The ZestMoney Story

Priya Sharma: Yeah.

Rohit Agarwal: you one words, and all I want are immediate reactions. OK?

Priya Sharma: Okay.

Rohit Agarwal: It should be simple. New York.

Priya Sharma: New York, very personal, amazing city. I love, one of my favorite cities.

Rohit Agarwal: London.

Priya Sharma: Again, very personal, amazing city, almost home to me.

Rohit Agarwal: Just funny.

Priya Sharma: Very, very personal. My first entrepreneurial stint. Loved it. And yeah.

Rohit Agarwal: Lizzy.

Priya Sharma: You know, been my partner and business partner for 12 years. So someone I deeply respect and someone I’ve shared a lot of highs and also some lows.

Rohit Agarwal: uh… fontay

Priya Sharma: Great company, you know, I think they have done a brilliant job in payments, definitely. And yeah, I think they have executed very well.

Rohit Agarwal: investors.

Priya Sharma: Investors, yes, I think they are essential, but I think managing them is also essential and it’s an art and not a science.

Rohit Agarwal: Great. Is it true, once a founder, always a founder?

Priya Sharma: Yes, I think in terms of mentality, yes, you do want to always have your own take on things. You want to have a lot more ownership. Even if you are, let’s say, partnering with someone and I’m definitely in that phase where I’m thinking about what to do next and I’m definitely looking at various options and if I look to, even if I’m evaluating a job, for example, then I think it is about partnership. The mentality changes from, okay, what is my role and what is the company? And now when I think of it, it’s more of a partnership kind of an approach. And I think maybe that’s the founder kind of mentality that, okay. I am coming in, what do I bring to the table? What does the other person bring to the table? Whether this can be a long-term thing or not, versus if you’re evaluating it just as a job, then you’re always thinking, okay, what do I get out of this? What will my next job be out of this? So from that perspective, yes. Yeah, maybe that mentality changes. And for me, it means partnership approach versus. not necessarily creating something from scratch all the time. I don’t know if I will do that right now. I don’t know. I’m still thinking.

Rohit Agarwal: And so can

Priya Sharma: Thank you.

From engineering to investment banking#

Rohit Agarwal: one nurture that kind of a partnership approach? Does it evolve naturally? Should one do anything in particular to arrive at that moment to think about, hey, am I ready for being a founder in that kind of a partnership mindset more so? Would love to understand your views on that. And as a… conduit to it if you want to use your background, how you grew up in the world of finance, and we win kind of that partnership mentality. I think that would be amazing.

Priya Sharma: Yeah, I think this is an interesting question because it also depends from person to person. I think, yeah, and maybe my background and my evolution into a founder has led to this kind of approach of partnership. So you know, my first job was software engineering. I am an engineer by training. I went to IIT and started much like any Indian here in, you know, the early, I guess, in 2001, my first job. And it was very much kind of learning the M&C way, learning things. And then I slowly started finding my ground and figuring out what I liked. And I liked business, so I gravitated towards more consulting roles. Then I got fascinated by finance, and then I gravitated to finance and investment banking. And that’s when I realized that I wanted to combine finance and technology and do something more creative. And that’s how my startup journey started. So I think for me, the reason I think about it as a partnership, because especially in the context of a tech ecosystem, for example, I am no longer a techie or I was a techie, but I have I’m not a practicing software person. So for me, therefore, if I were to, let’s say, create something, then I am always clear that it has to be in partnership with someone who brings some of those skills, for example. So maybe it is coming from there. And it’s also a recognition of the fact that there are things that I know that I can do well. I’m good at conceptualizing product, business ideas. But then there are other things that I don’t know. So maybe I think this is more specific to me, maybe other people and you know, there are lots of solo founders as well. And I think for me, I liked having, we were three co-founders in Zest. So I think definitely having another person, maybe not three or four, but at least another co-founder is definitely something that is helpful because I think entrepreneurship is a very. It’s a long journey and solo entrepreneurship, I think, is tough. I didn’t go through that. So for me, therefore, yeah, so maybe that’s why this partnership approach and this idea of partnership. And I also think that in a startup, there are many things that need to come together. And it is never, you know, no one person is doing everything. So even, you know, If I look at Zest, then obviously we had the idea and we had the concept and we were the initial sort of seed behind it, but then whatever it became later on and a lot of the success, it was a team effort. It’s always a team effort, right? So in that sense, I think that partnership approach is important. And for me, yeah. I think that’s maybe one of the biggest takeaways from Zest for me is that even our overall strategy was based on partnerships. So it was a B2B2C strategy. And we were solving a customer problem, but then we ended up becoming a platform. And I think most successful startups… If you look at the largest ones, Google, obviously, all of them are platforms. So if you want to build a platform, then I think you need to have a partnership kind of an approach, just a product-centric mindset on its own. Even that requires partnership. So even if you have a SaaS product or whatever, internally you have to partner. Teams have to work together. So. Yeah, so maybe this has come out on the top of my head, but the more I speak about this, I think it makes sense. That ultimately, it is about partnerships, yes.

Rohit Agarwal: Awesome. I want to take you back to your early years. Before you took up engineering, was there a choice for you

Priya Sharma: Thank

Rohit Agarwal: to

Priya Sharma: you.

Rohit Agarwal: say, hey, do you want to become an engineer? Do you want to go on the business side? Or was it just natural that you gravitated towards engineering at first?

Priya Sharma: So I come from a very middle-class family. My parents are teachers. My father has been an educator, so he was principal of the school that I was in. My mom was a teacher. She was my class teacher. I was, you know, I had to be a model student in that sense. And yeah, and in those times, I think, given my parents’ background and… My rest of my family, they are also doctors and engineers. So business was never a conversation in our family. There was no discussion of business. It was a completely alien world for us. So the only real discussion, and that was also like a five minute discussion where it was, you know, doctor or engineer. And for me, I think I preferred engineering in the sense that I prefer maths. and physics over biology. So it wasn’t even, you know, engineering, what does it mean? Do I like tinkering with machines and things like that? So it’s, it’s very, I think it’s very common in people of our generation to have gone through that. So yeah, it was, it was just, okay, you don’t want to do biology. So therefore, you know, you take physics and chemistry maths and therefore the options are engineering. And then, you know, okay, so what does engineering mean? Engineering basically means going through these entrance examinations and that’s what engineering meant to us, right? So it’s very bizarre and it’s weird, but I think this is how our generation grew up at that time. We were in Kanpur, which is a small town, but obviously there is IIT Kanpur, so IIT Kanpur was always, you know, a huge influence. And when I was in school, I used to play basketball. And I remember going to IIT Kanpur and playing there. So it just happened that way. And so yeah, so giving the entrance exam was the goal, not necessarily becoming an engineer. And the entrance exam, obviously very tough. But I managed to get in. My rank wasn’t great. So I didn’t get into IIT Kanpur. I tried my best. But then I got into IIT PHU, which is a very, a very different college in Banaras. And yeah, and when you get there, then you’re like, okay, now what? And that’s when the software boom was happening. So I joined in 97 and that’s when Infosys, I think they were IPOing or IPOed, I think. So, you know, the software boom was happening. So that’s it, you know, there was, engineering basically meant software suddenly. And I’m sure you know this, that at that time, the career options were, okay, you go into software and join Infosys or you give your GMAT or you give your GATE or whatever and you go abroad. So for me, yeah, engineering was more, I guess, entrance exam and IIT rather than becoming an engineer. But then in the end, yeah, I chose software engineering, I joined Sapient. which was a US company and they were just setting up their offices in Gurgaon. So I was one of their early cohorts, let’s call it. And really enjoyed it. So that was my introduction to work life. And I still remember at the induction, they used to give this book called Build to Last. And that’s a great book. I’m sure you’ve heard about it or read it. And frankly, I think that was my introduction to business because that’s when they talk about case studies of Nokia and Motorola and IBM versus Microsoft and all of these companies. And before that, there was no discussion of business or business strategy or finance. So I didn’t know at all. I didn’t know what NPV was till I went to my MBA. But I would say my introduction to business strategy The concept of strategy was through that book and through my job. And my early job at that time, this company, they were very famous because they were part of the dotcom boom and then later bust. And they were developing websites for US companies at the time, so large corporations who were suddenly getting onto the internet. So that was my earliest introduction to the internet at that time. an e-commerce. So my first job was developing a website for Staples, which is a large office supplies company in the US, and they were doing their international site. So yeah, so this was back in 2001. That’s sort of how, and early internet, early software development, we ourselves were not buying anything off the internet, right? So it was very bizarre to build these websites for… people sitting in Germany and understand all of these things. So that was my introduction to business. That’s actually when I started to understand consumer journeys and all of these things. So it was more of a product introduction. I mean, these days that role would be called product. At that time, it was just pure engineering. And business introduction came much later. And in a way, that was one of the reasons why I pursued my MBA because I… or as I started gravitating towards more business analysts type of roles. And then later on from Sapient, I moved to the US and from there I joined Deloitte Consulting where everyone around me was an MBA. So for me, yeah, so then the MBA era got into me. So, and then I just happened to apply to London Business School and I got through. So then obviously London, LBS was my formal business. introduction but my early career and in my childhood though definitely there was no talk of business it was always you know science, physics, chemistry, maths and just doing well at school and you know things like that.

