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Catch them young, watch them grow!

Great thought! But when it comes to managing money, it’s always the elders who have taken decisions. And that is the sole reason that as adults, people still struggle with savings, taxes and investments and why financial literacy in India is a tough nut to crack.

In this episode of the Founder Thesis podcast, Akshay Datt speaks with Sambhav Jain, Founder, FamPay, who is on a mission to provide financial freedom to teenagers.

Sambhav is a graduate of IIT Roorkee and always aspired to start his venture. He collaborated with Kush Taneja, his fellow batchmate, to start FamPay, which was selected by Y Combinator in 2019.

And within two years it has more than 2 million registered users and recently raised a whopping USD 38 million, making it the largest Series A fundraise in India by first-time entrepreneurs.

Tune in to this episode to hear Sambhav talk about how FamPay is empowering Gen-Z towards financial literacy with its high tech but an easy-to-use platform.

What you must not miss!

  • Internships: A way of understanding how young start-ups operate.
  • Experience of getting mentored by Y Combinator.
  • How can one use a numberless card?
  • Fundraising journey.

EPISODE TRANSCRIPT

Akshay 1:40

So Sambhav, where did you grow up?

Sambhav 1:45

I am from Chandrapur, it’s a small town near Nagpur, Maharashtra. I was born and brought up here. I did my schooling here. Being from a small town, there was not a lot of exposure.

Akshay 2:00

What did your dad do? What’s your family background?

Sambhav 2:06

My father is a civil contractor, he takes tenders and contracts for, let’s say. Road construction and all of that. Like everyone, I didn’t know much. Just the aspiration of having to go to the best colleges in India. I was always curious about science, since the beginning. It was not like I was good at maths and science so I took it. So IITs were the only option. Everyone said after the 10th you should prepare for IIT. That is where the journey began, I moved out of Chandrapur.

Akshay 2:50

How big is Chandrapur? Is it like Pune?

Sambhav 2:53

No, no. It’s a district. Not really a village but is considered tier 2-3. Smaller than Nagpur of course. But it is a peaceful city.

Akshay 3:12

Okay. Were you a movie buff growing up? Besides studying, what did you like to do?

Sambhav 3:19

Definitely, I used to watch a lot of content. During childhood, it’s a lot of Bollywood. There was no Netflix, Amazon Prime, there was no OTT. So whatever used to come on television, we used to watch that. But if I go back to the school days, 6th, 7th, 8th, the early teens, I was curious about most of the things so I was actually into dancing. So I used to learn from watching videos, TV and trying to copy the moves. At every school event, I used to do that. I was into a lot of cultural things because my mom was also quite keen so she put me into tabla classes and all of that.

Akshay 4:22

Okay. You were pretty confident of being on stage, dancing needs a lot of confidence. Obviously, you must have been on the more confident side of the spectrum.

Sambhav 4:36

Yes. Since childhood, I’ve been more of an extrovert and social person. I was never afraid of talking to new people, I used to make friends and always used to hang out in groups in school. So yeah, definitely I wasn’t an introvert. I’ve been social since childhood. 

Akshay 5:01

So in your early teens, what were your dreams? Did you think you’ll be a startup founder? Of course, the word startup wasn’t there that time.

Sambhav 5:10

Of course, I didn’t know the word startup. If I look back and talk about my very early teens, I had some ambitions that I was interested in automobiles, cars. That time I used to feel that I should have my own car company and we’ll make the sexiest cars and all of that. But at that time I didn’t know that it meant that I had to be a businessman. As education proceeded, I had more interest in maths and science. By the time I grew, it was more about learning and exploring what’s out there. In 11th-12th standard, it was like if I had to change my fate, I have to go to the best college in India. That was IIT in our mind. There was very limited exposure. I did not even understand the actual meaning of what that exposure could be, but I was like, I have to explore things right? There’s nothing in this town that I can learn. So yeah, after that it was more about, let’s explore what’s out there. And after going to college is when I heard and learnt about words like a startup, entrepreneurship. Even though I think by the end of 3rd or 4th year I did not really think that I’ll be a founder right out of college, I probably would have imagined it like a few years down the line, but I didn’t imagine it to be right out of college.

Akshay 6:58

So, was it very, very transformational coming from a small town, what was that like? Give me the highlights of those four years.

Sambhav 7:10

The college has been one of the best 4 years of my life. I think definitely, going to IIT was quite transformational in looking at things very differently, getting exposure, understanding what startups are, what is different, what the world is like out there. Right from the start, I was sure that I wanted to do a lot of things. From the 2nd, 3rd week of college in our first year, I contested in the hostel elections and got elected too. So the first one month after the 2nd-3rd week into campaigning and getting into all of that. So fortunately I got elected as a social and cultural secretary of my hostel. Simultaneously, in standard 12th, I left dancing, so there was a dance club at IIT Roorkee. I joined that. So as soon as I joined and even through four years of college I have experienced a lot of things and then two years later in the whole campus elections, I contested again for the post of General Secretary, Hostel Affairs, I got elected and that experience was very different being in college, and about 8000 kids vote in that and starting from the whole election process to getting elections done in that one year. And, there were so many initiatives that we did for the college, so it was a very different experience. That is when Kush and I worked on a product. So while we were in college in our 3rd year, we built an app called Appetizer. And it is the official mess app of IIT Roorkee. So, the problem was very simple: how many hostels there are, they would collect mess fees at the starting of the semester and then one can have a meal for the whole semester, right? It doesn’t matter whether you have it or not, you have paid for the whole semester. But what usually used to happen was kids wouldn’t eat in the mess, of course, they would go to the canteens. A lot of times and then they would take parties from seniors. The product is very simple. What you could do is download the Appetizer and once you log in using your intranet you could get access, keep a check on the details of the student and all of that. They could see the whole week’s menu like breakfast, lunch and dinner and next to every meal there would be toggles. They could skip whichever meals they wanted, just by a click of a button. So we had made a full user site for the students and an admin page for the mess secretaries, managers and deans who could upload menus on a weekly basis. Students could give their feedback. The best part was for the meals that you skip, you could get the money back for it. So this is the first product that we built together and it had a great impact. 

Akshay 10:48

Tell me about Kush, who is he and how did you guys meet?

Sambhav 10:55

So, Kush is again, I would say a very passionate guy and comes from Ludhiana. Yeah, he’s very passionate, he’s into fitness and cooking. He also has interesting stories. In the first year, in the first couple of weeks, as I mentioned I was contesting the elections. So, I went to Kush and Ayush, who is also from Ludhiana and he’s the first person to join the team. He is from the same batch and they both were in Production and Industrial. During the elections of course we went for support and help for campaigning and all of that. That is how we met.

Akshay 11:58

So from one app to a business partnership, how did that happen? How did you think that you want to do a startup together?

Sambhav 12:09

It was quite accidental. So from the first year itself, we had this urge to try different things and we had started internships. I had done multiple internships, I interned at Rivigo, AEON Learning, Hotstar, while Kush interned at 1MG, ShareChat. We interned in various roles like product role, marketing role, business role. After the first internship only, I think it’s a similar story for both of us, we got clear that learning happens in startups only. The kind of impact you are able to bring, the kind of ownership you get right, the exposure was completely different. So throughout college life, we didn’t apply through campus internships even though there were a lot of companies, the dream companies that came to the campus like giving great stipends, giving a great social status within the campus. We never applied to those and we even didn’t think of applying. We used to apply offline, just meet different sorts of founders to get them to it. Throughout college life, it was very clear that startups are where all the excitement is and learning and growth fast too. So by the end of my final year, I was like I want to join an early-stage startup, not an MNC or not a big company and Kush was like I want to start. So both of us did not pursue placements actively. We had a lot of time in the final semester and most of the time went into discussing, I used to keep on finding different startups and just go to him and I would ask what do you think about it, what do you think about the team? What do you think about the product? And he used to come up with new ideas. Like a few years later I also started going with new ideas that this problem looks real, I faced this problem so you can think something around. So we used to brainstorm but just casual, it’s just like two friends having a chat in their hostel rooms. So what happened was as placements kept on getting closer. And we used to help our friends clear tests, interviews and many of them had started coding. They hadn’t done any coding for three years and had just started preparing for that. So when I asked them why are you coding? I know you don’t like it. The answer would be that the job gives an X lakhs salary, life will be sorted. That’s the typical response we used to get and we had a discussion once where we could not understand how is your life sorted if you’re not looking at different factors while thinking of a job right? There are so many factors. They would straight-up see how big a package the company offers and everything else was secondary, including the title. People were even ready to go to mines in Assam because they would earn 30 lakhs. So we couldn’t understand that IIT was supposed to have the smartest kids in India and why is the thought process still like that. Why are they only thinking about money and not other things? Literally, people wouldn’t even look at the product for whichever product role they are applying for. They wouldn’t even check the website, they would see it offers so much and they would just directly apply. We used to think that why is decision making like this? So we realized they were just looking at money as a primary factor and money for them was important of course, but money was becoming the bottleneck to making the right decision. That is what we thought about it. Right, then we started thinking about it and why it is like that. Though earning more money in the short term is nice, not denying that, but in the long term, it’s not fruitful if you’re just making a decision based on money because one year later you won’t be the one who’s getting promoted, who’s growing, who’s feeling the learning curve, right? The biggest thing is you are thinking about the monthly money and you’re getting into a comfort zone, every day going to the office and not doing actual work. One year later you start figuring out what to do? What’s next for me because all your peers are growing. So now you go back to step one. Should I do an MBA to switch my career or what should I do? Right. And that’s a major problem I think with everyone. So we were having a discussion around this and then we came to a discussion that in India no one talks about money the way it should be talked about right? Since childhood, be it schools, parents, banks, no one talks about money openly, no one teaches financial literacy in India. There’s no financial literacy in India, if you compare it to the western countries, there are concepts of pocket money, right? Kids start getting pocket money early, as they get 15-16 years old, they might start working for delivery or in McDonald’s, Burger King etc. So they start earning for themselves. They feel financial independence. So with that they know that they can have this lifestyle in which I can party this much, I can travel this much, I can shop this much or so. Whereas in India because there is no concept of pocket money, there is no concept of earning.

