Groww: Increase Product Velocity by Empowering Decentralized Teams

Introduction

Dewi Fabbri: Hello and welcome to Moonshot, a show by Sequoia India and Southeast Asia that profiles innovative startups and inspiring founders who are dreaming big, making an impact and driving change across the region. I’m your host, Dewi Fabbri and throughout this podcast, we’ll be introducing you to founders and thought leaders who are helping shape the region’s startup ecosystem. We hope this podcast will give you fresh ideas on how to start and scale an enduring company.

Millions of people across India use digital payment apps and mobile wallets to transact every day. Digitally-savvy millennials are now turning to FinTech apps to invest and grow their savings. In 2016, Lalit Keshre, Harsh Jain, Neeraj Singh, and Ishan Bansal launched Groww, an easy-to-use investment platform. On this episode of Moonshot, we chat with Lalit Keshre, co-founder and CEO of Groww, and Ashish Agrawal, Managing Director at Sequoia India, about how the startup’s razor-sharp product-focused and strong tech culture is helping Groww win with millennials across India.

Financial services is a basic human need

Ashish, Lalit, thank you both so much for joining us today. So, Lalit, let’s start from the beginning. You’ve once been quoted as saying that people in India need financial services. It is a basic need like food, clothing, and shelter. Where does that belief come from? 

Lalit Keshre: So, see, Dewi, there was a movie, a very old movie, many years back. It was called Roti Kapadu Aur Makaan. It was a very popular movie. I don’t know who starred in that. So, which is basically your food, your clothes, and then your housing. And then, if you look today, beyond that, also entertainment, education, and everything, right? If you look at all these services, which are the basic, fundamental needs of people, they are all financial services. By definition, we are aspirational. When you want a future and financial services provide you with that future. We like investing; you invest for the future. You’re buying insurance to protect your future. You’re taking credit to invest for the future, basically to grow for the future. And then, the penetration in India is just so low. I come from a very small city and people don’t even know what a mutual fund is over there, and so on. So, I think that was the primary motivation that financial services are a fundamental need for people, and that’s the belief.

Dewi Fabbri: You were saying that in that small village where you’re from, people don’t even know what mutual funds are, but you do. How did you branch out from that small village? Tell us the story, the journey from when you got from that small village where people don’t even know what mutual funds are, to now launching an investing app that helps people invest in mutual funds. 

Lalit Keshre: Yeah, so it’s a long story. My parents are in a small village, but I was lucky to study in a district-level place. Then I went to IIT Bombay, I did not know about mutual funds, but I came to know about stocks, which was like one of my wingmates got an internship in one of the companies, and I was just checking and he told me that this company is listed. I was like, “What does that mean?” And, he said, “Listed means that it’s trading somewhere and you can buy stocks.” And, I was zapped, like, “Okay, you can buy companies like this. You can buy a stock like this.” That company is not listed anymore. So, I got excited and I bought one share for 80 rupees, which is like $1. And that’s how the journey started. Once you start investing, you start reading a lot. So, there is this rabbit hole of all the books, the investing books. There are so many, you keep reading them and so on. Then when I started working, I got some money and I typically don’t have luxury needs, so a lot of cash comes in and you keep kind of learning more and investing more and so on. So, how I came to know mutual funds was I think, much later, and that was for the tax season. There used to be a scheme called ELSS scheme, which at that time you could invest like 10,000 bucks in mutual funds. And then four years later I came to know about MFs.

Dewi Fabbri: So you were at IIT Bombay doing engineering?

Lalit Keshre: Yes. 

Dewi Fabbri: And this classmate of yours that told you about investing in stocks and he was an engineer too, that had a good understanding of finance? So did your 80 Rupees grow?  

Lalit Keshre: Of course. Indian markets have done phenomenally well over the last 20 years and a lot of companies are good, and if you’re lucky, money will grow.

When engineering and finance converge

Dewi Fabbri: So, how did engineering – because you were an engineer by training and also practice, right? You were doing that at Flipkart? 

Lalit Keshre: Yeah. 

Dewi Fabbri: Tell us about that. How did engineering and finance come together? 

Lalit Keshre: See, I feel engineering is kind of just a way of doing things right. My first job in engineering was about building video algorithms and that’s also an application in entertainment. And then, there was education. So, education is the domain, and then there is Flipkart, where e-commerce is the domain. Groww, financial services is the domain. But what is common across all these four is engineering, right? Tech. So Groww is not a financial service company, it’s a tech company. 