Rohit Agarwal: Very interesting. Take us through the journey from LBS to then doing investment banking and then kind of landing the role that ultimately wedged you into founding ZestMoney.

Priya Sharma: Yeah, so yeah, I got into LBS in 2006 and London obviously is a big financial center. And so everyone that in 2006 was again a boom year for finance, if you remember. So everyone was talking about how they, you know, wanted to get into the big banks and things like that. So I also got swept by that sort of emotion and thought, I might as well use this time to see what investment banking is all about and even at least understand what it is. And so yeah, so I just dive deep into the world of investment banking and finance and got an internship with Merrill Lynch in 2007. And midway through my internship is when the world started changing. So… The first hedge funds of Bear Stearns, I think they went under and then there was sudden sort of doom and gloom. So I thought, okay, wow, this is an interesting time to get into investment banking. So I graduated 2008 and joined Merrill Lynch full-time in May. And then by August, September, we all know what happened. So Lehman went under and the same weekend. Merrill Lynch was bought by Bank of America. So I was really living through that. We used to be called into our MD’s office and told that, you’re safe for now for this quarter and we’ll see what happens next quarter. So it was interesting. It was a very different shift for me being in investment banking. I was in M&A advisory and yeah, just this idea that You could go in and advise companies on what they should be doing in terms of their long-term strategy around, be it capital raising, be it acquiring companies, or divesting companies and things like that. So I was very fascinated by some of those aspects. And I was focusing on technology, media, telecom companies. So. As a result of that, I was able to study, again, these companies. And if you remember, my first projects were in the e-commerce domain. And then I slowly started seeing different companies who were going public or these were companies that we were then trying to raise money for and things like that. So I really saw that evolution. So then I started and I… did a few deals where I got the chance to interact with founders and I said, you know what I understand tech, my first job was in this sort of domain and why don’t I actually be part of a company like that rather than being in investment banking, which I also started realizing wasn’t my nature and it’s a very broken kind of mindset. I always joke and say that famous line in this movie that says, party, oh, you’re a broker. And so it’s a different mindset. And I just thought that being on the company side would be more creative. And that’s how then I started to think about finding startups in London. So I was in London at the time. And London was definitely emerging as the sort of tech startup. you know, hub in UK and Europe. And that’s how I found this company called Wonga. They had started in 2007. Their vision and mission was to disrupt financial services and they were one of the first financial services app in the UK. And they had a very successful product, which was a short-term lending product where money was in your bank account within 15 minutes. So… They had revolutionized digital lending in UK and Europe. And when I joined them, they were quite big and very popular. And they were looking to expand into many different markets. And they were looking to get into new products and expand their sort of product lines. And so I joined them in their, I guess, corporate strategy, international development kind of team. And my boss said to me, oh, you’re Indian. And we’re looking at India. And we just hired this girl. She’s, her name is Lizzie. And she’s in India right now. And maybe you both of you can go to India and see if it makes sense for us to launch in India. So that’s how I met Lizzie, who later on, you know, became my co-founder. And very quickly we became, Lizzie and I became the Wonga India team. Ironically, she was based here in Mumbai. I was based in London and we used to commute. and shuttle. So for me it was the best of both worlds but it really opened my eyes you know so because it was a blank canvas so our remit was go develop a product and a business idea for India effectively that was the you know brief given to us and we spent our time doing a lot of market research and understanding the market and this was you know end of 2011 early 2012. And obviously we started zooming in, you know, so what’s happening in financial services and then what’s happening within credit. So financial services and also credit, everything was very branch-based, very physical, paper-based, you know, we understood the banking and the NBFC sector, you know, that was very stable and all of that. But yeah, there was hardly any digital transactions. Payments were very nascent at that time. Then we also started recognizing that e-commerce, Flipkart obviously had, I think at that time they had their massive round tiger, I think, and they were on the upswing. And the first wave of e-commerce had, you know, startups had started coming. So we started recognizing that payments was definitely, there was a lot of friction. A lot of the e-commerce growth was happening as a result of COD, cash delivery. And And then credit was completely non-existent. So we started studying the credit cards, what’s happening here. Then we studied Bajaj Finance. So yeah, so I think that was a very good time for us. It was a lot of fun. We then developed kind of a business plan as that was our role basically. And… we set out to actually execute. So that business plan was roughly, the product was actually what later on became Zest. So it was called Paylater, that company, Wonga, actually owned the Paylater brand. And so, yeah, it was positioned around online, installment funding available at checkout, three months, six months, nine months. And so we developed that business plan. We bought an NVFC and we were executing on it. And then this company started having some regulatory issues and the regulator in the UK was changing and they said, okay, sorry, let me see what that is. Sorry, sorry, sorry. Sorry about that.

Rohit Agarwal: No issues, yeah, you can pick it up from the regulator part should be fine

Priya Sharma: So regulatory changes were happening in the UK. And so they basically decided to put all their big expansion projects on hold. And that’s when then Lizzie and I, we were obviously very disappointed because we had done so much work on this. And we were so excited with the idea. And so there then was a gap of. about a year and a half. So I then did, I took up another role within the company. I started doing investments for them. And I was investing in small European fintechs. And then Lizzie and I used to keep in touch and she left meanwhile, so she was like, I want to be here in India. And I wasn’t so sure. So that I think was an interesting period for us where we knew we had this idea. We knew… We had the business plan and we knew what needed to happen. But we ourselves are not ready to take that plunge and that risk. And I think we finally, and I think that year, this was 2014, where there was a lot of internal struggle, you know, for me personally, and I think also for Lizzie. And beginning of 2015 is when, you know, I… I was here in Mumbai for something and I met Lizzie and I said, look, you know, we have this idea. I think this product is still, you know, no one’s done it. And by that time the Paytm, you know, big funding had happened. So FinTech had suddenly arrived in India. Everyone was talking about FinTech. People used to contact, you know, both of us saying, you know, you were doing something. You are in FinTech. So FinTech, before that FinTech wasn’t even a word, right? So. So suddenly we felt, okay, you know what? Like we know this, we know what to do and let’s do this. So I think it took us some time to take the plunge because we knew that this was a big undertaking. It wasn’t something that you could just get, you know, it wasn’t going to be a bootstrapped endeavor. We knew that from the beginning. So that is how we then formed Zest. So yeah, we just turned around. And Lizzie, if you met her, if you know her, so yeah, I said, let’s do it. And then the next day she turned around and said, yeah, let’s do it, we’re doing it. And then by the evening, she’s telling everyone that, oh, we are a new startup and we are doing this and we are gonna be live in two months and all that. So then, yeah, as I said, we realized it wasn’t We got bootstrapped, so we needed to raise funding. And it was licensing required. And you had to refine the business plan according to a startup plan versus earlier it was part of a large corporate. So we did that. And that is how we then came up with the partnership model, especially with the banks and the NBFCs, because we realized that. on day one getting all the licenses will take a lot of time and so we’d rather focus on the product and the idea rather than the licensing and then the license and all that will come over time and then over time we’ll build balance sheet and you know we had the full plan basically. So we went to San Francisco and we met Ribbit Capital who we knew from before and they just yeah gave us our first check. And that was it. So that’s how we started Zest. And then meanwhile, then I was like, okay, we need to find a team. And so we found Ashish, who was also in Monga. And we had been in touch. And although Lizzie and I were not working with him directly, but he was part of the tech team in central London. And so we said, okay, you’re Indian. You know this product because he was hired to actually build PayLater for Monga, which was going to be a global product. It wasn’t just an India product. And Lizzy and I are doing this, and why don’t you join us? And so he took a little bit of convincing, but finally he agreed. And that’s how we started. So yeah, we just basically packed our bags and moved here to Bangalore. And that’s it. That’s how Zest was born.