Akshay 18:08

So it’s basically something to be ashamed of if you are working at a McDonald’s. Like your friends will wonder why you are doing that?

Sambhav 18:14

Even if you forget about Mcdonald’s, I think opportunities have increased so much today right? You can just manage social media for someone, right? There are so many things you can do. But there is no concept of even earning or getting pocket money right? The biggest question is, how will I survive if I don’t have a job when I get out. There’s no confidence that yes, at least it is not a question of survival. In western countries it’s not about survival, it is about how I need to figure out what I want to do. Because there is no financial literacy, there is a lot of gap in decision making etc. If a parent tells me don’t get a Rs 15000 phone but get a Rs 12000 phone, I don’t really know what the impact is on the annual finance with the Rs 3000 I’m saving, or what is the impact if I get my own pocket money and save 3000 bucks by cutting down my finances on shopping and food ordering. It’s not expensive, but at least I’ll fight for what I really like. It’s important for me so I’ll make the sacrifices.

Akshay 19:16

Yeah. You learn to prioritize.

Sambhav 19:19

Yeah, but in India, because there is no financial literacy, there is no decision making or independence or freedom. So, you are bound to listen to your parents or listen to anyone that you should do what they say. You get handicapped in taking the right decision. So we don’t realize it, but if you don’t have that freedom to make a decision you get handicapped. And that is how we, just two college students, were having this discussion and about our different perspectives towards this. And it wasn’t like we will start a venture on this. But just like any problem we used to brainstorm and have these discussions about its implications. And we weren’t talking about credit scores, taxes, etc. It was how to look at money. We realized that it is a big problem. And for us, financial literacy and independence were not about giving a course and getting it right. Nobody wants that. It was more of a life skill like cooking or driving the car which you learn when you practice it. So we decided to solve this and bring in the culture of pocket money to India. Let’s build something digital wherein parents will send pocket money and we’ll gamify the app through which the kid can learn how to budget, invest and all of that. We’ll give them a card through which they can spend. So we thought that this is an interesting problem.

Akshay 21:24

But, for two kids who have not even passed out yet, it sounds super ambitious. That we’ll make an and a card, you have zero ideas on how to issue cards and all the banking relationships etc. So how did you feel that yes, let’s do this. How did you get the confidence?

Sambhav 21:50

Correct. I often say this, it’s nice when you don’t have the baggage of experience. And you wouldn’t believe it but even after our first fundraise, we were aspirational and ambitious that we’ll launch the product in two months, we’ll see everything. We’ll sort the banking partnerships etc, but even today if you ask me, we have these internal discussions that we if have to launch a product, we need to have a practical timeline of 4-6 months, considering how we need to improve the support, operations, product, tech, marketing and launch, in making the product and tech. There’s a 360 degree perspective on everything. Back then, during college, it was similar to how we had made Appetizer. We just thought we’d build an app, people used it and enjoyed it, there was an impact. So we thought okay let’s do it. We’ll see how it’s to be done, who we should talk to. In college, it is even more achievable as one has taken smaller initiatives. It isn’t possible at a startup or a professional level. At least in both of our experiences, we had taken ownership of building something and managed to do that. So that gave us the confidence that we can do this. And at that time it wasn’t an idea of a startup, it was more of a problem with which we connected emotionally. We felt that we’ll be making an impact. Since it was the last semester, we moved to Bangalore to figure it out.

Akshay 23:42

But why Bangalore?

Sambhav 23:50

We had done our internship in Bangalore and we knew that there was a startup ecosystem. There were many IIT Roorkee seniors, from a job perspective, also like a lot of startup founders. Being in Roorkee for 4 years, there was a lot of good exposure on campus, in the sense, we had fests, different clubs, and good people. Everyone was ambitious but we had gotten disconnected from what was happening in urban cities. So we wanted to know what if times have changed. And coming from a small town, we didn’t even know what was happening in bigger cities. The mindset was that maybe parents give pocket money to kids, as parents are much more aware. We just thought, let’s go to Bangalore and see what to do. During the internship, our experience was good, of the city, ecosystem, seniors and everything. So we went there and thought whatever happens we are not asking for money from home. That was the only thing and we didn’t have high demands that we have to earn so much at such an early stage. That is how we looked at money, it was not about money. In the early stage, it was always about learning and growing more. Even today, we feel there’s so much to learn, we are just in the early stages of our startup. So where do we get the kids? We used to go to the malls, and we used to find them, stop them and talk about ourselves. “We are students of IIT Roorkee and we are working on a project. We’d like to interview you for 10 mins and all that.” Definitely, a little bit of the IIT factor worked so they would readily agree. That is where we got the golden insight. 90% of the kids we spoke to, none of them had bank accounts and all of them had smartphones. They were using it and were already spending on Swiggy, Flipkart, Ola, Uber, Netflix. But none of them had access to even digital payments. So when we asked them how they pay? They said we ask parents for cash or we borrow their debit card or credit card. We asked them if they know UPI, and they said no. Haven’t you used Google Pay, they said yes, we have seen people scanning and paying. You don’t do it? So they said no, we can’t do it because we don’t have an account. Yes, because to link UPI ID you have to have a bank account. Because you need a bank account for a debit card, you can’t get a credit card below 18. So kids told us stuff like they get out with 200 bucks before tuition or that they had a 500 rupee note in their secret pocket for an emergency. We were very shocked because we never thought about this. We assumed that everyone has access to digital payments and we started researching more and when you look at India’s population, around 40% is below 18. Can you imagine how big that chunk is?  So whenever we are speaking about the next half billion users on the internet, we often forget that the majority of them are going to be minors and nobody is building for them though they are the most tech-savvy audience. Like I’ll give you an example, I have a niece who is about 2.5 years old. She doesn’t know how to read and write but she knows which app is Youtube on the mobile and even when she clicks, she finds the right video looking at the thumbnails though she can’t read the titles of the video, and the best part is she knows that the video she clicked is not playing, it’s the ad. She waits for 5 seconds to skip the ad. That is how fast these kids adapt to technology. They’re very internet-first and it was crazy that they don’t have access to even digital payments. Financial literacy or independence is a far-fetched idea. They don’t even have access to bank accounts. Let’s solve for payments first. Like this is the main key problem and on top of it will build on banking and all of the literacy and all of the independence things that we want to build. But this is a clear cut pain point. That is how FamPay came into the picture. We are going to build a payments app for teenagers and with that idea, we applied to YC in our final semester through college. Our two months were up in Bangalore. I remember our final B.Tech presentation was on May 7 and the YC interview was on 9th in Bangalore.

Akshay 29:16

You got shortlisted for the interview, how much work is needed to apply for YC and how will you get shortlisted? Did you really work hard and create a fancy presentation?

Sambhav 29:30

I think, definitely, the idea, product, and the market we are targeting are all important factors. But what I have realized in the last two years in all my interactions with YC is they focus more on founders. That is what they bet on because in my batch there were many founders who pivoted their ideas.

Akshay 30:01

What made them shortlist you? Was it the IIT pedigree or what was it?

Sambhav 30:05

No, No, No. I don’t think it was the IIT pedigree. They were just like they loved the energy and clarity we had for this idea.

Akshay 30:19

 Well you really thought it through, you researched on it

Sambhav 30:22

Yes. Like with the limited resources that we had while being in college and especially from India if you look at our previous batches before the summer of 2019, you wouldn’t find founders as young as us in the Roorkee batch. Getting shortlisted for YC in itself was a very big deal for us. I remember, we were very happy that at least we got into the interview stage, which is like 10% of the applications. And now with this probably even if we got an incubator or an accelerator, we’ll be happy. We didn’t have high hopes, to be honest. We were like, let’s give it our best. Let’s try to answer whatever questions they might have. So we used to just discuss what all questions might come up, how are we different from different payments apps, what’s going to be a revenue model? What’s going to be, how are you going to acquire the first 10,000 customers? Are there any regulations? We just used to get through these questions. Let’s try to find answers to them. So 2 to 3 weeks we just spent on creating a list of things that YC would ask us. We did some mock interviews and each one of those went off in different directions. Someone would grill about the competition while the other would about regulations. 

Akshay 31:53

These were your seniors doing it?

