Q&A with Harshil Mathur & Shashank Kumar, Cofounders of Razorpay

by Y Combinator10/17/2018

We put together a list of the top YC companies by valuation as of October 2018. You can see that list at https://ycombinator.com/topcompanies.

Here’s a Q&A with Harshil Mathur & Shashank Kumar, Cofounders of Razorpay, one of the companies featured on the list.

What does Razorpay make/do?

In this digitalisation era, more and more businesses are going online every day and existing online businesses are evolving. With business models changing, use cases around payments are advancing and becoming increasingly complex. We at Razorpay, through our comprehensive and innovative products, help address the entire length and breadth of the payment journey for Indian businesses, from payment acceptance to management to disbursement. By being able to offer India’s first converged payments solution, we are able to solve and manage the entire money movement of India’s huge underserved business community and embrace cash-rich traditional sectors such as Education, Government, Insurance and new age e-commerce companies.

How many employees does Razorpay have?

We are currently a 250 employee team and growing.

How many founders?

Two founders, Shashank & myself

What is your most impressive recent product milestone?

The 2.0 product suite comprising of Razorpay Route, Smart Collect, Subscriptions, Invoices, Payment Links, has been doing wonders. Traditional sectors such as Education, Insurance, Mutual Funds & Bill Payments among others, have historically been cash-driven. Being able to enable these sectors to embrace digital payments & witnessing them seeing the impact it has created for their business is a satisfying experience. Depending on the sector, we’ve designed custom solutions to be integrated throughout the flow of money for the businesses.

These customised payment solutions can help businesses save up to 20% in cost and time. For instance features such as ‘Payouts on demand’ and ‘recurring subscriptions’ have helped companies reduce costs by 20% and witnessed a 30% drop in no-shows with a product like payment links. Another product, Razorpay Route has helped decrease manpower requirements as it provides faster settlement, automatically splits payments across vendors and makes the process efficient.

Currently 2.0 product suite contributes to 20 – 25% of our revenue, we project it to grow to 35% by next year.

What is the larger impact / societal impact of your product in the space you work within?

Well, the larger impact is to make payments accessible to any business in India with a bank account and a phone number. And to be able to do that, we are constantly working towards marrying intelligent technology solutions with the payment needs of businesses to deliver a simple, affordable, secure and comprehensive payment experience. We’ve been striving to always make online payments simplified for businesses, constantly redefining benchmarks in product innovation, quality and customer support standards for the industry to follow.

What’s an interesting element of Razorpay’s company culture?

What Razorpay is today is because of its culture, its people and I can say that time and again. Our work culture is our greatest differentiator and gives us a clear edge.

The interesting element here at Razorpay is the hunger to know more. Knowledge sharing is an area that we are heavily focussed on, the desire to know more never ends. We believe in an open and transparent culture and so we want our employees to have a good understanding of how the business is going, and where we are heading. Millennials interact with brands that are open, transparent and stand for more than just their bottom line.

As the team is expanding, we are constantly finding new ways of sharing information with each other and prevent departments from becoming isolated and going in different directions. We encourage employees to be emotionally invested in the organisation, they have a voice that desires to ask questions, share opinions & perspectives, and discuss ideas & concerns. Employees communicating with the management is a natural part of a workday here. We are proud to have a ‘low hierarchy’ organizational structure, where information can flow easily and fast. We’ve realised over the 3.5 years that when you’re transparent, you create trustworthy relationships – you breed loyalty. At Razorpay, we like to embrace different opinions, respect each other and avoid judgements.

Looking back, what motivated you to start Razorpay?

From the beginning, both of us were very clear that we wanted to build something that will benefit the masses. So we started building a crowdfunding portal in 2013 but quickly realised the poor state of the online payment industry in India, especially for startups and SMEs. When we contacted a few payment gateway companies, we were asked for our past operational records, presence of physical offices, security deposits and very high set-up fees. The online reviews were bad, technical integration was clumsy and support provided by most incumbents was terrible. Having faced such bad experiences, we decided to shift focus to solve the problems around payments and provide a simple, affordable and secure way for startups, SME’s and organisations like schools, colleges and training centres to accept online payments. And thus Razorpay was found in 2014.

Is what you’re working on now the original idea or did you pivot?

We still continue to work on the initial idea of democratising digital payments across India by providing a simple, affordable and secure way to accept payments. However, last year in September, we rebranded the organisation basis customer feedback – we recognised that payment acceptance is not their only problem. There are other big challenges, such as managing cash flows, disbursement of money, automating NEFT and bank wires and collection of scheduled payments among others. And so with the aim to revolutionize & democratise digital payments for businesses, we unveiled our new avatar (in addition to the payment gateway), Razorpay 2.0 and launched a gamut of new products and payment solutions (Route, SmartCollect, Subscriptions, Invoices, Payment Links) last year. With these solutions, we have successfully evolved as India’s first converged payments solution company.