Rohit Agarwal: Amazing. What a coincidence. You know, always it seems from outside that these startups, every single one of them is very meticulously thought out and planned for years and years and years and then somebody starts it. But it’s interesting that you’ve done all the work as a corporate employee in some

Priya Sharma: Yeah,

Rohit Agarwal: ways

Priya Sharma: yeah.

Rohit Agarwal: and then, you know, it ended up being kind of your babies. Very

Priya Sharma: Yeah.

From Wonga to founding ZestMoney#

Rohit Agarwal: interesting. What took you personally to take that plunge? Because it was a lot, right? Moving from London to Bangalore, doing a different kind of a role altogether.

Priya Sharma: Yeah.

Rohit Agarwal: All of the regulatory challenges in the London sort of fintech ecosystem, but I’m sure Wonga was doing well and it was

Priya Sharma: No.

Rohit Agarwal: an established position. You could have continued to grow there. What took you to convince yourself? to

Priya Sharma: Yeah.

Rohit Agarwal: then take the plunge.

Priya Sharma: Yeah, it was an interesting decision. I really, as I said, I struggled with it for almost a year, actually. And I was looking at other roles in London. So FinTech in London was taking off definitely. So I think Revolut at that time had just got funded, and which obviously now they are the poster child of FinTech in London. So some of those companies were just starting. And so for me, I think. This idea of, you know, I guess what the product in with what later became Zest, I had so much conviction on it, right? So I think that was the main pull that wanted to see that concept come to life. I think for me, I would say that was the biggest pull that then trumped every pros and con list and everything. So it was… just this, I couldn’t get rid of that concept in my head. And I tried, so, you know, because it wasn’t an easy decision from many perspectives, right? So I would go to interviews and then, you know, people would then ask me, what were you doing? And so I would describe this, this tint of mine where I had done this project and all of that. And that’s when my eyes would light up and people would inevitably ask me like, why won’t you do it yourself? So a lot of people would. just asking me why won’t you do it. My friends were like, okay, if you really think this is the thing, then you should do it. So I think I was getting that. I was just scared of it, scared of moving also. I was, I had not been in India for nearly 13 years and that time I had actually never worked in India throughout my life, right? Like I’d always done project work for other countries. So yeah, so it was a big decision. But I think it was the concept. And then I think both Lizzie and I came to the point that, okay, we’ve got to give it a shot. Like we’ve got to try. And if we don’t try, then yeah, I don’t know how I would feel, you know? So it was, yeah, extreme conviction in the idea that was the final pull. And that made me drop everything and move basically.

Rohit Agarwal: Very interesting. If I think about it, there couldn’t be a better person who’s closer to both finance as well as strategy, right? You were of course a co-founder, CFO and COO of a FinTech startup, right?

Priya Sharma: Yeah.

The strategy of finance for India#

Rohit Agarwal: So kind of money is a raw material in FinTech startups and you were kind of dealing with that while managing the finances of your own company and so on.

Priya Sharma: Yeah.

Rohit Agarwal: As you think about strategy of finance. What comes to your mind? How do you conceptualize that?

Priya Sharma: Yeah, so obviously I think it’s a big term and a lot of things fall into it. But as we thought about it in the context of Zest and in the context of lending, I’d say there are two main things. One is the concept of risk and reward, which is, in my opinion, the fundamental of, or theory or modern finance theory. So as it relates to lending in India, one of the biggest thesis that we had going in was that no one was doing risk-based pricing. And that is why lending in India is so restricted, is that most people, banks and NBFCs, due to various reasons, maybe due to regulatory perception, it’s actually not really written in there’s no price caps and you know, things like that. But there is a perception around the level of pricing, especially when as it relates to lending products. And that level of pricing, if you compare with the developed world is actually quite low. especially when you take into account the inherent risk that we have. There is sovereign risk. There is lots of risk and customer risk. So I generally think that there is a mismatch in pricing of risk in India. And that is one of the big reasons why credit is so under-penetrated versus in the West where you know, there is a price for everything and they are a very, they are obviously a capitalist society, but they are to the core, they are capitalist. Here in India, when it comes to regulated, financial institutions, obviously there’s a, there’s so-called gray market where the pricing and everyone talks about it 3% a month, 4% a month, and money lending and all that. But, and again, if you look at the capitalist, free markets theory, then, The reason why those people are able to charge that is because there are people who are willing to pay that. So free markets are already at work. But when it comes to regulated institutions, definitely I feel that most people tend to be in the sort of sub 40% kind of range. And in fact, banks are in this maybe 22 to 26% kind of a range. And then if you layer that with the risk, the customer risk and all the… cost of capital here is very high as compared to the US. Whereas, so yeah, so if you compare US pricing and risk to India pricing and risk on a consumer credit, it just never matched up. So fundamentally, I thought that was an interesting point and we did try to do risk-based pricing. That was one of our key thesis. The other key thesis as it relates to customer and especially in lending was that, again, because the risk reward spectrum just doesn’t add up for the institutional lenders here. Therefore, they are forced to take less risk, right? So if you know that your pricing is capped, then you will take very less risk. And therefore, as a result of that, the types of people that you lend to are what you would call super prime, and there’s very little credit that is available to people who actually need credit. So… So fundamentally, I thought that was actually the genesis or one of the overarching thoughts we had behind Zest is that if you are able to somehow change that, then you can slowly begin to solve for access to credit to people who actually need it. So we tried, I don’t think we succeeded. I think there’s a lot of work to be done in this area. And I hope that this changes in the future. So as it relates to strategy of finance, I think this is to me a sort of one-on-one correlation between finance theory and how it related to us, at Zest. The second thing obviously is around capital structure. So again, here in India, we have a high cost of capital. Using my sort of investment banking hat on. I also try to understand why the cost of capital is so high. So yeah, I think it’s about, finance is all about allocation of money, and the difference between developed markets and developing markets is that developed markets are more efficient at allocation of money and developing markets are less efficient at allocation of money. And as you become more efficient, then the overall cost of capital goes down. So yeah, so in my opinion, you know, on a macro level, if we are to invest in developing our bond markets, for example, so equity markets has been doing well, especially the last few years, and everyone’s talking about it. But if we should also invest in developing the bond market, because my theory is that then your large corporates are able to access the bond markets. So large corporates are able to access or raise capital from the equity markets, right? Because those are now fairly robust and a lot of institutional and retail money is going there. But very large corporates maybe are able to access the bond markets, but your slightly tier two or tier three are not able to access the bond market. So as a result of that, they are very reliant on bank credit, private placements. And therefore then the bank credit doesn’t necessarily reach the SME and the micro SME and also the lower end of spectrum of the consumer credit, right? So that’s another point I think that as a society, I hope that we are able to develop our bond markets and basically start allocating. debt capital much better. As it relates to Zest, so we were very conscious of that from day one, that raising a large balance sheet is not going to be that easy in India. And as a lending startup, you do need to have a balance sheet strategy. And in a way, that is why from day one, we focused a lot more on this kind of platform approach, where we would work with. large lenders who themselves have a lower cost of capital than we would ever have on our own, right? Like the amount of funding that we would need to get that level of cost of capital, it would take decades, not years. And so we realized very early on that having this kind of platform or partnership approach was important rather than focusing on our own balance sheet. Although maybe, I mean, in the last year or so, maybe that strategy didn’t work for us too well. And we always, as part of our business plan, we always had the hybrid approach that we should have our own balance sheet as well, and we’ll grow it over time. But I think that pendulum swung too quickly on the other side. And even from a regulatory standpoint, suddenly the regulator… seems to prefer the balance sheet side of things. So, but I think, you know, we would not have been able to reach the scale that we did had we gone with the strategy of building our own balance sheet from day one. Because I think inherently building a balance sheet in India is tough and it takes a long time. And… And then that time factor doesn’t work well with the shareholder base that we had, which is the VC models. So, yeah, so I think these are the two sort of finance theories that I took and we thought about it deeply and we tried to play around with it and implement that in our business model and our business strategy. I don’t know how successful we were, but I think… I like that as a finance theorist of risk and reward and capital allocation and cost of capital.

