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  • Rishi Gaurav Bhatnagar

Kunal Shah on building CRED

In this talk, we explore not just why Kunal Shah built CRED, but also why he chose this over becoming a partner at Sequoia or another firm.



According to Kunal Y Combinator and Sequoia conversation could have gone in one of those (becoming a partner)directions, but nothing concrete was in place. He had a lot of fun in those stints. Kunal says he could empathize with how hard it is to be on the other side of the table as a VC and make the decisions they have to make.


“When the world has an unlimited amount of money coming to the country, you should be rather building than investing. You are less likely to make good investments if there is too much capital available.” say Kunal

For him, the timing of the market was not to be an investor, but a founder hence he chose to be a founder again.


With CRED, Kunal is addressing 30-40 million Indians.

Clarification about the real market in India


Kunal clarifies what the real market in India is. This is also informed by his previous company built for the masses called Freecharge.


India’s per capita income is supposed to be INR 2000, but actually only about 9% of women in India are in the workforce (much lesser than Bangladesh and Pakistan). With such low per capita income, it is extremely hard to support an internet business model that offers convenience.

The Global companies according to him come to India so they can tap into MAU Farms because of the sheer number of users. These look great in the public market but don’t really support a business.

According to him, In Bollywood 80% of their revenue comes from 2000-3000 multiplexes around India, people who are spending on a Flipkart or Amazon, etc. are still these top 20-30 million, not the masses.

The data from all credible sources like the Income Tax department support these numbers as well. There is no point in building business models with large DAUs if that doesn’t translate into business.


What is he addressing with CRED

Creating a large gated community of high trust individuals and eventually figure out a way to work with each other and create an interesting business model on top of that.

Kunal adds “We are not a fin-tech company. We are a lifestyle company building a high trust network of people and eventually we want the members to help each other and do interesting things.“


Any country has become prosperous when they reward good actors and punish the bad actors. According to him “we are not the government, we are not here to punish the bad actors but we can reward the good actors”. People so far are liking the idea of being rewarded for being a good actor. On CRED they are rewarded for paying dues on time.

Some spaces that may be interesting and could open up because of this high trust community will be classifieds, renting, and more.


According to Kunal, “CRED looks like a transaction platform, we want to be a community but transaction platform was a way to filter.“

In any gated community like Harvard, once you get people inside the gate, the value they extract from each other is immense. Gate is just a filtering mechanism.

Wild idea CRED is trying to solve: Could they make getting visas easier for the members because Indian passport is not the best in the world.


On Trust and why Banks will not be replaced


India is a mistrust nation:

  • Classified hasn’t worked but we can systemically suffer trust issues.

  • Huge deposits have to be paid by people for renting houses

When it comes to borrowing money, it doesn’t matter what brand it comes from but when it comes to depositing money, we care about it. That’s why the brands that have been there for years are actually valued more because we have to deposit money in them.

In a mistrust nation, there is also a concentration of trust. Most of the Bollywood revenues come from the top 20 people or so. Similarly, Tatas can do salt to the car to furniture, and you can trust them.

“We are by design likely to have trust problems and hence Banks will not be replaced, they will be there forever. But banks need a great front end and that is where CRED could come in” Says Kunal.

Some banks have already shown interest to offer loans to the community.

Kunal doesn’t believe in failing fast approach:

“Only Currency we have less of as entrepreneurs is time, so be fully prepared instead of trying and failing with un-calculated methods” says Kunal. According to him, you can not succeed in a country like India with Pivoting. You have to be better prepared. Research is so easy to do. Even today, with every launch there are thousands of calls and thousands of interviews that are made after which CRED’s team will get a conviction about what may work. You can not know everything, you have to speak to 200-300 customers and get to know what they want from them.

What has worked for Kunal in his journey:

Combination of enough curiosity and paranoias to go to the depth of things instead of being superficial about things.

Because you don’t know detailed things, you make an effort to learn and overcompensate.

Kunal’s thesis on good product managers:

According to Kunal, the best product manager is a combination of High IQ and understanding of crowd empathy and know-how to get applause.

Actionable notes:

  1. Time as a currency is reducing every day. Don’t fail fast, plan better. Research is cheap.

  2. Be authentic on social media, people are willing to give constructive feedback if you appear to be vulnerable.

  3. Learn about capitalism, do research on it. You can not play the game without knowing what it is.

  4. Wealth creation is not zero-sum.

  5. Reach out to people and ask dumb questions, but be sincere about it.

Something to ponder about:

if everyone is a job seeker, who is creating jobs?

Thank you for taking the time to read this. I would love to know your thoughts in the comments below. Until next time, keep growing! - Rishi


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