Were there moments where you thought the company might die? Describe one of those and anything you learned from it.

In the initial days of founding Razorpay, we had built a fees payments system along with payment gateway (PG) designed for schools to be able to accept fee payments digitally. At that time, it was an underserved market and we thought schools would be benefited with our product.

Shashank & I, we went on our motorbike to sell this product for around three to four months. But having pitched the solution to several schools, none of them except one school agreed to buy the product, as they were not aware and had not witnessed the benefit of digital payments. After having put immense effort, such a turnout was definitely de-motivating and we started wondering if we should even continue the startup or shut it.

But soon few startups from Startup Oasis, a Jaipur based incubation centre, started using our payment gateway solution for their companies, in spite of us not proactively selling to them. They wanted to deploy a solution with quick onboarding facility, simple integration and easy access to customer support. As we were readily available, working in the same incubation centre, we were able to resolve their queries effectively and they were happy with the solution. Our first bunch of customers were from Startup Oasis and till date some of them work with us.

While in the earlier days, we wanted to sell to larger organisations as we thought selling to schools will provide us quick revenue and scale and we wanted to pursue smaller companies later on. But this experience changed us and our business model and we decided to work with a lot of startups. Soon, word of mouth was the only form of marketing applied for almost a year and that worked best for us. Today, we work with over 100,000 online businesses including the likes of Airtel, Goibibo, Zomato, IRCTC, Swiggy, Cleartax, DSP BlackRock, Yatra & Zoho, among others. We have clocked in a healthy growth rate of 30-35% month-on-month and currently process millions of dollars worth of payments everyday. Razorpay expects more than 10x growth in volume & revenue by next fiscal year and predicts the Razorpay 2.0 product suite to contribute 35% of its revenue by next year. By 2020, we aim to touch a client base of over half a million businesses and enhance the payment experiences of 500 million end consumers.

What we learnt from the earlier experiences & challenges was that one should recruit your first 100 customers who love your product immensely and the rest will go on and soon you’ll achieve scale.

What was a particularly important insight you had about your market that made your product work?

At the moment, there are two major insights that come to my mind, and it’s been the result of being in constant conversation with our clients and banks, trying to understand the pain points related to the flow of money for their business in India.

Earlier in 2014, our pivot from crowdfunding platform to being a payment gateway was a result of the unstructured state of online payments in India and the process of onboarding businesses being a nightmare then. Though the concept of a payment gateway is not new now, it is still essential to recognise a market that is not being catered to; identify the challenges that this market faces and try to provide a wholesome solution that is simple in its application. In a crowded payments market, this is what Razorpay did. We recognised that the incumbent players were only involved in the digitised transactional and payments space, catering to larger sellers. The smaller businesses were not being paid enough importance. We decided to build something that would enable this vast audience to accept payments online (and increasingly over mobile) as rapidly as possible in an uncomplicated manner.

Today, the ask of the hour is convenient, secure and easier way to accept & disburse money and corresponding payment solutions that can provide a glitch-free, seamless experience and products suited for varied payment platforms and business requirements. Razorpay has always been much ahead of its time with superior technology. Last year, our evolution as Razorpay 2.0 was in response to the recognition that payment acceptance is not the only problem for businesses, there were other big challenges that were and are still being addressed through 2.0 product suite (Route, SmartCollect, Subscriptions, Invoices & Payment Links). In less than a year, these solutions contribute to 20 – 25% of our revenue today. Throughout this evolution, what has helped us the most is being open to feedback from our partner businesses, we like to keep them as our centre of commerce and enable convenience and ease.

The Indian payments market is expected to reach INR 8,172.7 billion by 2019, according to Ken Research. Online payments in India are growing at a CAGR of 50% YoY and we are determined to target a major chunk of this growth.

I believe there is a lot that payment solution providers and the B2B industry can do to make digital payments easier for all customers. Faulty captures, transaction failures, refunds – these are all bottlenecks that technology can solve. Seeing the traction for the Razorpay 2.0 product suite reinforces my view that digital transactions are here to stay and we will continue to innovate and manage the entire flow of the payment cycle.

What’s one piece of advice you’d share with a young founder?

Always focus on solving a core problem that a lot of people around you are facing. Don’t just build a product that you want to see in the world, you will be your own customer.

I believe if you continue working towards solving real-world problems, you will witness greater demand and all other growth requirements such as scale, funding will fall into place on its own. In everything you do, be persistent and never give up.


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