Rohit Agarwal: Very interesting.

Priya Sharma: Just

Rohit Agarwal: I

Priya Sharma: give

Rohit Agarwal: really

Priya Sharma: me one

Rohit Agarwal: liked

Priya Sharma: second.

Rohit Agarwal: your

Priya Sharma: Let me just take a

Rohit Agarwal: short.

Priya Sharma: small break.

Rohit Agarwal: Yeah?

Priya Sharma: Sorry, I have a lot of nasal congestion.

Rohit Agarwal: No issues, all good. Good to start? Yeah.

Priya Sharma: Yeah.

Rohit Agarwal: No, I think very valid points, Priya. And what I really like is your dissection of the inefficiencies

Priya Sharma: Hmm.

Rohit Agarwal: around availability of finance in India versus the developed world. Makes a ton of sense. I’m curious to know at ZestMoney, did you have to go through some product pivots to arrive at what? ended up scaling or

Priya Sharma: Good night.

Building the ZestMoney product#

Rohit Agarwal: was it pretty straightforward in terms of the core thesis of course remained the same? And then also the product that you first launched that hit the nail on the head.

Priya Sharma: So I think the core thesis more or less remained the same. The product also, I think more or less remained the same. I think there were some pivots around the strategy. So we did realize sort of midway that we also needed to have not just a B2B to C kind of strategy, but a B2C strategy as well. So we started, you know, and that’s actually how we. also started our app strategy. So when we first launched, we didn’t have an app. This is also because we launched in January 2016 is when we launched. And at that time, the construct was very much around what is now called as embedded finance, right? That we are on the checkout. The customer will find us on checkout, and specifically online. And that is when the customer sort of interacts with us. But we wouldn’t follow it up with our own app and things like that. So we remained very, very embedded actually. And it’s only later down the years, maybe 2019 onwards, 2020 onwards is when we started having our own app. And that’s also when a lot of the app first, FinTechs started coming around and this whole movement towards Mao and Dao and all that. So. So I think that was one big product pivot and also a strategy pivot. The other thing, which I wouldn’t call it a pivot, but it was, I never imagined that we would grow so much in offline, like when we first started, it was always an online thing for us. We imagined ourselves to be online and in a way, given at that time the fintechs that… we had seen were people like PayPal, for example. And none of them had an offline strategy at that time. So for us, I would say offline was a completely different ball game. And it was a pivotal moment for us. We went offline. I mean, we were trying offline here and there early on, because definitely online also had its challenges in the sense that. merchants were very concentrated, whereas offline is completely the opposite where it’s very, very fragmented. So offline was a big bet for us that we made post-COVID. And the offline product was also quite interesting. It was, again, QR code led, which was inspired by the UPI, you know, revolution that was happening at that time, but we were one of the first people to have a credit journey on QR code. So that was another kind of product, I would say consumer facing product innovation that we did. So yeah, we did evolve with the market and with the time, but largely the thesis remained the same. And we were true, I would say, you know, we were true to our vision. What started happening was that we were one of the only ones within the FinTech ecosystem who were so focused on point of sale or checkout financing, as it’s called, versus there were many others who were purely on the digital loan or personal loan, effectively. And pause or checkout financing is tough. It’s a tough business because it’s got the pros and cons of… payments and credit. So you’ve got to build the distribution, you’ve got to invest in having those merchant relationships. And especially as we moved offline, we really felt that you had to invest a lot in distribution and building those merchant relationships. But then at the same time, it also helped build our brand. So… Suddenly we were everywhere and people would go to some place and be like, oh, I saw this on such and such merchant. So it really helped us in certain ways. But yes, it was definitely expensive. Payments is expensive. And then obviously, payments and credit, we were, Bajaj had done it, obviously, but they had done it. with a very people first approach. So they would put their agents in the store and you know, things like that. And we were obviously trying to do it completely differently through a tech, you know, product and app basically.

Rohit Agarwal: As a fast growing startup, I am sure from every single vector or a stakeholder that you might have, and then consumers in general, you are thrown a certain idea. Hey Priya, you should do this, you should do that, or here is an opportunity.

Priya Sharma: Yeah.

Rohit Agarwal: How do you remain in the lane, so as to say, and not get distracted by doing too much too soon? or how do you choose when to add act two, act three, act four?

Priya Sharma: Yeah, it’s a tough one. I think definitely we had got to the point where people were coming with ideas. Team used to come with ideas, why aren’t we doing this and such and such has done this and we should be doing this and that. So, we definitely used to have a lot of firstly healthy debates around what we should be doing, what we shouldn’t be doing. And in some cases actually we did do too much. you know, and then some of the teams were definitely spread too thin. But at the same time, yeah, we did say no to a lot of things. And then I said, I said, we tried to remain true to our vision. Right. So for good or for bad, we would always go back and say, you know, we’re solving for credit, for example. And we would we would come back to that and say we are solving for credit. So if it’s not around credit, then maybe we don’t do it. And then the other thing that we started looking at was insurance. So then we said, okay, we do insurance, but then insurance is also around credit. So some of these anchors we definitely started using. And then there was a point where, you know, like banks used to come and say, you know, why don’t you do this for us and why don’t you do that for us? become a sort of a service provider for us. So those things again, we try to say, no, actually we are a product company. And we would, if we were to, so we would take the inputs and actually some of our new product lines or some of the new things that we did later on the line were linked to that in the sense that we took that feedback and said, okay, there is a need for this and let’s take that back and see how we can play this. Maybe some of those things we could have done faster, for example. So I think the way to do this is that take ideas, take feedback, and then go back to yourselves and in your core team and say, okay, but these are things we can do, these are things we can’t do. So some are complete, throw out or not for now or later. And then within that, you say, okay, these are the ones. So for example, the service provider angle, right? We tried and we were thinking on those lines that we could come up with a sort of a SaaS product line for the lenders, which we actually could have done. And maybe we were not as agile on that. But we also recognize that it’s a very long sales cycle for a consumer company to suddenly become SaaS. You have to invest in it. You have to have different teams and things like that. So it was also not that easy for us to execute overnight. So these are challenges. I think I don’t necessarily have the right idea or answer for this. But I think generally, startups, as a founder, you always feel that how can you be faster? So I always think, OK, we could have done that faster. And maybe my decision making wasn’t fast enough or something like that. So I think those things as a founder, definitely I would say that, yeah, maybe keep the decision making fast. Don’t dwell on it too much or say yes or no quickly. And if the teams are getting spread too thin, then definitely cut down on it and not sort of persevere on the same path. So, but yeah, I think it’s easy to get distracted and it’s easy to expand very quickly. in this market.

Rohit Agarwal: You were a first-time CFO and COO without

Priya Sharma: Yeah.

Rohit Agarwal: any direct operational experience so as to say. How did you approach it?