Sambhav 31:55

Seniors, YC alumni. On Twitter, a lot of YC alumni would put out their calendar where you could just book a mock interview. We did a few with US founders and a few with Indian founders. It was a great experience. After the interview, we were not sure if our interview went really well or we are feeling it went well because they did not grill us thinking that they are kids. We had a good interview. I think they were quite satisfied with the research and what we were trying to build. We got into YC and after that definitely, there was no looking back.

Akshay 32:43

So what happens once you get into YC, are there classes and then time to work on the product? Just help me understand.

Sambhav 32:56

In YC, there are no classes. I would say it is more like an accelerator program.

Akshay 33:06

And they give you money upfront?

Sambhav 33:09

Yeah, they give you one crore. They have a standard deal. So they do seasonal investing twice a year. Once in the summer batch and the other in the winter batch. Every startup that they invest in, give one crore approximately. So yeah, we also thought that this was a crash course to entrepreneurship and they’ll make us an entrepreneur in 2-3 months. But it’s not true. It’s more about just being very hands-on, whatever you’re building, just build it, whatever problem you’re trying to solve, solve it. YC takes startups at all stages, at an idea stage, revenue stage, go-to-market stage. The whole idea is that after 3 months, there is something called a Demo day. It is basically where all the startups gather and all the investors gather and every startup is given 60-90 seconds to pitch their idea. And people from Silicon Valley gather and whoever is interested, you can start conversations with them and end up raising money for whatever you want to build. So the whole idea is that the one crore you’ve received, you need to utilise it in the next three months. Every startup has a different goal. Everyone has a different goal in terms of, whether they want to raise money, and if so, then how much. So it’s very subjective as per the case. So after YC, we got to know that before demo day we have to actually experiment with something and validate it. So we started navigating through the FinTech space and understanding that if we want to start with payments, how can we enable it or what are the kind of APIs we would need, what type of partners we would need, how can we get the cards manufactured for launch, etc. Do we need certain licenses, certifications? How would the company operate? There were a lot of complications and we would receive a lot of scepticism whenever we used to speak. They would say things like a lot of things about the regulations one needs to consider in payments and FinTech. So yeah it was an interesting period in the next 2-3 months. The learning curve was very steep. We had to experiment, evaluate, design, launch, and understand FinTech. Learn about fundraising and the terms associated with it. What is a term sheet? We didn’t even know what that was. We had to incorporate the company, whether we need people or not. From designing our logo, website and a lot of things. Those 3 months I would remember and cherish for my lifetime. We did so many things hands-on, it is completely unforgettable. And the first experience is always priceless. So if we wanted to hire also, we wrote the JD ourselves. It’s how you build everything with love. It’s like your baby.

Akshay 37:15

So, you spoke to people in the industry like your seniors and others to understand the space and form a strategy. Basically, these 3 months were spent in researching and forming a strategy?

Sambhav 37:29

Researching and also setting up the base for the company. We had to validate as these things will work, we had to know.

Akshay 37:39

How did you validate? Did you launch an app and a card and all that?

Sambhav 37:44

We just, it was a very hacky MVP. Through which the users could load money and they could do UPI transactions by using a payout API in the backend. We designed and coded the whole thing. Very simple product. Just load money and you can do UPI transactions. You can scan and pay basically which the kids could not do before.

Akshay 38:10

And how did you do this? How did you enable UPI transactions?

Sambhav 38:14

By using a payout API from one of the PGs. There is a payout API where there is an IMPS transaction in the backend. You can basically make a transaction.

Akshay 38:27

Okay. So you created your FamPay account and then people could load money which would lie in your account and they can scan so it would go from your account.

Sambhav 38:40

Right, so that is what we connected to the PGs here. Like we just want to experiment otherwise definitely it’s a paid API. So as I mentioned we saved every penny as much as possible. If we had to use a tool also, we used to try to look for how as an early-stage startup can we use it through different investors. We would get something or the other, free for 3-6 months. So we did all of that. And then we launched our product and within 7 days, we got traffic of 35,000 users.

Akshay 39:23

Wow. Okay. How did the word spread? Did you advertise?

Sambhav 39:26

No, we didn’t advertise at all. In just 4-5 days, we built an army of 5 interns. We designed a very quick brand ambassador programme. Each one should get 5 of their friends on board and all of that. We had 250+ brand ambassadors in just 3-4 days.

Akshay 39:56

And what would they get? Some certifications basically?

Sambhav 40:00

Yes. We did not pay anything upfront and we had done a little bit of gamification so that the users who came in and refer a friend, they would earn coins. For every user that you refer, you used to get 18 coins and you could use 30 coins to earn a spinner. And with a spinner, you would get cashback. But it was all done so fast. From building the MVP to getting interns, spreading the word, getting it designed, getting brand ambassadors onboard and then expanding so quickly, building a referral and then capitalising it and then building coins. It just went crazy in the first seven days. We just stopped the experiment of course because we did not expect that much traffic and we were not ready for that scale. As it was just an experiment, we were not doing KYC, no partner and all of that. We just shut down that product but that validation helped us to definitely raise our seed round of 4.7 million from Sequoia.

Akshay 41:25

This was on the back of the 35 thousand number. That’s a huge validation.

Sambhav 41:30

That’s a great validation and even the seed round was more about the validation that we can execute things. Because we had incentivised the brand ambassador programme, we put in some money for the referrals. In one dollar we would get 10-15 users, that is how cheap the acquisition was but more than what it proved was that we did it all in 7 days.

Akshay 42:20

Then, what next? By this time you would have set up your company and all of that you had taken care of.

Sambhav 42:27

Yeah, by that time we had done that. After we got out of college and got funding of one crore, we felt that it was huge. For a college student, it felt that a lot can be achieved with this fund. But soon before our fundraise, we realised that this would be nothing if you want to build a big company. Because even if you need to get 2-3 good engineers, they would take up 30 lakhs as a minimum salary. You have a lot of costs – like tech, human resources, marketing, getting your cards manufactured and so many things. Of course, the first thing we did was shut down our first product, our MVP. We needed to build it with all the compliance in mind, figure out the regulations and all of that. We started building our team, we started reaching out to our friends from IIT Roorkee. I told you about Appetizer right, so in college, there was a group called Mobile Development Group. Kush, Chirag and Harjot were part of that group. So Appetizer was developed by Chirag and Harjot. We had worked on that product together and Kush was 100% sure that we had to bring them on board. So we got them in and started building the product and the team, figuring out how to launch the product and all of that. By Feb 2020, everything was ready and we had the first version that could go out. We had a good go-to-market strategy aligned, we were planning to…

Akshay 44:32

Tell me the details. What was product version 1? What did it all include?

Sambhav 44:38

It included getting your own card, your own scan and pay function ready, and doing peer-to-peer payments. It’s like a full-stack payment option for kids. But unlike other wallets, it was more about giving them a complete banking experience. We were like we won’t make it seem like a payments app, we’ll give them a card and scan and pay functionality.

Akshay 45:16

They can see the balance and all that? Parents can transfer the money and they can see the balance 

Sambhav 45:20

Yeah, we were planning to go live in April, after the Board exams.

Akshay 45:30

How does money load in this? Let’s say you got kids to download the app, how would they take money from their parents?

Sambhav 45:37

So the parents can send money directly to their kids’ accounts or they can download the app themselves. They have their own way. The parent and kid both are part of the onboarding process.

Akshay 45:53

Okay. and parents could also do a UPI transfer to the kid?

Sambhav 46:00

Correct. So that was the first version but COVID happened. All the schools, manufacturing plants were shut. There was a lockdown and a lot of uncertainty as to when this will go on till. We were like let’s not launch the product right now, we might end up investing a lot in growth and may not end up getting the right RoI.

Akshay 46:24

How big was your team then?

Sambhav 46:26

6-7 members.

Akshay 46:29

Okay. Most of them are from IITs only?

Sambhav 46:32

Yes. Six of us. We call them the founding team. Then there were a couple of engineers who had just recently joined. It hadn’t even been two months. So it was a very small team, 4-5 interns apart from that. We were like let’s hold on and see how the spending patterns are changing, how are people adapting to COVID, whether schools are opening or not. We conducted surveys for 2-3 months. We realised that our go-to-market strategy should be online. And finally, last year in August, we finally went live. The journey has been amazing, very crazy after that. In the first 8-10 months, we were growing 100% month on month.

Akshay 47:39

The card was free here or they had to pay?

Sambhav 47:44

In the first month, for the first thousand users, it was free.

Akshay 47:50

That was your growth hack basically? Like your go-to-market strategy, it would make people curious.

Sambhav 48:00

Correct. That excited them. It’s their first card in their life, it was the same feeling as a first bicycle or first phone. It was personalised and also, we launched India’s first numberless card.

Akshay 48:20

Why numberless? Won’t that be a problem for e-commerce transactions?

Sambhav 48:27

The number is available on the app. We were brainstorming and it started as a design problem. We were trying to place the number but that was spoiling the look of the card. It started with that conversation and we thought what if we don’t have the number, it will look so clean. When we started thinking about it seriously, even from a security perspective, it takes security to a whole new level because if the kid is losing the card no one is getting access to the CVV or anything. And in any case, if you are shopping offline, you are swiping the card and entering the pin, you don’t need the numbers to be on the card.

Akshay 49:20

This is what you were talking about, the advantage of doing something without experience.