So, we were working at Flipkart and we were lucky to see that big growth. We started at very good times and then I was exploring my next business idea and, of course, looking for partners also. Again, Harsh and I have known each other since our first job, and he came into Flipkart. That’s also kind of an interesting story. There was an interview scheduled with me for a product manager, and the name was Harsh Jain, and I thought it’s kind of a very common name, but when he started the interview, I realized it was the same Harsh that I have known for a long time. Of course, I did not take the interview because it was a conflict, so he came in and then we started discussing. His idea was to stay longer in Flipkart, but then I managed to convince him to quit faster. And then, Neeraj was working with me as an engineering manager and I really admired his grasp on people and in tech. He has built a lot of scalable systems at Flipkart. So, then the three of us kind of started discussing. 

Financial services was kind of a narrowed-down idea. See, we are consumer folks and we wanted to build something that has a very high impact. So education and financial services were two kinds of things. Both Harsh and I had burnt our fingers with education, so we thought we’ll do financial services this time. And then we also went to Bombay and figured out that we are far away from the customers. People are sitting in Bombay, building products, and your customers are very far away from you. One day, I was having lunch with Ishan and I told him, “I’m quitting”, and he was like, “Oh, I also want to join because I’m very passionate about financial services and I’ve been thinking about this.”

So, my way of choosing people to work with me is like, is he smarter than me? So, Harsh was smarter than me, Neeraj was smarter than both of us, and Ishan is smarter than all three of us. So, four of us started, and then it was about, “Okay, what do we exactly do in financial services?” All four of us are passionate about this. Let’s figure out the right approach, and no matter how much time it takes, let’s kind of spend some time there. And, that’s when the experiments started. And then, mutual funds struck there because number one, it was a very simple product for retail investors. You can start with very small amounts and then it’s very diversified, very well protected by the regulators and so on. So, it was almost like buying a book for Amazon or Flipkart. So you buy a book from Amazon or Flipkart… It’s the same. For $500, you can buy a book. For $500, you can buy a mutual fund. So, that’s how we started. The idea was that we’d keep launching more products one by one.

Dewi FAbbri: So, back to the fact that you left a job that you were doing, I assume, well at, and you had a comfortable job. That’s something that a lot of startup founders grapple with, right? You’re working a stable job, and you want to take a chance and test your idea. Where did that conviction come from?

Lalit Keshre: So, when I was in college, I did a student startup at the time. Over time, you build that conviction. So this was not the first time I was quitting. I quit once in 2010 as well, for my first startup. So the second time, quitting was not that tough. And then when you have co-founders who have conviction like you and who are smarter than you, then it becomes easy. 

Dewi Fabbri: Ashish, let’s bring you in on the conversation here. What was it like meeting Lalit and the team at Groww for the first time? 

Ashish Agrawal: So, Dewi, back in 2018, we were actually looking for a way to play the investing world in India. It came from a personal need in that I couldn’t get around to use all the existing investing platforms. They were not good enough for my personal use case of investing the little savings that I had. And so, we were searching hard, and we must have scanned 20-25 companies, maybe more. Many of the companies we met came from a very traditional financial services background. And, as Lalit was describing, we were looking for a team which could disrupt the space with a technology-first, design-first, and product-first approach, and that is what we found with Lalit and the team at Groww. The conversation grew over several interactions. I’d say, the Groww team is one which is very product-centric, has a very strong focus on the customer, and that was very clear from the very early days. They were squarely focused on solving for the needs of the 27-year-old millennial in India, which I don’t think any other company had that level of clarity, and their entire strategy around acquisition to product to service was all centered around just squarely solving for the needs of that customer. That customer obsession really got to us and we felt that maybe they’ll be able to crack other segments of the market, but certainly, they will do a very good job of cracking this segment of the market for the investing use case. But, Lalit, if I may turn it on to you, what drove that customer obsession in the team from the beginning?

Lalit Keshre: We worked with Flipkart. FlipKart is known for customer obsession because of the founders both Sachin and Binny, and then they came from Amazon and brought a lot of Amazon. And, from one point, if you see, you are building business because of your customers, and they’re paying you in one way. And, if you continue serving them really well, and if you really understand them, business will continue to grow. And, I think that’s one of the basic principles. And secondly, from a selfish perspective, it is actually good for business. If your customers are happy, they can pay you. I mean, I can’t imagine a very large, very successful company where customers are not happy. And primarily, I think it’s because of reading a lot of letters to shareholders as a resource and then, of course, Sachin [Bansal] and Binny [Bansal] had a big role to play. 

Ashish Agrawal: How do you ensure that flows to the rest of the organization? 