Priya Sharma: Yeah, it was, so I think I always approached it as a co-founder first. So both of these roles for me, and this was also how the three of us divided our roles. So we all three of us were first time founders. I would say Ashish, you know, given he was on the tech side. So he had been a technologist and in a way, you know, he was CTO. And even if he was not at Zest, he would have been CTO. Right. So. So I think he was between the three of us, he was the one who was doing or was in his domain, whereas Lizzie and I were definitely doing a lot of the business things and thrown, you know, both of us were playing CEO and CFO, CEO for first time. So I would say, yeah, keeping the founder mindset was important for the three of us all the time. Then for me, I saw… CFO and CO role. So lot of the departments rolled into me. So I would look at it on a per function or department, you know, way. When you start a company, then obviously there is no function or there is no department. So the CFO or COO doesn’t mean anything for, you know, couple of years at least, right? So then you just have one person for account. So I had, you know, one person for accounts and… I just made sure that I was asking the right questions and 2 plus 2 was adding up to 4. But then as we grew, then it became about identifying and separating the functions. So keeping the functional hat on was step one as we grew. So creating, so a lot was about creating the function. So separating credit risk and… credit was always an important one for us. So it was always a function from day one, but sort of growing that function, right? And then developing collections around that, then customer experience was a function. And then the overall CEO role I always saw as a connector because I had the product mindset, right? So I would always be able to see what the tech and the product guys were doing and where it was sort of falling apart on the customer side. So not everything is automated or built on day one. So there is always a handoff between product and ops. So I started seeing the COO role initially as sort of a connector. And the two of you need to talk to each other and make sure this kind of happens, right? And the role in sort of phase two of the startup journey is… that how do you productize a lot of the customer experience and create efficiencies and make sure that things are getting built into the product so that the operations are stable. Phase three is when it’s about on the CEO side, I started thinking more about, OK, what is the revenue piece? imbibed into the company, the metrics, what are the metrics you look at, running, yeah, a lot of metric driven and creating those kind of boundaries around them. CFO was again, yeah, so as I said, initially it was just account and thing and getting through the audits and making sure that we are able to sort of sustain ourselves. For me, the CFO role, I always saw it personally as a more strategic role. So I always owned the business plan. So I always was, and also given my background, I was more interested in the business plan. I was more interested in the P&L. And the accounting, like day-to-day stuff, I definitely was able to build a team over time. It didn’t happen initially, but it built the team. And And then, yeah, I always focused on fundraising and all of those pieces. So, but definitely, I think it both the roles towards the end was quite a lot. Like I had almost, you know, maybe 12 or 13 function heads rolling into me. And it was, it was definitely quite a lot. The reason I was able to do it is because operations within a fintech is also very linked to financials or my. movement of money, right? So a lot of our issues were around, or this loan didn’t get sanctioned or whatever. So it’s about money movement. But yeah, it did become quite a lot. And maybe we should have split the roles and maybe we could have got someone as well externally. But I think it evolves. I think building the right team is important. So. Definitely on the finance side, we were able to hire quite a good team. So finance function, I had a one down who later on was the CFO of Zest. And he then built a team around him. On the CEO side, it still was quite a few different functions for the longest time. And then we got Mandar to then consolidate quite a few functions. So Yeah, so I think as a founder, you do have to constantly evaluate functions. So initially, it’s all sort of one, you know, 10 people team or whatever, and functions don’t matter. But from sort of 30 people onwards, you start evolving into functions. And we were, yeah, always looking at org design and always looking at functions. and always looking at then the functional head, you know, do we need to collapse few, can we collapse few things into this person, that person, you know, things like that. Yeah, I mean, I learned on the job. I don’t know if I did a great job of it, remains to be seen or, you know, but a lot of learnings and definitely you have to constantly keep thinking about what is not working and how do you fix it. So I think. That was kind of the yardstick we used. And then at the same time, you know that, you know, you have certain constraints in that you, you know, the business is only this much or, and then the other thing is how do you go from, you know, that the business is supposed to grow from X to Y. So how do you plan for that? You can’t over plan for it because then you need invest too much, then you will invest too much and it might not happen. But if you don’t plan for it, then it’s going to break. So yeah, I think there’s always that balancing act. Operations and finance always sort of lag behind a little bit, or everything sort of lags behind always a little bit in startups. I don’t think anyone can say that, you know, they’re completely ready for the growth and the challenges that are going to come up. So you have to constantly be on top of things.

Rohit Agarwal: How do you know that you need to hire for a role? Is it kind of when need arises? Is it when, you know, you’re looking ahead and saying, okay, this is kind of where we are gonna be, or this is kind of what we need to do, and then kind of hire in advance. How did you think about kind of hiring for a particular role, especially senior ones?

Priya Sharma: Yeah, definitely a mix of both. But I would say the easiest place to start is to say among the current people that you have, can they take over something? So let’s say, for example, when we were looking at offline, so our first vote of call was definitely to look at who within us can lead this and take it from 0 to 1, effectively. So. I think that’s always the better way that you move someone internally to do the 0 to 1. And then when it comes from sort of 1 to 5 or whatever, then we have to assess whether this person or this kind of setup currently is going to work. And if not, then, you know, do we need to bring someone else or do we need to bring someone externally? and those are the things that we would evaluate. I think there are other startups who have definitely done a much better job of this, frankly, I think, hiding externally and growing them. We were not very aggressive, like we had a few changes, but I think our last leadership was quite stable. So. from COVID onwards, you know, so most people in the senior leadership would stay at least sort of three years plus with us, I would say. There were many people who were, you know, five or six years, so we didn’t turn around and get as many external people. We tried a little bit. It was, especially in our initial days we tried, it didn’t necessarily work for us, so then we switched more towards. promote internal people kind of a mindset and then support through us. So we were very involved. All three of us were very, very hands on and very involved. Maybe if we got an external person, then maybe we wouldn’t have been so involved in everything. And as I said, I don’t know if that was the right choice for us, maybe, maybe not. At that time, we felt that the internal hiring and the internal, you know, so initially the first set of hires, we definitely, we turned the first two years, but then sort of from year three, year four onwards, I think we had a lot more stable functional heads and most of them stayed, barring a few, you know, changes. It wasn’t a complete overall. So it did work for us, I guess. So different, you know, and as a result of that, I think we had a lot more. There was a certain culture, people were much nicer to each other. It was definitely known and still people talk about it and say that it was a very good culture of internal sort of camaraderie and promotion. But maybe getting an external person would have meant that we were more direct in our execution and approach and maybe faster. I don’t know. It’s a, I don’t have an answer to that question.

Rohit Agarwal: more hindsight 2020

Priya Sharma: Yeah, it’s

Rohit Agarwal: right

Priya Sharma: just hindsight. So I don’t know. I mean, there’s something we did right. Some things didn’t work

Rohit Agarwal: Right.

Priya Sharma: for us. So yeah, I don’t know the right answer.

Building the team and the culture#

Rohit Agarwal: As someone who was kind of managing, you said, almost 14 sub-functions, departments, I’m sure there are always fires burning.

Priya Sharma: Yeah.

Rohit Agarwal: How did you think about alignment between those short-term operational fires that you need to put off one way or the other, as well as kind of balancing the long-term vision that one needs to achieve?

Priya Sharma: Yeah, so if the fire was some tech thing, something broken, something happened, then obviously that was more a case of, okay, how do we fix it? And what are the sort of remedial actions and what do we move on from there? If we felt that the fire was more of a cultural thing or it also was showing to us that this is not scalable in the long term and we need to do something. differently, that is when then we would evaluate the org structure point, right, and say that what do we need to change here? Is it the junior team not working, mid management not working, senior management not working? Is the functional, other functional, you know, is it too siloed? Is it too many things happening? So, so I would say the fire was a constant, you know, I guess, thing. So these are the for the internal ones. External fires were the ones where it’s very difficult because the regulatory overnight changes and suddenly on a Friday, RBI has announced something and you need to do something. So I think those we were as a team, then we would rally around and we would say, okay, so this has happened. And I think the team used to actually generally, we used to say that we are very good in a crisis and the team used to rally around and. fix those fires or do whatever it was needed. So, and then that would also lead to a discussion. So external fires would lead to a discussion on strategy. This is not working, that is not working. What do we need to do internally and externally? And also around team and people. So fire fighting is part of the game. I think as a founder, you need to be able to… Not be bogged down by the fire too much. And over time, I think we were able to deal with some of the things, some of the very big things we were not able to deal with, the very big funding winter and all of that. But yeah, I think this is also down to the team, that the team became more and more resilient. as we fought fires and we found our way through it. And there are many fires, like even on the macro side, there’s always something like there was the ILFS crisis and then there was the yes bank, bank accounts getting frozen and then there was COVID and then there was the RBI moratorium and then there was digital. So every day there was something new that would come up. So I think the team had also like become quite resilient and we as founders also, I think it’s important to show, not show too much panic. So that’s one of the things that I think we learned is that, okay, if you stay calm, then the others are going to stay calm. So that’s the end. Then, you know, just be calm, be like, okay, this is what is happening, this is what we need to do. And then have a course of action on that.

