfect, you will always have a few people coming in who could not match the pace. When they go out and when they see the organisation still growing, they feel bad.

One-man show would mean that if I say something, nothing else can happen. You go out and talk to people… till today, I do not even know which of my employees sits where. How can I micro-manage them?

It's simple, when you grow, you have friends, frenemies and enemies. I don’t have time to waste on that. The truth is I am a shopkeeper's best friend.

Read the first part of the interview here.