Lalit Keshre: Culture starts from the founders. And, when a person joins us, the interview process itself has a few rounds where we assess how customer-obsessed this person is, and depending on the seniority level, it can go very deep. When they join the first session, the intro session that they have is with me. And, in that 45 minutes, I just talk about one thing, that this is a non-negotiable value at Groww. And in financial services, it’s very easy to get swayed because there’s money. And then, in meetings and in the all-hands, they just keep watching us on how we are making decisions. And, when 10 people are in the room, all 10 are at least on the same page. “Okay, let’s start from this, we cannot compromise on this specific thing”, and so on. And then there are other things like, we have Operation Bezos, which is like if you are working with Groww, you spend time doing support calls for the customers for a week. So those are the kinds of things.

Set up a decentralized structure and empower your teams to make quicker decisions

Ashish Agrawal: Maybe one other aspect which has been striking for me about Groww is how decentralized your decision-making is. Many companies have all decisions rolled up to the founder and so on. You guys have a 1000 member team, which is very decentralized in decision-making. Talk a little bit about how you have accomplished that and what are the benefits of that. 

Lalit Keshre: Personally, I love speed… Velocity. Speed is bad, but velocity is basically in the right direction as well. And, when we think about it, how can you move fast? And the biggest hindrance for us, or probably for any other company, is decision-making. If you are deciding everything, then you are limited by your own speed, and you can’t be taking decisions, right? And, in our organization, to move fast, you are taking hundreds of thousands of decisions. And the only way to do it is if you can decentralize. It needs a lot of work though, because everybody needs to align on the company’s strategy. So, what we have done is the strategy is top-level because strategy, you don’t need to decide every day or every month. Strategy is probably decided once in a while, and if it changes and so on… But then, day-to-day decisions are happening in every pod or every function. That’s the kind of primary motivation for decentralization. 

Dewi Fabbri: Is there an example that you can give us where the team moves extremely quickly and you don’t need to get involved in those micro-decisions?

Lalit Keshre: Yeah, so almost everywhere. What we have done is there are functions. What I mean by functions are engineering function, product function, design function, operations, business, and so on. So, they are led by very solid leaders. They are exceptional at those functions, and they have a lot of maturity and experience. Then, the people from these functions step out and create pods, like Star Wars pods. So basically, there would be one engineer, there would be one product designer, and so on. And, it’s a very small pod and these can be from five people to 20 people and so on, and they have a specific goal, a specific purpose. So, I’ll give an example. Let’s say a mutual fund is a pod. And then they become like a startup within themselves, and they decide everything and so on and, of course, they align with the company’s strategy and we discuss them once a month, or so on. The rest of the decisions are being taken by them; what is the product roadmap? What should we do in this kind of escalation and so on?

Dewi Fabbri: That’s amazing. So, they kind of act autonomously but in line with the company’s broader strategy, exactly. How do you deal with that? As a founder, you seem very calm with letting go of that decision-making almost. How do you deal with that on a personal level and also as a founder? 

Lalit Keshre: Personally, I don’t like to get into too many things and I appear calm, but I’m very hyper inside. Some people who work very closely with me would know that. But one thing is that there is a decision, right? And if you realize that you are not the best person to take that decision, because the person who is on the ground and who has a lot more context than you, and who is probably smarter than you – mostly he or she is smarter than you – is more capable. So, it’s very important to just trust their guts and just trust their decision-making. Again, from a selfish perspective, it makes a lot of business sense also to decentralize and empower people. And there is also a sense of purpose for them, so happiness is also very important, right?

Taking a pull-driven approach to building an investment platform

Dewi Fabbri: So, you spoke about how you have a very strong focus on your customers. You guys are customer-obsessed, and Ashish, you also mentioned that Groww is building for a 27-year-old millennial. But there are already several investment platforms available in India. How is Groww differentiating itself? 

Lalit Keshre: When we were starting out, I was doing research. I went to the Google Play Store and searched for mutual fund apps, and there was like a list of 40 apps, and I downloaded all of them, checked it out, and there was no app which I felt would meet the customer’s needs. By that time we had done a lot of research on what the customer needs and so on. So, sometimes people attempt to solve it in multiple ways, but there is just one variable that is missing somewhere, and you change that. And, we found those variables with a multiple approach. If you look at Indian Financial Services specifically, I think competition never hurts anybody. Every financial service is very competitive in the country. 