Rohit Agarwal: What was your hack to remain calm and confident during those crisis moments?

Priya Sharma: One is I would say that as founders we were quite close. So we would always have that channel of communication open that definitely helped because we would deal with each fire together. Second personally, I think we learnt not to panic and to always show calm even if we are not calm. So that is one. Then the third is like how to stay calm. That I think, A, there’s so many things that used to happen that you sort of got used to it. So the threshold keeps going up. The threshold of pain keeps going up. So that is one. And you just get more and more resilient until something that totally kills you. So whatever doesn’t kill you makes you stronger. That’s definitely true. But no, personally, I think just fitness and having time boundaries, you know, not constantly being on the job. So even if there is a fire, then having that kind of mindset that, okay, you know, we have a call and it’s an emergency call, we do it now. But then we say that, okay, we’re going to circle back in one or two hours or whatever, right? So having those set, how do I say, next steps and time boxing it and then saying that, okay, you know, now it’s midnight and I need to sleep and, you know, I’ll only deal with this tomorrow morning or whatever, right? So I think those, that discipline definitely crept in and it was, it definitely helped. that no matter what I’m going to get my sleep, even if I don’t sleep, but I’m not taking calls at 3am for example. I think as we age and as we grow, that really helped, saying that I have my own discipline and I have my own things and then yes, 8am is when I do the call or you can call me at 7am but not at 5am. So things like that.

Rohit Agarwal: You mentioned culture during the last couple of responses. What are your views on culture, especially in a startup scenario, where hopefully the startup itself is evolving quite fast?

Priya Sharma: Yeah.

Rohit Agarwal: And in the case of Zest, it was eight, nine years that you

Priya Sharma: Yo.

Rohit Agarwal: guys were building it. I’m sure there were lots of ups and downs. And

Priya Sharma: Yeah.

Rohit Agarwal: so during those periods, then how do you maintain the core of culture?

Priya Sharma: Yeah. See the core of culture is also, it evolves over time. So it’s, culture is always an evolving thing. And it’s actually something you can’t really control it because even as co-founders, you know, we have, we were three completely different people with three completely different backgrounds and three completely different ways of working. So even when we were three people like, What is the culture? So I think one of the things that we did do over time, so the first thing that we did when we started, and maybe sometimes I feel we overdid it also, because we were a bit older founders, and we had come from a startup ourselves, and we had seen the start that we were sort of senior level, like one level down in that startup. And So we knew the founders and we had seen their journey up front. So we also tried to learn from that. And then obviously we had read all the books and all that. So the first thing that we did was we wrote our vision mission statement and we had our core values. So that was an interesting. I don’t know if other people do it in India. But before we did anything, before we wrote a single line of code, we actually wrote core values. which were inspired, I would say, very much by this company that the three of us were coming from. And we also had two other people who were our first, let’s say, first two employees. They were also from there. So in a way, the founding group was from that company. So we sort of took the pros and cons from there. And we sort of came up with a code that we would then, we started passing on to our new hires. And we started building that culture, how much they understood it or didn’t understand, I don’t know. But in fact, we did have that and we would have an induction process and a performance evaluation. And as I said, maybe we overdid it and maybe people were not used to it here so much. So then, however, I think through COVID is when we started having this chat about culture a lot more. And it was also an interesting point because it was very tough. As I said, there was literally fires burning all over. And also emotionally, people were all going through trauma. And then suddenly, the funding boom happened. And people were getting pushed left, right, and center. And that is actually when I feel that the culture aspect really started to come about. We also did some work on it. So we got an external consultant to help us and she helped us do a culture audit and the senior sort of 20, 30 people, we all sat down for a few hours and we talked about what culture is and what it means and what our core values are and do we still believe in the core values that we had written. four or five years ago and whether it’s relevant or not. So I think that was an interesting aspect and we changed actually a few of those things at that time. Some of those things were not being understood as well or it meant something to me versus it meant something else to the other person. So that I felt was a much more interesting exercise. where the team itself came up with the culture. And actually, ironically, it’s very funny, I said the partnership thing first, and where the team actually started saying that, actually, what are we good at? And it was a very soul-searching kind of exercise, and most people say, actually, we believe that Zest is good at partnerships, and Zest has actually built a brand through its partnerships. And so that I thought was quite interesting. And, but having said that, I think, yeah, these are interesting conversations to have. But, you know, and what happened in 2022 across the world and in 2023 where all the, even the large, you know, tech companies, everyone used to talk about culture and mission and vision, and then suddenly there were layoffs and all of that. So. putting my CFO hat on, I would say that ultimately culture has to be in line with your business objectives, right? So that I think, you know, maybe, maybe we missed a trick there, maybe, I don’t know. But yeah, I mean, there were some good things that came out of it. And during COVID and you know, that year when we were all working remotely and they were all we were hiring so many new people because everyone was hiring and there was so much and there was so much attrition and you had to sort of keep your tribe together. I think those, you know, 2020 2021 and definitely helped us in 2022. Maybe you know, because we were. We could have been faster maybe it stopped us from being faster. And even as founders, maybe we didn’t take some very, very tough calls that we could have taken. I don’t know. So again, this is the hindsight in a way that keeps coming up. But in general, it was a very, very culture based on camaraderie, mutual respect. We as founders definitely tried to create an environment of trust. And people definitely gave an avenue for people to. think about Zest as a career and not just a job. So in that sense, yeah, I think we definitely did a decent job of it, I would say.

Rohit Agarwal: What advice would you give? to the Priya Founding ZestMoney on Day 1.

Priya Sharma: Oh my god! I don’t know. This is a very tough one. Yeah, I think the first thing I would say is it’s a marathon and a sprint at the same time. So pace yourself and keep your strength and keep your own cool and calm first. I would say that to me personally. Yeah, I think obviously the last year has been very tough. But as I said, when I started Zest, for me, it was this insane conviction in this product and this idea. And that, I think, still remains. I still think that product had a place in this ecosystem and in this country. And So yeah, I don’t know. I don’t know what advice I would give. I don’t know if I would have actually done anything differently, I don’t know. It’s tough to say. Yeah.

Lessons from ZestMoney#

Rohit Agarwal: Can you tell us maybe five things over the life of Zest that you all did right? And maybe you are proud of.

Priya Sharma: Yeah, so I think we started, as I said, the conviction around the product and the idea, but it was also this overarching belief that credit should be done differently in India. That just because someone doesn’t have a credit history doesn’t mean that they are not creditworthy. You know, the digital experience, which as I mentioned, when we were thinking about the product, everything was extremely paper based. Even yesterday, my bank made me sign some documents and I had to sign like five different same documents five times on every page. So we used to really question all that and that whole idea of digitizing financial services and digitizing credit, which was the fundamental need that we were solving. I think we were able to solve that very well. we were able to, in fact, we saw that so well that we were emulated so much and we created a category. So that I think, and yeah, looking back in 2014, when I wasn’t even sure if I wanted to do this and Lizzie wasn’t sure if she wanted to do this, from there to now, 2024, 10 years later to have built it. to have seen the journey, that’s quite insane. Second is the partnership approach, the level of partnerships that we were able to crack. And with the level of funding, you know, so as I said, if you look at the large payment players and we were able to, we were sort of, I always felt we were punching above our weight, maybe too much sometimes, but so that, I think, you know, the partnership approach. work for us and we were able to build a true platform, a credit platform, which we were the largest and no one had that. The brand definitely, again, we spent very little on brand marketing. I was very stingy in terms of the marketing spends and we were able to build a brand that is still in the papers for good or for bad. And yeah, the culture. And definitely, I would say. We were able to create a lot of value in the ecosystem. Maybe we were not able to capture a lot of that value that we created. I think in general for startups in India, capturing value is going to be the next stage of evolution because we feel that we’ve kind of been giving away a lot of our technology and our product. for free and we need to be able to start getting into that mindset of capturing value. But yeah, we were able to create value, we were able to create something differentiated, something unique, something that people did talk about. And as one of my friends was telling me, you know, you were very lucky you got success in your first startup and not how many people are able to actually… fly from London and settle down and create something that became big at one point in time. So yeah, I think those are things that definitely is, if I look back and to your question, advice to myself in 2014, 2015, like that time we just wanted to go live, we just wanted to launch the product and see what happens. From there to… 2022-23 is quite interesting.