Sambhav 49:25

Correct. That naivety acts in your favour. It helps you to be unconventional and go beyond what is accepted. Even if I saw my online shopping behaviour, I don’t usually have my card handy, I have to go to my wallet, remove it and then type.

Akshay 49:52

Or like I keep a picture with me. If I have to use it I search for the picture.

Sambhav 49:58

Ultimately, you also prefer the card details to be on your phone because it is handy. So we were like why not put all this on the app and remove it from the physical card. It is much more convenient and secure. Third, it is much cooler. Our card is super cool and fourth is, kids aren’t aware that this information is sensitive. There are so many kids who have put pictures of their cards on Instagram, they don’t have to worry about disclosing information. They want to flaunt it. If you search FamPay on Youtube, you’ll see so many unboxing videos by kids organically. We knew if we want to attract kids to this product, it has to be sexy, it has to be aspirational, it has to be cool. We knew that the brand and the product we are creating has to be of really good quality because these are the kids who have been using YouTube, Instagram, Netflix from day one and already have so much access to great quality products. They can immediately tell which one is a poorly built product. And also we had to beat the banks, of course. Or at least the mindset that kids had regarding banks. They find it very boring and that they don’t want to do it. So we had to break this notion. It’s simple.

Akshay 51:42

How long did it take for you to get the first thousand with all these hacks? The unboxing-friendly, influencer outreach etc?

Sambhav 51:52

I think we got the first thousand in the first 4-6 weeks.

Akshay 51:58

And how tedious was it to get the KYC done? To get the first money into your account?

Sambhav 52:04

That’s a bit tedious, that’s a challenge for all the FinTechs. KYC brings a certain drop off in the journey because people are lazy to do it and when asked about documents, they get more serious, questioning the security of the product.

Akshay 52:26

Kids don’t have too many documents, right?

Sambhav 52:30

They have Aadhaar. It is to build trust that parents also have to do KYC. Parents question as to why is the kid asking for this? It’s very common even in India. Parents don’t trust right away. So that’s a bit tedious. 

Akshay 53:08

So in the first 4-6 weeks, the thousand people were the ones who finished the KYC.

Sambhav 53:13

Yeah and started using and transacting.

Akshay 53:18

From there, how did it grow?

Sambhav 53:23

As I mentioned, it grew 100% month-on-month.

Akshay 53:27

September you had 1000, August you launched, then it was 2000, 4000, etc that was the trajectory?

Sambhav 53:38

Yes, it was multiplying. The average was 100% but in certain months we hit 3x, 4x. It was quite fast.

Akshay 53:48

How many active users are there now?

Sambhav 53:51

We have more than 2 million registered users already on the platform.

Akshay 53:58

But the registered user is someone who has downloaded or entered the app but has not done the KYC.

Sambhav 54:05

Correct. 

Akshay 54:05

Then tell me about the next fundraise like that’s the next milestone in the journey, right?

Sambhav 54:12

Yes, so we recently closed our Series A, we raised 38 million from Sequoia and a few other investors. I think we had the first conversation in February or March and were very sure by the end of December that we had hit PMF. This has a great product-market fit. People want it, we were seeing a good number of kids using it regularly, good retention, the growth rate was crazy. The kind of feedback we were getting from users, the kind of time they were putting in unboxing videos, pictures. These were all signals and we knew it. Now, it was about scaling. That is when it started.

Akshay 55:19

This was again in-bound? The VCs were already aware of you?

Sambhav 55:23

Yeah. We were always connected from the start after YC so we kept on chatting over the last couple of years. When we needed help, we would ping them. Even if those investors were not on our cap table, I think some talk or the other kept happening. They were aware of the progress and everything and it just naturally happened. That is what triggered our Series A. We just closed it about one and a half months back or a couple of months back.

Akshay 56:07

And which I think is the third-largest Series A ever done in India, right? 39 million dollars?

Sambhav 56:14

Yes, it’s 38 million dollars.

Akshay 56:18

It is such a massive achievement for someone so young.

Sambhav 56:25

We did not know that it is one of the largest Series A. We were also reading an article and it said probably the largest Series A by first-time entrepreneurs. Definitely, it is a great milestone.

Akshay 56:50

What made it happen? What contributed to such a massive Series A?

Sambhav 56:58

Everything. I would say the product, the growth, the team, the energy, how we have executed everything, marketing, brand, etc.

Akshay 57:11

What was your team by the end of last year? 2020 December or January 2021?

Sambhav 57:18

It was small, 30-35.

Akshay 57:23

These were all tech or marketing?

Sambhav 57:26

Correct. So the kind of growth and things we pulled off with such a small team, expenses and P&L we had, everything contributed to this. It was a new market. As I mentioned, nobody else is building for teenagers. If we see the products in the market, everyone is building for adults. If you have to build for teenagers, I think the approach has to be different. If there’s any product for teenagers, they mostly end up targeting parents. That wouldn’t work because the kids’ generation has changed a lot. In our times, probably we used to ask for remote control cars and be happy but now they ask for greenscreens. They want to start podcasts of their own. And it’s the next big market because every year millions of kids will get their first smartphones, it is basically tapping the future adults.

Akshay 58:40

Okay. I want to understand the business model when you were doing the discussion with VCs for Series A, when you had to show them how you will make money. So what is that?

Sambhav 59:01

Currently, we earn in two ways. The card is not given for free anymore, and the second is…

Akshay 59:12

How much do you charge per card?

Sambhav 59:14

So we just launched our new set of cards, we again launched something very new. India’s first doodle numberless card with visa. It’s called FamCardMe. We have two segments of cards. The second is FamCard. FamCardMe is a highly premium version and can be personalized. Kids can add their own choice of doodles to it. So that card is charged at 1000 for a one-time fee and the FamCard is charged at 500. Secondly, for every card transaction, we earn interchange. Those are the two ways we are earning right now.

Akshay 1:00:03

Okay. Your current offerings are essentially like a bank account substitute for teenagers. So what is in your product roadmap now? What do you plan to add? Because teenagers grow and become adults and take up their first jobs. Obviously, you’d want to be with them throughout the journey, right?

Sambhav 1:00:29

That’s the exact thing even our investors were asking: what’s our roadmap. This is the most exciting part. We are not looking at losing the customers once they turn 18 and the idea is to grow as our users grow. And so there will be really interesting things we’ll be launching in the next 12-18 months for that cohort of users who graduate into becoming adults. So let’s keep it a surprise, there’s a lot in the works and in the plan.

Akshay 1:01:00

So long-term view, say by 2030, where do you see FamPay? By that time? We don’t need to go into detailed stuff but a more broad picture view of where you think FamPay will be by 2030?

Sambhav 1:01:30

The big picture is we want to be that whole financial ecosystem for GenZ.

Akshay 1:01:40

Like a bank replacement? For example, instead of an ICICI account, I have an account with FamPay which has everything that I need over there?

Sambhav 1:01:49

Yeah, we would want to be the one-stop solution for them and that all their demands are met through us. But of course, that is very far. In ten years, we will be more focused on our mission that how we take GenZ one step closer to financial independence and financial literacy. A lot of our decisions would be driven by that.

Akshay 1:02:20

What do you plan to use these funds for? Headcount increase or marketing spend or what?

Sambhav 1:02:28

So, definitely, investing in growth from here to our next milestones. Hiring and expanding the team quite extensively in the next 3-4 months. We have already started hiring. So, we are investing some money in launching new products. But the majority of the costs are going to be definitely into growth, marketing and hiring.

Akshay 1:03:08

Okay. How big is your team now?

Sambhav 1:03:11

We are close to 50-53 full-time members and close to 20 interns.

Akshay 1:03:19

Where do you see it by the end of the year?

Sambhav 1:03:24

That depends. I think we are looking at 25-30 more hires in the next 3-4 months across different functions.

Akshay 1:03:35

So how are you building up the organisation? Are you building it up as a remote company or as one with an office-based culture? I want to understand your thinking on building FamPay’s organisation structure.

Sambhav 1:03:58

We are still fighting or arguing on whether we want to be a remote-first or office-first company. There are two perspectives to it. There’s always a healthy debate about this. We are figuring out a middle way wherein a year, we would do a 3-month workation at a location where the whole team will work together and the rest of the year you work remotely. We’ll always have the office open, but it is not mandatory for at least the next 6 months. It is subject to change and we are still deciding on how to go about it.

Akshay 1:04:58

And in terms of your people strategy, what kind of people are you looking to hire? Are you looking at a flat organisation? How will you manage when you hit a headcount of 100 people?

Sambhav 1:05:17

We have had this discussion internally, both me and Kush. We feel that we’ll let it evolve for the time being. Every startup has a different org structure and unique way of operating and we feel that it is not about titles that define but more about how you operate. We are giving it time, it depends on hires and how functions evolve. It’s not just about creating a culture. We are focusing on creating a healthy culture where everyone has a certain freedom, ownership, accountability. It’s more about that creating that healthy work environment and less about org structure, we are letting that evolve on its own. We have spoken to a lot of founders and every company to some extent has a unique org structure.

Akshay 1:06:24

Right. My last question to you, by when do you think you’ll become a unicorn? Or is that something you don’t think about?