Ashish Agrawal: Let me chime in here. Lalit is making it sound easy, but it’s very unique for a company to enter what is typically thought of as a crowded market with several players as perhaps amongst the last entrants into the market and then, through a very product-centric and customer-centric approach, be able to become the market leader in that market. And, Groww now has done it twice over, first in mutual funds and now very close to that in brokerage. So it’s a very unique capability. I think the Groww team possesses the ability to go attack a market, which has several very well-run incumbents. 

Dewi Fabbri: Can you give our listeners an example of what you’ve done to differentiate yourself from the competitors? I mean, you yourself said, Lalit, when you were building Groww, you downloaded these 40 different apps. Is it the user interface? Is it that customer support is quick to respond? What is it about Groww that makes people want to stick with using the app? 

Lalit Keshre: So, let’s say you want to build something, and if you’re building from the perspective of giving, of offering something, that’s how financial services work, actually. I build a product and then there is a distributor who will say, “Okay, I built this ABC. Go ahead and sell it to like five folks and seven folks, and 10 folks”, or let’s say I build this robot advisor and offer it to customers; “Try this, enter this”. That’s one approach. The second approach is that the customer has a job-to-be-done and to just be invisible and solve that problem. So, that’s the consumer thinking. One is push-driven, another is pull-driven. The only difference our approach has is that it is more pull-driven. It is more from the customer’s job-to-be-done. The rest, everything flows through that. And, now if you start from that, then everything is like backward thinking. You start from that, and then all your decisions basically are derived from that process. And then, it goes to, okay, how are your APIs connecting to how your UX should look, or how should customers reach out to you, and all these kinds of things flow from that. So that’s the difference, I guess.

Bake customer-centricity into every product decision

Ashish Agrawal: I think there are many things the Groww team has done right, and it starts from small nuances of the product to customer experience in service. Groww has amongst the best customer reviews on social media platforms. And there are several small decisions that Groww must have gotten right, but I think it flows from the big decision of this customer-centricity.

Lalit Keshre: I think customers start loving… When we launched, as I said, there were so many apps, and within three months we had more customers than most of them. And, at that time, we were on zero commission. So when they used our product, they just loved it so much that it was specifically built for them, and then they would talk about it to their friends and their families and so on. And, for the first few years, we didn’t even do any marketing. Even now, most of our customers are organic customers. Why? Because they just love talking about Groww. 

Ashish Agrawal: So, an example of this customer-centricity. In the early days, there were lots of mutual fund distribution companies and they would all offer what are called ‘regular plans’ where users have to pay a 1% commission. And, Groww made the choice of going after what are called ‘direct plans’, where the users pay effectively 0% commission, and that is cheaper for the users. And, we were seeing this change happening in the industry where users were migrating, users were cognizant of the fact that there are some products, which are cheaper than others and migrating towards the direct plans. Groww leveraged that trend and made the right call of focusing on customers vs. going after their own profits in the early days. So, that’s one example of customer-centricity, and a decision that resulted in us being able to acquire users at a rapid pace… Even today, new user acquisition is organic, which is phenomenal. You don’t see that in consumer internet products or FinTech products, that level of organic adoption.

Don’t sell, educate instead

Dewi Fabbri: The other thing that I also noticed about Groww is, I went on your YouTube channel and I saw a ton of educational content. Is that part of that strategy as well? I mean, you want to educate your users so that they can make wiser financial decisions. Can you tell us a bit about that?

Lalit Keshre: When we came up with this insight about the product, that it has to be DIY, basically, no advice – customers should come on the platform and choose what they want. Now, if you’re doing DIY and not providing education along with it, that strategy would fail because then customers would make the wrong decisions. I mean, it can be good in the short term, but in the long term, it would hurt. So we invested heavily on education. There are lots of programs that we run. On YouTube there is the academy, which is Groww Academy, one of them is ‘Ab India Karega Invest’, which is where we physically go to Tier Two towns and meet customers and educate them. We have Groww Thrive, which is where we build the best minds and conduct events twice in a year, which is very popular. We have Groww Digest, which is the highest read newsletter in the country, which is just about financial education. One common thing across all our educational initiatives is that we don’t sell anything, we don’t use a CTA – a call-to-action to buy something and so on. So, that also generates a lot of trust. And, by the way, it’s very illogical. If I’m a business guy and if I’m looking at my investments I’m doing in this, and you’ll see, “Oh, there is no return on this. Why are you investing millions of dollars in this thing?” It will look very irrational. But I think there was a fundamental conviction that we had, that it would work out. So, that’s how the strategy evolved. 