Rohit Agarwal: What key lessons do you think are crucial for other Fintech startups to succeed in today’s market based on all of your experience with Zest at this point in time?

Priya Sharma: I think definitely this point about capturing value. And I’ve been reading a lot, listening to a lot of podcasts and this point about capturing value is the key point. And you have to do it from the beginning. So as founders, I think, yeah, we need to price our product better. So again, coming to the risk-based pricing point that I mentioned earlier, you know, we always wanted to our whole approach or our own thesis that we want to do risk-based pricing, but maybe we didn’t do it as well as we should have. We had only started taking baby steps towards it. So, you know, so, and I would say this to all founders, all startup founders, look at your pricing, you know, are you pricing your product correct? And look at your costs and are you basically managing your costs well? So that’s the first thing that we as an ecosystem have definitely not been looking at some of these fundamental business aspects. For whatever reason, but I do feel that this mindset of creating value, not just in terms of… valuation but real value, right? And I think that is a mindset shift that maybe we also didn’t have, right? So in the sense that, as I said, it’s very easy to get carried away because in the beginning, you only want to launch your product. Then you launch your product, then you see whether it’s gonna work. Then when it starts working, then you want to grow. So all of these are natural progressions, but I do think that, yeah, maybe the second, you know, this phase of… founders from 2024 onwards would also then have at the back of the mind that am I capturing that value and am I creating value for my shareholders beyond just the pure valuation metrics, right? So that’s one. Second, I would say coming to FinTech, regulation is key. Not to say that we were not cognizant of that, right? As I said, we built everything at Zest in cognizance of taking cognizance of regulation, always being compliant with regulation. We always did the right thing. We always tried to think as to how the regulator would think. But having said that, you still, you know, get caught off guard and get caught up in cycles. So that I think, yeah, I mean, and this is also I would say to investors is that, you know, FinTech is ultimately a regulated play. right? So, and so investors should also be cognizant of that and know that, you know, there might be certain period of regulators uncertainty, you know, the licensing might take time or whatever. So I think, yeah, FinTech needs a bit more patience. It’s a long game. It requires patience. I think founders also need to be a bit more patience. Investors need to be a bit more patience and regulators, I would… really request more regulatory clarity and less uncertainty. I think that’s what any business person would say. Yeah, I think those are the two things and definitely build for the long-term and see if the product is differentiated. I mean, all of those are sort of entrepreneurship one-on-one, but I’d say in the context of… 2024, I would say these are the two important things.

Rohit Agarwal: makes a ton of sense. At Zest of course amongst the three co-founders you and Lizzie are women it’s kind of relatively uncommon of course to have more women in the founding team than men.

Priya Sharma: Yeah.

Rohit Agarwal: How did you think about diversity inclusion overall at Zest given kind of it naturally started out at the top at a diverse company to start with?

Priya Sharma: Yeah, so one is that because of two women founders, I think we used to get a lot of women who’s to want to work with us. So that by definition, I think we were a bit more attractive. And then from a culture perspective, and I mentioned this 3 a.m., 4 a.m. thing and all that. So also maybe because we were a bit older and we had come from a very sort of Western work environment. So as a result of that, that culture was always a bit different and a bit more professional maybe. And less of a college dropout and dorm type culture maybe. So that was always more conducive to women. And so it was always, I would say from the outset, we were set up like that, but not by design, just because of how we were. But I think as we grew, we definitely started realizing that there weren’t as many women in the leadership. So… As the functions grew and as the team, the senior leadership team expanded, we then realized that certainly in certain functions, there weren’t as many women. So that’s when I think we started making bit more of an effort. And during COVID, definitely we did a lot around this. And because of the flexibility, and remote working was there for everyone. And so all of those things I think helped. It was a topic of discussion, but I think it’s even for us, it wasn’t something that I can say that we solved. So it’s definitely something that is tough, is definitely tough because there aren’t that many women leaders and also women leaders need a different approach and different style of working and all of that as well. So we did do much better than a lot of other people, but I don’t think we did enough. And there’s definitely more that we could have done.

Rohit Agarwal: Did it ever feel to you that it was harder to do what you do

Priya Sharma: Mm.

Rohit Agarwal: being a woman?

Priya Sharma: I don’t know, because I don’t know any different, right? So I think this is something that you just have to accept as a person. And definitely, I think, you know, look for me, I’ve been an engineer, I’ve been in finance, I’ve always been in very, very male dominated sectors. So I’ve never thought about this so much. And personally, I think, A friend of mine actually posted something on this on LinkedIn a few months ago. And this concept of gender neutral is sort of in my head. So I’ve always operated like that, I think like that, especially in a work environment. It’s very difficult to say how other people think, right? So I think of myself as, you know, in a workspace, as a gender neutral person, right? It doesn’t occur to me sitting there that… oh, I’m a woman and I should act like this and I should do this, right? So it’s a very analytical and strategy and all of that. Now, how the other person reacts to you, whether they are used to working with you or partnering with you, that’s their conditioning. That’s their, you know. You can’t change that. The only thing I guess as you grow older and as you grow senior, you become more and more cognizant of the fact that it is not just about, you know, you doing your work and you giving your best and all that. So you know that, you know, how the external person or external party perceives you is also a component of, you know, what you’re able to do or whether or not you’re able to meet your business objectives and all of that. So that I think… Yeah, it’s a learning. It’s a, I don’t know, in sometimes, in some cases, it works, some cases, it just doesn’t work. And maybe the reason for that is some gender bias that the other person has. It’s very difficult to say because even that person, because it’s a bias, that person also doesn’t necessarily know it or acknowledge it. I think the only thing that has happened is that I have started becoming… a bit more conscious of that. I’ve started becoming that, yeah, there might be a gender bias. Whereas, you know, if as a job, as an employee, I don’t think I ever thought about it, or as an engineer, as someone who went into the IIT and all of that, I never thought about it, right? Because my upbringing was always, yeah, you write the exam, it’s the guy sitting next to me, he’s writing the same exam, I did well, I got in, you know, all of that. So I think as you grow older and when you realize that businesses about partnerships, businesses about working together, you know company is doing something on their own completely, right? So everything has different components and there are different people. And so how people react to you is something that you then have to start accepting that there might be people who are not reacting to you the right way or maybe this. taking something that you said the wrong way for whatever reason. So if they say something then or if you perceive something then you try to solve it. If you don’t, I mean, if you don’t even understand what they’re saying or how they’re reacting then you can’t do anything about it and you just move on. So I’m also learning. I don’t think I am very good at it. It is also a transition for me to understand that as you grow older, you certain biases, glass ceilings, all of these exist. And I think most women are learning to navigate through that. So it does exist, that’s for sure, for whatever reason. So yeah, it’s something that we need to, I think if we bring more awareness to it and people start thinking about it, then I think at least it’s kind of step one. Because a lot of it is a bias. You don’t even know it exists. You don’t know that you may be thinking of, you’re reacting to a certain person differently. Like if I say something versus if the same thing is said by someone else, and if you’re reacting or perceiving me and my competence differently, then that’s a bias, right? So, yeah.

Rohit Agarwal: Make sense. As I think about financial services companies and of course now more fintech companies which has a big financial services angle to it anyways it makes much more intuitive sense for them to have a CFO almost from the get go.

Priya Sharma: Yeah.

Rohit Agarwal: As you think about other technology companies compared to FinTech companies, what is your advice in terms of when should a company hire a CFO?