Sambhav 1:06:35

Honestly, we don’t look at a time frame for that. We have other milestones in our heads. Being a unicorn is more of a byproduct or outcome of our growth, so we are chasing the milestones that we have set like we want X number of active users or Y volume. But it’s never for the purpose of becoming a unicorn soon. It’s more about chasing our growth and mission. Very few conversations between Kush and me or within the team about that. It comes up as a joke, recently during the fundraise, the team brings it up. It always comes up as a joke, but we don’t discuss it.

Catch them young, watch them grow!

Great thought! But when it comes to managing money, it’s always the elders who have taken decisions. And that is the sole reason that as adults, people still struggle with savings, taxes and investments and why financial literacy in India is a tough nut to crack.

In this episode of the Founder Thesis podcast, Akshay Datt speaks with Sambhav Jain, Founder, FamPay, who is on a mission to provide financial freedom to teenagers.

Sambhav is a graduate of IIT Roorkee and always aspired to start his venture. He collaborated with Kush Taneja, his fellow batchmate, to start FamPay, which was selected by Y Combinator in 2019.

And within two years it has more than 2 million registered users and recently raised a whopping USD 38 million, making it the largest Series A fundraise in India by first-time entrepreneurs.

Tune in to this episode to hear Sambhav talk about how FamPay is empowering Gen-Z towards financial literacy with its high tech but an easy-to-use platform.

What you must not miss!

  • Internships: A way of understanding how young start-ups operate.
  • Experience of getting mentored by Y Combinator.
  • How can one use a numberless card?
  • Fundraising journey.

EPISODE TRANSCRIPT

Akshay 1:40

So Sambhav, where did you grow up?

Sambhav 1:45

I am from Chandrapur, it’s a small town near Nagpur, Maharashtra. I was born and brought up here. I did my schooling here. Being from a small town, there was not a lot of exposure.

Akshay 2:00

What did your dad do? What’s your family background?

Sambhav 2:06

My father is a civil contractor, he takes tenders and contracts for, let’s say. Road construction and all of that. Like everyone, I didn’t know much. Just the aspiration of having to go to the best colleges in India. I was always curious about science, since the beginning. It was not like I was good at maths and science so I took it. So IITs were the only option. Everyone said after the 10th you should prepare for IIT. That is where the journey began, I moved out of Chandrapur.

Akshay 2:50

How big is Chandrapur? Is it like Pune?

Sambhav 2:53

No, no. It’s a district. Not really a village but is considered tier 2-3. Smaller than Nagpur of course. But it is a peaceful city.

Akshay 3:12

Okay. Were you a movie buff growing up? Besides studying, what did you like to do?

Sambhav 3:19

Definitely, I used to watch a lot of content. During childhood, it’s a lot of Bollywood. There was no Netflix, Amazon Prime, there was no OTT. So whatever used to come on television, we used to watch that. But if I go back to the school days, 6th, 7th, 8th, the early teens, I was curious about most of the things so I was actually into dancing. So I used to learn from watching videos, TV and trying to copy the moves. At every school event, I used to do that. I was into a lot of cultural things because my mom was also quite keen so she put me into tabla classes and all of that.

Akshay 4:22

Okay. You were pretty confident of being on stage, dancing needs a lot of confidence. Obviously, you must have been on the more confident side of the spectrum.

Sambhav 4:36

Yes. Since childhood, I’ve been more of an extrovert and social person. I was never afraid of talking to new people, I used to make friends and always used to hang out in groups in school. So yeah, definitely I wasn’t an introvert. I’ve been social since childhood. 

Akshay 5:01

So in your early teens, what were your dreams? Did you think you’ll be a startup founder? Of course, the word startup wasn’t there that time.

Sambhav 5:10

Of course, I didn’t know the word startup. If I look back and talk about my very early teens, I had some ambitions that I was interested in automobiles, cars. That time I used to feel that I should have my own car company and we’ll make the sexiest cars and all of that. But at that time I didn’t know that it meant that I had to be a businessman. As education proceeded, I had more interest in maths and science. By the time I grew, it was more about learning and exploring what’s out there. In 11th-12th standard, it was like if I had to change my fate, I have to go to the best college in India. That was IIT in our mind. There was very limited exposure. I did not even understand the actual meaning of what that exposure could be, but I was like, I have to explore things right? There’s nothing in this town that I can learn. So yeah, after that it was more about, let’s explore what’s out there. And after going to college is when I heard and learnt about words like a startup, entrepreneurship. Even though I think by the end of 3rd or 4th year I did not really think that I’ll be a founder right out of college, I probably would have imagined it like a few years down the line, but I didn’t imagine it to be right out of college.

Akshay 6:58

So, was it very, very transformational coming from a small town, what was that like? Give me the highlights of those four years.

Sambhav 7:10

The college has been one of the best 4 years of my life. I think definitely, going to IIT was quite transformational in looking at things very differently, getting exposure, understanding what startups are, what is different, what the world is like out there. Right from the start, I was sure that I wanted to do a lot of things. From the 2nd, 3rd week of college in our first year, I contested in the hostel elections and got elected too. So the first one month after the 2nd-3rd week into campaigning and getting into all of that. So fortunately I got elected as a social and cultural secretary of my hostel. Simultaneously, in standard 12th, I left dancing, so there was a dance club at IIT Roorkee. I joined that. So as soon as I joined and even through four years of college I have experienced a lot of things and then two years later in the whole campus elections, I contested again for the post of General Secretary, Hostel Affairs, I got elected and that experience was very different being in college, and about 8000 kids vote in that and starting from the whole election process to getting elections done in that one year. And, there were so many initiatives that we did for the college, so it was a very different experience. That is when Kush and I worked on a product. So while we were in college in our 3rd year, we built an app called Appetizer. And it is the official mess app of IIT Roorkee. So, the problem was very simple: how many hostels there are, they would collect mess fees at the starting of the semester and then one can have a meal for the whole semester, right? It doesn’t matter whether you have it or not, you have paid for the whole semester. But what usually used to happen was kids wouldn’t eat in the mess, of course, they would go to the canteens. A lot of times and then they would take parties from seniors. The product is very simple. What you could do is download the Appetizer and once you log in using your intranet you could get access, keep a check on the details of the student and all of that. They could see the whole week’s menu like breakfast, lunch and dinner and next to every meal there would be toggles. They could skip whichever meals they wanted, just by a click of a button. So we had made a full user site for the students and an admin page for the mess secretaries, managers and deans who could upload menus on a weekly basis. Students could give their feedback. The best part was for the meals that you skip, you could get the money back for it. So this is the first product that we built together and it had a great impact. 

Akshay 10:48

Tell me about Kush, who is he and how did you guys meet?

Sambhav 10:55

So, Kush is again, I would say a very passionate guy and comes from Ludhiana. Yeah, he’s very passionate, he’s into fitness and cooking. He also has interesting stories. In the first year, in the first couple of weeks, as I mentioned I was contesting the elections. So, I went to Kush and Ayush, who is also from Ludhiana and he’s the first person to join the team. He is from the same batch and they both were in Production and Industrial. During the elections of course we went for support and help for campaigning and all of that. That is how we met.

Akshay 11:58

So from one app to a business partnership, how did that happen? How did you think that you want to do a startup together?

Sambhav 12:09

It was quite accidental. So from the first year itself, we had this urge to try different things and we had started internships. I had done multiple internships, I interned at Rivigo, AEON Learning, Hotstar, while Kush interned at 1MG, ShareChat. We interned in various roles like product role, marketing role, business role. After the first internship only, I think it’s a similar story for both of us, we got clear that learning happens in startups only. The kind of impact you are able to bring, the kind of ownership you get right, the exposure was completely different. So throughout college life, we didn’t apply through campus internships even though there were a lot of companies, the dream companies that came to the campus like giving great stipends, giving a great social status within the campus. We never applied to those and we even didn’t think of applying. We used to apply offline, just meet different sorts of founders to get them to it. Throughout college life, it was very clear that startups are where all the excitement is and learning and growth fast too. So by the end of my final year, I was like I want to join an early-stage startup, not an MNC or not a big company and Kush was like I want to start. So both of us did not pursue placements actively. We had a lot of time in the final semester and most of the time went into discussing, I used to keep on finding different startups and just go to him and I would ask what do you think about it, what do you think about the team? What do you think about the product? And he used to come up with new ideas. Like a few years later I also started going with new ideas that this problem looks real, I faced this problem so you can think something around. So we used to brainstorm but just casual, it’s just like two friends having a chat in their hostel rooms. So what happened was as placements kept on getting closer. And we used to help our friends clear tests, interviews and many of them had started coding. They hadn’t done any coding for three years and had just started preparing for that. So when I asked them why are you coding? I know you don’t like it. The answer would be that the job gives an X lakhs salary, life will be sorted. That’s the typical response we used to get and we had a discussion once where we could not understand how is your life sorted if you’re not looking at different factors while thinking of a job right? There are so many factors. They would straight-up see how big a package the company offers and everything else was secondary, including the title. People were even ready to go to mines in Assam because they would earn 30 lakhs. So we couldn’t understand that IIT was supposed to have the smartest kids in India and why is the thought process still like that. Why are they only thinking about money and not other things? Literally, people wouldn’t even look at the product for whichever product role they are applying for. They wouldn’t even check the website, they would see it offers so much and they would just directly apply. We used to think that why is decision making like this? So we realized they were just looking at money as a primary factor and money for them was important of course, but money was becoming the bottleneck to making the right decision. That is what we thought about it. Right, then we started thinking about it and why it is like that. Though earning more money in the short term is nice, not denying that, but in the long term, it’s not fruitful if you’re just making a decision based on money because one year later you won’t be the one who’s getting promoted, who’s growing, who’s feeling the learning curve, right? The biggest thing is you are thinking about the monthly money and you’re getting into a comfort zone, every day going to the office and not doing actual work. One year later you start figuring out what to do? What’s next for me because all your peers are growing. So now you go back to step one. Should I do an MBA to switch my career or what should I do? Right. And that’s a major problem I think with everyone. So we were having a discussion around this and then we came to a discussion that in India no one talks about money the way it should be talked about right? Since childhood, be it schools, parents, banks, no one talks about money openly, no one teaches financial literacy in India. There’s no financial literacy in India, if you compare it to the western countries, there are concepts of pocket money, right? Kids start getting pocket money early, as they get 15-16 years old, they might start working for delivery or in McDonald’s, Burger King etc. So they start earning for themselves. They feel financial independence. So with that they know that they can have this lifestyle in which I can party this much, I can travel this much, I can shop this much or so. Whereas in India because there is no concept of pocket money, there is no concept of earning.