Ashish Agrawal: I’ll probably tie in with their focus on a specific customer segment as well. If you think of the 27-year-old millennial in India, he or she doesn’t want to be spoken to by a wealth manager coming in and approaching them and trying to sell them products. They research about products on online platforms, in particular YouTube and so on. So Groww’s acquisition strategy was, to a large degree, centered around a content strategy, solving for the needs of that 27-year-old millennial.

Pursue long-term success over short-term gains

Dewi Fabbri:  So, Ashish, you’ve spent a ton of time working with the team at Groww. What are some things that they’ve done incredibly well that you would advise other founders to do or to implement in their startups?

Ashish Agrawal: I’d say two things which pop out for me are, one, a very long-term orientation. I think the Groww founders are here to build a large business over the next few decades. There are very few founders who are looking to transform their industries over multiple decades and almost make it their life’s mission to do that. And, the Groww founders have that. They’re patient, they are not looking to chase short-term goals and targets, and are willing to make lots of short-term compromises, be it in terms of monetization, or revenues, or profitability, and many other aspects of the business in the pursuit of long-term success. And that, I think, is a very hard orientation to have for many founders. But it’s a very admirable trait to have a long-term orientation. 

The second aspect which pops out for me is what I would call a certain degree of frugality in the way the company is built. We had many investors visit Groww’s offices and they came back surprised, saying, “Hey, how many people are there at Groww?” I’m like, “There are 1000 people now”. And, they’re like, “Where do all of them sit?” Because Groww’s offices are so frugal and so small. People are often surprised that this is that large of a company working out of such a small and frugal office. And, that has again been the case for them throughout their lifetime. They have managed to attract people and retain them without fancy offices and many of the excesses that we see in the startup world. And, that frugality, they’ve probably invested that money in the service of customers, but they’ve managed to build an organization very frugally in a culture, which is rested on frugality. Those are the two things which pop out for me in addition to customer-centricity and engineering DNA.

Attract talent by offering purpose, autonomy, and growth

Dewi Fabbri:  That’s amazing. How do you think you’ve managed to attract all this talent while maintaining this frugality? 

Lalit Keshre: There are two things when you think about working somewhere. Actually, there are three things. One is a sense of purpose. And then, there is autonomy, basically – how much independence that you get and, of course, the growth, the personal growth. We take care of all three. So, because of this decentralization, there is a lot of independence. There is a purpose because the kind of thing that we are doing, you feel proud about it at the end of the day. Whenever somebody sees somebody walking with a Groww t-shirt, they definitely ping on Slack, “Oh, I saw this. He was talking about Groww”, and all those kinds of things. That is the kind of good feeling that you have. I’ll correct Ashish, our productivity is very high, so we have a very good ESOP policy, probably the best in the Indian startup scene, although we don’t talk about it too much. But people who work with us know about it and we don’t advertise it because that ends up hiring the wrong kind of people. So, we tell everybody that, if you’re looking for money, don’t come to Groww. If you’re negotiating, starting with that… But once they come inside, they see the growth, and so we end up attracting the right kind of folks, and then they also see growth. So, our retention is also very high. Our undesired attrition is probably the lowest.

Ashish Agrawal: Groww has a far more widely distributed stock compensation scheme than many startups do. In every round that has happened since the Series A, there have been secondaries offered to employees and those secondaries have been at par with primary, as in if the investors are investing at X share price, the employees have gotten secondaries or shares sold at the same share price, which is again very rare. So, I think these are very unique aspects of Groww. I think they have done a very good job of taking care of their employees and their retention numbers kind of show for it and employee NPS numbers as well.

Lalit Keshre: eNPS are in the 93 percentile.

Trust in your own convictions

Dewi Fabbri: So Lalit, if you had to give one piece of advice to an aspiring founder, what would it be? 

Lalit Keshre: There is a lot of advice everywhere on the internet. There are a lot of gurus that are speaking about how to do a startup and what to do in a startup. And, one thing that I’ve learned is that there’s no playbook for a startup. And, there is nobody in this world who has the context that you have about your startup, and my advice is to not listen to any advice and just do what you have really high conviction on. So, even if the smartest of the folks, the world that I am seeing is very different from let’s say what you are seeing. And then, you have to believe in your world and just go for it. So, don’t listen to any advice. 

Dewi Fabbri: Lalit, thank you so much for taking the time to share your story with us today and Ashish for sharing your insights with us. 

I’ve been speaking to Lalit Keshre, co-founder and CEO of Groww and Ashish Agrawal, Managing Director here at Sequoia India. For more interesting startup stories, visit our website, siteadmin.peakxv.com, or follow us on your favorite podcast platform. I’m Dewi Fabbri, and you’ve been listening to Moonshot.