Priya Sharma: Yeah, I would say CFO or not, but definitely have a strong finance function. If not from day one, then at least from day two onwards. And definite for any business, you know, be it small business or whatever, definitely invest in having, you know, good finance function and making sure you’re… taxes are in line and your books are in line and your revenue recognition is done right. I just think that some of those things if you get right from the beginning, it really helps. I think for a business like ours, there was so much complexity. There was so much complexity and I feel that there was so much that we could have done more. So, you know, like internal audit, internal compliance, some of these things that we could have invested in a lot more, you know, even though we were a relatively small company. So as a FinTech and as a startup, definitely I would say that if not a CFO, but at least get a strong sort of, you know, VP finance or director of finance early on. and definitely invest in good auditors. So obviously in our case, given that we had global investors, so from almost like day one, we had the big four. So in that sense, it brings that rigor, right? So you know that you’re being looked at a certain way and then at least you have that annual compliance. But… Definitely, yeah, it’s something that we should think about. CFO, again, every company has a different CFO need also. And if you are a listed company, then you need a different type of a CFO. If you are a private company, you want a different CFO. But I think definitely I would say that CFOs should be, on any finance person, should be more strategic in their thinking. Because I definitely find that, because most of the people who go into finance function come from CA background or audit background, so they tend to be very, very siloed, a very siloed approach towards things that they’ll sit in their corner. And they’ll only ask a question if the auditor needs it or if they need it for certain bookkeeping. things, whereas I think they should, in the immortal words of Sheryl, we should get a seat at the table, right? So I think the finance folks should definitely be involved. They should definitely look at what the business is doing, where it’s going. And I used to encourage my team to definitely, you know, get more involved in the biz dev, for example, right? Who are we doing business with? Who are our vendors? Who are our partners? Get involved, get that understanding. So those are things, don’t get siloed. I would say even at a junior level, that’s what people tend to do. They just sit there and they just like look at their Excel sheet and don’t look up. And I don’t think that’s the right thing to do.

Tough decisions and the wind-down#

Rohit Agarwal: It makes sense. Zest money wasn’t an easy road at all. And a lot has been written in papers. And I’m sure there are multiple different sides of the story. So without

Priya Sharma: and.

Rohit Agarwal: getting into that, I’m sure you had to make a lot of tough, unpopular decisions for the greater good of the company. Tell us, how did you think about those decisions? And what leadership qualities are essential in such war time scenarios, especially when you mentioned that almost every single year there was something macro happening,

Priya Sharma: Yeah.

Rohit Agarwal: something that regulator might be doing, something internally might be happening,

Priya Sharma: Yeah.

Rohit Agarwal: right? And so how, as a co-founder, as a CFO, as an operator, how do you think about that and how do you deal with those tough decisions?

Priya Sharma: Yeah, I think being unemotional and being calm is super important. And yeah, so I think I think that’s number one. Second is to have a bit more sense of, OK, in the short term, what do we need to do in the long term? What do we need to do? And if in the long term, we think that you know, this particular strategy or where we are is not going to work. And therefore, what is the short term thing that we need to do to sort of navigate our way out of it. So, and then some of those decisions are also quite tough in the sense that as a founder, as I said, you know, you always, you believe so much in your vision and mission and you live it and you become it and you’re own life and your purpose is defined by it. So, you know, at a time when things are really, really going against, then it goes against you personally as well, right? Because it’s not just a job. So I think, yeah, at that point, I think how do you be unemotional and not to say that I was unemotional, like that I was able to separate that. But I think maybe good entrepreneurs or good business people are able to separate that emotion from the business decision. Maybe that’s the way to succeed in this. But as a founder, it’s very tough because up until that point, you are the product, you are the thing, you are the company, you are everything. And then suddenly you’re not. and then how do you deal with that? So, yeah, I don’t know if it worked out in the end. But yeah, I think that is my biggest learning that as a founder or as a business person, and maybe founders, we as sort of venture-backed founders, we don’t think of ourselves as business people. We think of ourselves as founders. It’s a different. entity to how normal business people or normal promoters, let’s call it here in India, think. Yeah, in my opinion, they are very unemotional or very sort of cut and dry maybe. And maybe we are too emotional and too… Yeah, and maybe in emotions we make the wrong decisions or maybe we… take short-term decisions or long-term decisions that are not right in the long-term. So, yeah, I think my learning is to be unemotional and calm. I think in a time of crisis, I think that’s when you have to… So, be a little bit detached and be able to see… Because yeah, business strategy is complex. And when… when your company is large enough and big enough and there are many different stakeholders and everyone then suddenly has a different viewpoint and different things. So yeah, I would say the first thing is to be unemotional and then see what needs to be done. And then obviously you need to manage the stakeholders, build consensus, and then execute on the strategy. So without getting into any specifics, but yeah, that’s I think. My loony.

The co-founder CFO advantage#

Rohit Agarwal: Makes sense. Did you ever think that being a co-founder, you were able to do things that a hired CFO might not be able to pull off?

Priya Sharma: Yeah, and definitely. So because as I said, I also had the dual role of CFO and COO. So I was always saw the other side also. Right. So whereas if you are hired, you know, let’s say CFO, then maybe you don’t see the other aspects, right. So you would see, okay, this is my function. These are the things that all into me. I will only look at this. Whereas as a co founder, you know that if the buck stops with you and whether or not the other side reports to you or not, you will then do whatever it takes to resolve that issue or make sure it happens. So the only flip side I would say to being a co-founder and then a professional CFO is maybe I think as a co-founder that emotional thing is always there, right, as I mentioned. So, and whereas as a CFO, I think a CFO, a professional CFO might be more cut and dry and be like, no, this is what is right. And maybe that person can be the one who can separate the emotion better. So as a co-founder, definitely the probability of, it solves a lot of issues because you can see the big picture, you know what the board is saying, you know what the external, because you know, I’m involved in everything. So I know what the merchants are saying, lenders are saying, what the team is saying. But then because you’re so involved, that maybe sometimes you’re not able to act as decisively or make some of the more financial decisions, maybe, I don’t know, that a professional would do. The only thing is maybe whether a professional would then stick around, because CFOs generally, they also tend to leave and all that. So those are other aspects as well. But yeah, I think for me, there were too many roles mixed together all the time. So it’s tough for me to say because I also haven’t, you know, I’ve only played the CFO role as a co-founder. So that’s my, it’s my guess that would be the case.

Rohit Agarwal: Priya, what motivates you to keep going?

Priya Sharma: Now, I think I’m just taking a bit of time off, but also enjoying this phase because I feel that you should unlearn a lot of things and then relearn. So I’m sort of enjoying that piece and trying to look at things from a slightly different context and a different perspective. So that’s motivating and meeting people having these kinds of conversations is also quite interesting. But generally I also feel that life is long and you’ve got to do other things. And for me right now the focus is on trying to find other avenues and other areas that excite me. So that’s what motivates me.

Rohit Agarwal: If you were to do a startup again and become a serial founder,

Priya Sharma: Yeah.

Rohit Agarwal: what may be one or two things that you would do differently this time?

Priya Sharma: I think managing capital structure and your business model in a manner that it doesn’t require so much capital, constant capital. I think that would be my biggest thing because obviously in lending and we knew that from get go, right? Like lending is ultimately a balance sheet play. It requires debt. It requires equity. So you’re in a constant cycle. So yeah, maybe I feel that capital structure. is tough and constant capital raising is definitely tough. And especially when you, and there is a business cycle and hitting that business cycle wall is very tough. So one is definitely I would like to do is not be caught up in that and do that differently. So either do something that doesn’t require as much capital or if I do something that requires as much capital then. solve for it upfront and think about it more strategically or differently. I think we were maybe a bit too naive about it at Zest and we thought we could solve it as we went along and that wasn’t the case. So that I think capital and fundraising is key to startups and any business venture. Secondly is the control aspect. founders definitely, you know, we should try and control our destiny, which is, which can be done by, as I said, capturing value or being in that value capturing mindset. It’s easier said than done. I don’t know the answer on how to do it. But I do think that this line like really stuck with me that, you know, that you should do something. where you create value for yourselves as well. So that I think is important to me. Rest, yeah, I’m still figuring out, but yeah, I think these two are, I would say, the more important.