Akshay 18:08

So it’s basically something to be ashamed of if you are working at a McDonald’s. Like your friends will wonder why you are doing that?

Sambhav 18:14

Even if you forget about Mcdonald’s, I think opportunities have increased so much today right? You can just manage social media for someone, right? There are so many things you can do. But there is no concept of even earning or getting pocket money right? The biggest question is, how will I survive if I don’t have a job when I get out. There’s no confidence that yes, at least it is not a question of survival. In western countries it’s not about survival, it is about how I need to figure out what I want to do. Because there is no financial literacy, there is a lot of gap in decision making etc. If a parent tells me don’t get a Rs 15000 phone but get a Rs 12000 phone, I don’t really know what the impact is on the annual finance with the Rs 3000 I’m saving, or what is the impact if I get my own pocket money and save 3000 bucks by cutting down my finances on shopping and food ordering. It’s not expensive, but at least I’ll fight for what I really like. It’s important for me so I’ll make the sacrifices.

Akshay 19:16

Yeah. You learn to prioritize.

Sambhav 19:19

Yeah, but in India, because there is no financial literacy, there is no decision making or independence or freedom. So, you are bound to listen to your parents or listen to anyone that you should do what they say. You get handicapped in taking the right decision. So we don’t realize it, but if you don’t have that freedom to make a decision you get handicapped. And that is how we, just two college students, were having this discussion and about our different perspectives towards this. And it wasn’t like we will start a venture on this. But just like any problem we used to brainstorm and have these discussions about its implications. And we weren’t talking about credit scores, taxes, etc. It was how to look at money. We realized that it is a big problem. And for us, financial literacy and independence were not about giving a course and getting it right. Nobody wants that. It was more of a life skill like cooking or driving the car which you learn when you practice it. So we decided to solve this and bring in the culture of pocket money to India. Let’s build something digital wherein parents will send pocket money and we’ll gamify the app through which the kid can learn how to budget, invest and all of that. We’ll give them a card through which they can spend. So we thought that this is an interesting problem.

Akshay 21:24

But, for two kids who have not even passed out yet, it sounds super ambitious. That we’ll make an and a card, you have zero ideas on how to issue cards and all the banking relationships etc. So how did you feel that yes, let’s do this. How did you get the confidence?

Sambhav 21:50

Correct. I often say this, it’s nice when you don’t have the baggage of experience. And you wouldn’t believe it but even after our first fundraise, we were aspirational and ambitious that we’ll launch the product in two months, we’ll see everything. We’ll sort the banking partnerships etc, but even today if you ask me, we have these internal discussions that we if have to launch a product, we need to have a practical timeline of 4-6 months, considering how we need to improve the support, operations, product, tech, marketing and launch, in making the product and tech. There’s a 360 degree perspective on everything. Back then, during college, it was similar to how we had made Appetizer. We just thought we’d build an app, people used it and enjoyed it, there was an impact. So we thought okay let’s do it. We’ll see how it’s to be done, who we should talk to. In college, it is even more achievable as one has taken smaller initiatives. It isn’t possible at a startup or a professional level. At least in both of our experiences, we had taken ownership of building something and managed to do that. So that gave us the confidence that we can do this. And at that time it wasn’t an idea of a startup, it was more of a problem with which we connected emotionally. We felt that we’ll be making an impact. Since it was the last semester, we moved to Bangalore to figure it out.

Akshay 23:42

But why Bangalore?

Sambhav 23:50

We had done our internship in Bangalore and we knew that there was a startup ecosystem. There were many IIT Roorkee seniors, from a job perspective, also like a lot of startup founders. Being in Roorkee for 4 years, there was a lot of good exposure on campus, in the sense, we had fests, different clubs, and good people. Everyone was ambitious but we had gotten disconnected from what was happening in urban cities. So we wanted to know what if times have changed. And coming from a small town, we didn’t even know what was happening in bigger cities. The mindset was that maybe parents give pocket money to kids, as parents are much more aware. We just thought, let’s go to Bangalore and see what to do. During the internship, our experience was good, of the city, ecosystem, seniors and everything. So we went there and thought whatever happens we are not asking for money from home. That was the only thing and we didn’t have high demands that we have to earn so much at such an early stage. That is how we looked at money, it was not about money. In the early stage, it was always about learning and growing more. Even today, we feel there’s so much to learn, we are just in the early stages of our startup. So where do we get the kids? We used to go to the malls, and we used to find them, stop them and talk about ourselves. “We are students of IIT Roorkee and we are working on a project. We’d like to interview you for 10 mins and all that.” Definitely, a little bit of the IIT factor worked so they would readily agree. That is where we got the golden insight. 90% of the kids we spoke to, none of them had bank accounts and all of them had smartphones. They were using it and were already spending on Swiggy, Flipkart, Ola, Uber, Netflix. But none of them had access to even digital payments. So when we asked them how they pay? They said we ask parents for cash or we borrow their debit card or credit card. We asked them if they know UPI, and they said no. Haven’t you used Google Pay, they said yes, we have seen people scanning and paying. You don’t do it? So they said no, we can’t do it because we don’t have an account. Yes, because to link UPI ID you have to have a bank account. Because you need a bank account for a debit card, you can’t get a credit card below 18. So kids told us stuff like they get out with 200 bucks before tuition or that they had a 500 rupee note in their secret pocket for an emergency. We were very shocked because we never thought about this. We assumed that everyone has access to digital payments and we started researching more and when you look at India’s population, around 40% is below 18. Can you imagine how big that chunk is?  So whenever we are speaking about the next half billion users on the internet, we often forget that the majority of them are going to be minors and nobody is building for them though they are the most tech-savvy audience. Like I’ll give you an example, I have a niece who is about 2.5 years old. She doesn’t know how to read and write but she knows which app is Youtube on the mobile and even when she clicks, she finds the right video looking at the thumbnails though she can’t read the titles of the video, and the best part is she knows that the video she clicked is not playing, it’s the ad. She waits for 5 seconds to skip the ad. That is how fast these kids adapt to technology. They’re very internet-first and it was crazy that they don’t have access to even digital payments. Financial literacy or independence is a far-fetched idea. They don’t even have access to bank accounts. Let’s solve for payments first. Like this is the main key problem and on top of it will build on banking and all of the literacy and all of the independence things that we want to build. But this is a clear cut pain point. That is how FamPay came into the picture. We are going to build a payments app for teenagers and with that idea, we applied to YC in our final semester through college. Our two months were up in Bangalore. I remember our final B.Tech presentation was on May 7 and the YC interview was on 9th in Bangalore.

Akshay 29:16

You got shortlisted for the interview, how much work is needed to apply for YC and how will you get shortlisted? Did you really work hard and create a fancy presentation?

Sambhav 29:30

I think, definitely, the idea, product, and the market we are targeting are all important factors. But what I have realized in the last two years in all my interactions with YC is they focus more on founders. That is what they bet on because in my batch there were many founders who pivoted their ideas.

Akshay 30:01

What made them shortlist you? Was it the IIT pedigree or what was it?

Sambhav 30:05

No, No, No. I don’t think it was the IIT pedigree. They were just like they loved the energy and clarity we had for this idea.

Akshay 30:19

 Well you really thought it through, you researched on it

Sambhav 30:22

Yes. Like with the limited resources that we had while being in college and especially from India if you look at our previous batches before the summer of 2019, you wouldn’t find founders as young as us in the Roorkee batch. Getting shortlisted for YC in itself was a very big deal for us. I remember, we were very happy that at least we got into the interview stage, which is like 10% of the applications. And now with this probably even if we got an incubator or an accelerator, we’ll be happy. We didn’t have high hopes, to be honest. We were like, let’s give it our best. Let’s try to answer whatever questions they might have. So we used to just discuss what all questions might come up, how are we different from different payments apps, what’s going to be a revenue model? What’s going to be, how are you going to acquire the first 10,000 customers? Are there any regulations? We just used to get through these questions. Let’s try to find answers to them. So 2 to 3 weeks we just spent on creating a list of things that YC would ask us. We did some mock interviews and each one of those went off in different directions. Someone would grill about the competition while the other would about regulations. 

Akshay 31:53

These were your seniors doing it?

Sambhav 31:55

Seniors, YC alumni. On Twitter, a lot of YC alumni would put out their calendar where you could just book a mock interview. We did a few with US founders and a few with Indian founders. It was a great experience. After the interview, we were not sure if our interview went really well or we are feeling it went well because they did not grill us thinking that they are kids. We had a good interview. I think they were quite satisfied with the research and what we were trying to build. We got into YC and after that definitely, there was no looking back.

Akshay 32:43

So what happens once you get into YC, are there classes and then time to work on the product? Just help me understand.

Sambhav 32:56

In YC, there are no classes. I would say it is more like an accelerator program.

Akshay 33:06

And they give you money upfront?

Sambhav 33:09

Yeah, they give you one crore. They have a standard deal. So they do seasonal investing twice a year. Once in the summer batch and the other in the winter batch. Every startup that they invest in, give one crore approximately. So yeah, we also thought that this was a crash course to entrepreneurship and they’ll make us an entrepreneur in 2-3 months. But it’s not true. It’s more about just being very hands-on, whatever you’re building, just build it, whatever problem you’re trying to solve, solve it. YC takes startups at all stages, at an idea stage, revenue stage, go-to-market stage. The whole idea is that after 3 months, there is something called a Demo day. It is basically where all the startups gather and all the investors gather and every startup is given 60-90 seconds to pitch their idea. And people from Silicon Valley gather and whoever is interested, you can start conversations with them and end up raising money for whatever you want to build. So the whole idea is that the one crore you’ve received, you need to utilise it in the next three months. Every startup has a different goal. Everyone has a different goal in terms of, whether they want to raise money, and if so, then how much. So it’s very subjective as per the case. So after YC, we got to know that before demo day we have to actually experiment with something and validate it. So we started navigating through the FinTech space and understanding that if we want to start with payments, how can we enable it or what are the kind of APIs we would need, what type of partners we would need, how can we get the cards manufactured for launch, etc. Do we need certain licenses, certifications? How would the company operate? There were a lot of complications and we would receive a lot of scepticism whenever we used to speak. They would say things like a lot of things about the regulations one needs to consider in payments and FinTech. So yeah it was an interesting period in the next 2-3 months. The learning curve was very steep. We had to experiment, evaluate, design, launch, and understand FinTech. Learn about fundraising and the terms associated with it. What is a term sheet? We didn’t even know what that was. We had to incorporate the company, whether we need people or not. From designing our logo, website and a lot of things. Those 3 months I would remember and cherish for my lifetime. We did so many things hands-on, it is completely unforgettable. And the first experience is always priceless. So if we wanted to hire also, we wrote the JD ourselves. It’s how you build everything with love. It’s like your baby.

Akshay 37:15

So, you spoke to people in the industry like your seniors and others to understand the space and form a strategy. Basically, these 3 months were spent in researching and forming a strategy?

Sambhav 37:29

Researching and also setting up the base for the company. We had to validate as these things will work, we had to know.

Akshay 37:39

How did you validate? Did you launch an app and a card and all that?

Sambhav 37:44

We just, it was a very hacky MVP. Through which the users could load money and they could do UPI transactions by using a payout API in the backend. We designed and coded the whole thing. Very simple product. Just load money and you can do UPI transactions. You can scan and pay basically which the kids could not do before.

Akshay 38:10

And how did you do this? How did you enable UPI transactions?

Sambhav 38:14

By using a payout API from one of the PGs. There is a payout API where there is an IMPS transaction in the backend. You can basically make a transaction.

Akshay 38:27

Okay. So you created your FamPay account and then people could load money which would lie in your account and they can scan so it would go from your account.

Sambhav 38:40

Right, so that is what we connected to the PGs here. Like we just want to experiment otherwise definitely it’s a paid API. So as I mentioned we saved every penny as much as possible. If we had to use a tool also, we used to try to look for how as an early-stage startup can we use it through different investors. We would get something or the other, free for 3-6 months. So we did all of that. And then we launched our product and within 7 days, we got traffic of 35,000 users.

Akshay 39:23

Wow. Okay. How did the word spread? Did you advertise?

Sambhav 39:26

No, we didn’t advertise at all. In just 4-5 days, we built an army of 5 interns. We designed a very quick brand ambassador programme. Each one should get 5 of their friends on board and all of that. We had 250+ brand ambassadors in just 3-4 days.

Akshay 39:56

And what would they get? Some certifications basically?

Sambhav 40:00

Yes. We did not pay anything upfront and we had done a little bit of gamification so that the users who came in and refer a friend, they would earn coins. For every user that you refer, you used to get 18 coins and you could use 30 coins to earn a spinner. And with a spinner, you would get cashback. But it was all done so fast. From building the MVP to getting interns, spreading the word, getting it designed, getting brand ambassadors onboard and then expanding so quickly, building a referral and then capitalising it and then building coins. It just went crazy in the first seven days. We just stopped the experiment of course because we did not expect that much traffic and we were not ready for that scale. As it was just an experiment, we were not doing KYC, no partner and all of that. We just shut down that product but that validation helped us to definitely raise our seed round of 4.7 million from Sequoia.

Akshay 41:25

This was on the back of the 35 thousand number. That’s a huge validation.

Sambhav 41:30

That’s a great validation and even the seed round was more about the validation that we can execute things. Because we had incentivised the brand ambassador programme, we put in some money for the referrals. In one dollar we would get 10-15 users, that is how cheap the acquisition was but more than what it proved was that we did it all in 7 days.

Akshay 42:20

Then, what next? By this time you would have set up your company and all of that you had taken care of.

Sambhav 42:27

Yeah, by that time we had done that. After we got out of college and got funding of one crore, we felt that it was huge. For a college student, it felt that a lot can be achieved with this fund. But soon before our fundraise, we realised that this would be nothing if you want to build a big company. Because even if you need to get 2-3 good engineers, they would take up 30 lakhs as a minimum salary. You have a lot of costs – like tech, human resources, marketing, getting your cards manufactured and so many things. Of course, the first thing we did was shut down our first product, our MVP. We needed to build it with all the compliance in mind, figure out the regulations and all of that. We started building our team, we started reaching out to our friends from IIT Roorkee. I told you about Appetizer right, so in college, there was a group called Mobile Development Group. Kush, Chirag and Harjot were part of that group. So Appetizer was developed by Chirag and Harjot. We had worked on that product together and Kush was 100% sure that we had to bring them on board. So we got them in and started building the product and the team, figuring out how to launch the product and all of that. By Feb 2020, everything was ready and we had the first version that could go out. We had a good go-to-market strategy aligned, we were planning to…

Akshay 44:32

Tell me the details. What was product version 1? What did it all include?

Sambhav 44:38

It included getting your own card, your own scan and pay function ready, and doing peer-to-peer payments. It’s like a full-stack payment option for kids. But unlike other wallets, it was more about giving them a complete banking experience. We were like we won’t make it seem like a payments app, we’ll give them a card and scan and pay functionality.

Akshay 45:16

They can see the balance and all that? Parents can transfer the money and they can see the balance 

Sambhav 45:20

Yeah, we were planning to go live in April, after the Board exams.

Akshay 45:30

How does money load in this? Let’s say you got kids to download the app, how would they take money from their parents?

Sambhav 45:37

So the parents can send money directly to their kids’ accounts or they can download the app themselves. They have their own way. The parent and kid both are part of the onboarding process.

Akshay 45:53

Okay. and parents could also do a UPI transfer to the kid?

Sambhav 46:00

Correct. So that was the first version but COVID happened. All the schools, manufacturing plants were shut. There was a lockdown and a lot of uncertainty as to when this will go on till. We were like let’s not launch the product right now, we might end up investing a lot in growth and may not end up getting the right RoI.

Akshay 46:24

How big was your team then?

Sambhav 46:26

6-7 members.

Akshay 46:29

Okay. Most of them are from IITs only?

Sambhav 46:32

Yes. Six of us. We call them the founding team. Then there were a couple of engineers who had just recently joined. It hadn’t even been two months. So it was a very small team, 4-5 interns apart from that. We were like let’s hold on and see how the spending patterns are changing, how are people adapting to COVID, whether schools are opening or not. We conducted surveys for 2-3 months. We realised that our go-to-market strategy should be online. And finally, last year in August, we finally went live. The journey has been amazing, very crazy after that. In the first 8-10 months, we were growing 100% month on month.

Akshay 47:39

The card was free here or they had to pay?

Sambhav 47:44

In the first month, for the first thousand users, it was free.

Akshay 47:50

That was your growth hack basically? Like your go-to-market strategy, it would make people curious.

Sambhav 48:00

Correct. That excited them. It’s their first card in their life, it was the same feeling as a first bicycle or first phone. It was personalised and also, we launched India’s first numberless card.

Akshay 48:20

Why numberless? Won’t that be a problem for e-commerce transactions?

Sambhav 48:27

The number is available on the app. We were brainstorming and it started as a design problem. We were trying to place the number but that was spoiling the look of the card. It started with that conversation and we thought what if we don’t have the number, it will look so clean. When we started thinking about it seriously, even from a security perspective, it takes security to a whole new level because if the kid is losing the card no one is getting access to the CVV or anything. And in any case, if you are shopping offline, you are swiping the card and entering the pin, you don’t need the numbers to be on the card.

Akshay 49:20

This is what you were talking about, the advantage of doing something without experience.

Sambhav 49:25

Correct. That naivety acts in your favour. It helps you to be unconventional and go beyond what is accepted. Even if I saw my online shopping behaviour, I don’t usually have my card handy, I have to go to my wallet, remove it and then type.

Akshay 49:52

Or like I keep a picture with me. If I have to use it I search for the picture.

Sambhav 49:58

Ultimately, you also prefer the card details to be on your phone because it is handy. So we were like why not put all this on the app and remove it from the physical card. It is much more convenient and secure. Third, it is much cooler. Our card is super cool and fourth is, kids aren’t aware that this information is sensitive. There are so many kids who have put pictures of their cards on Instagram, they don’t have to worry about disclosing information. They want to flaunt it. If you search FamPay on Youtube, you’ll see so many unboxing videos by kids organically. We knew if we want to attract kids to this product, it has to be sexy, it has to be aspirational, it has to be cool. We knew that the brand and the product we are creating has to be of really good quality because these are the kids who have been using YouTube, Instagram, Netflix from day one and already have so much access to great quality products. They can immediately tell which one is a poorly built product. And also we had to beat the banks, of course. Or at least the mindset that kids had regarding banks. They find it very boring and that they don’t want to do it. So we had to break this notion. It’s simple.

Akshay 51:42

How long did it take for you to get the first thousand with all these hacks? The unboxing-friendly, influencer outreach etc?

Sambhav 51:52

I think we got the first thousand in the first 4-6 weeks.

Akshay 51:58

And how tedious was it to get the KYC done? To get the first money into your account?

Sambhav 52:04

That’s a bit tedious, that’s a challenge for all the FinTechs. KYC brings a certain drop off in the journey because people are lazy to do it and when asked about documents, they get more serious, questioning the security of the product.

Akshay 52:26

Kids don’t have too many documents, right?

Sambhav 52:30

They have Aadhaar. It is to build trust that parents also have to do KYC. Parents question as to why is the kid asking for this? It’s very common even in India. Parents don’t trust right away. So that’s a bit tedious. 

Akshay 53:08

So in the first 4-6 weeks, the thousand people were the ones who finished the KYC.

Sambhav 53:13

Yeah and started using and transacting.

Akshay 53:18

From there, how did it grow?

Sambhav 53:23

As I mentioned, it grew 100% month-on-month.

Akshay 53:27

September you had 1000, August you launched, then it was 2000, 4000, etc that was the trajectory?

Sambhav 53:38

Yes, it was multiplying. The average was 100% but in certain months we hit 3x, 4x. It was quite fast.

Akshay 53:48

How many active users are there now?

Sambhav 53:51

We have more than 2 million registered users already on the platform.

Akshay 53:58

But the registered user is someone who has downloaded or entered the app but has not done the KYC.

Sambhav 54:05

Correct. 

Akshay 54:05

Then tell me about the next fundraise like that’s the next milestone in the journey, right?

Sambhav 54:12

Yes, so we recently closed our Series A, we raised 38 million from Sequoia and a few other investors. I think we had the first conversation in February or March and were very sure by the end of December that we had hit PMF. This has a great product-market fit. People want it, we were seeing a good number of kids using it regularly, good retention, the growth rate was crazy. The kind of feedback we were getting from users, the kind of time they were putting in unboxing videos, pictures. These were all signals and we knew it. Now, it was about scaling. That is when it started.

Akshay 55:19

This was again in-bound? The VCs were already aware of you?

Sambhav 55:23

Yeah. We were always connected from the start after YC so we kept on chatting over the last couple of years. When we needed help, we would ping them. Even if those investors were not on our cap table, I think some talk or the other kept happening. They were aware of the progress and everything and it just naturally happened. That is what triggered our Series A. We just closed it about one and a half months back or a couple of months back.

Akshay 56:07

And which I think is the third-largest Series A ever done in India, right? 39 million dollars?

Sambhav 56:14

Yes, it’s 38 million dollars.

Akshay 56:18

It is such a massive achievement for someone so young.

Sambhav 56:25

We did not know that it is one of the largest Series A. We were also reading an article and it said probably the largest Series A by first-time entrepreneurs. Definitely, it is a great milestone.

Akshay 56:50

What made it happen? What contributed to such a massive Series A?

Sambhav 56:58

Everything. I would say the product, the growth, the team, the energy, how we have executed everything, marketing, brand, etc.

Akshay 57:11

What was your team by the end of last year? 2020 December or January 2021?

Sambhav 57:18

It was small, 30-35.

Akshay 57:23

These were all tech or marketing?

Sambhav 57:26

Correct. So the kind of growth and things we pulled off with such a small team, expenses and P&L we had, everything contributed to this. It was a new market. As I mentioned, nobody else is building for teenagers. If we see the products in the market, everyone is building for adults. If you have to build for teenagers, I think the approach has to be different. If there’s any product for teenagers, they mostly end up targeting parents. That wouldn’t work because the kids’ generation has changed a lot. In our times, probably we used to ask for remote control cars and be happy but now they ask for greenscreens. They want to start podcasts of their own. And it’s the next big market because every year millions of kids will get their first smartphones, it is basically tapping the future adults.

Akshay 58:40

Okay. I want to understand the business model when you were doing the discussion with VCs for Series A, when you had to show them how you will make money. So what is that?

Sambhav 59:01

Currently, we earn in two ways. The card is not given for free anymore, and the second is…

Akshay 59:12

How much do you charge per card?

Sambhav 59:14

So we just launched our new set of cards, we again launched something very new. India’s first doodle numberless card with visa. It’s called FamCardMe. We have two segments of cards. The second is FamCard. FamCardMe is a highly premium version and can be personalized. Kids can add their own choice of doodles to it. So that card is charged at 1000 for a one-time fee and the FamCard is charged at 500. Secondly, for every card transaction, we earn interchange. Those are the two ways we are earning right now.

Akshay 1:00:03

Okay. Your current offerings are essentially like a bank account substitute for teenagers. So what is in your product roadmap now? What do you plan to add? Because teenagers grow and become adults and take up their first jobs. Obviously, you’d want to be with them throughout the journey, right?

Sambhav 1:00:29

That’s the exact thing even our investors were asking: what’s our roadmap. This is the most exciting part. We are not looking at losing the customers once they turn 18 and the idea is to grow as our users grow. And so there will be really interesting things we’ll be launching in the next 12-18 months for that cohort of users who graduate into becoming adults. So let’s keep it a surprise, there’s a lot in the works and in the plan.

Akshay 1:01:00

So long-term view, say by 2030, where do you see FamPay? By that time? We don’t need to go into detailed stuff but a more broad picture view of where you think FamPay will be by 2030?

Sambhav 1:01:30

The big picture is we want to be that whole financial ecosystem for GenZ.

Akshay 1:01:40

Like a bank replacement? For example, instead of an ICICI account, I have an account with FamPay which has everything that I need over there?

Sambhav 1:01:49

Yeah, we would want to be the one-stop solution for them and that all their demands are met through us. But of course, that is very far. In ten years, we will be more focused on our mission that how we take GenZ one step closer to financial independence and financial literacy. A lot of our decisions would be driven by that.

Akshay 1:02:20

What do you plan to use these funds for? Headcount increase or marketing spend or what?

Sambhav 1:02:28

So, definitely, investing in growth from here to our next milestones. Hiring and expanding the team quite extensively in the next 3-4 months. We have already started hiring. So, we are investing some money in launching new products. But the majority of the costs are going to be definitely into growth, marketing and hiring.

Akshay 1:03:08

Okay. How big is your team now?

Sambhav 1:03:11

We are close to 50-53 full-time members and close to 20 interns.

Akshay 1:03:19

Where do you see it by the end of the year?

Sambhav 1:03:24

That depends. I think we are looking at 25-30 more hires in the next 3-4 months across different functions.

Akshay 1:03:35

So how are you building up the organisation? Are you building it up as a remote company or as one with an office-based culture? I want to understand your thinking on building FamPay’s organisation structure.

Sambhav 1:03:58

We are still fighting or arguing on whether we want to be a remote-first or office-first company. There are two perspectives to it. There’s always a healthy debate about this. We are figuring out a middle way wherein a year, we would do a 3-month workation at a location where the whole team will work together and the rest of the year you work remotely. We’ll always have the office open, but it is not mandatory for at least the next 6 months. It is subject to change and we are still deciding on how to go about it.

Akshay 1:04:58

And in terms of your people strategy, what kind of people are you looking to hire? Are you looking at a flat organisation? How will you manage when you hit a headcount of 100 people?

Sambhav 1:05:17

We have had this discussion internally, both me and Kush. We feel that we’ll let it evolve for the time being. Every startup has a different org structure and unique way of operating and we feel that it is not about titles that define but more about how you operate. We are giving it time, it depends on hires and how functions evolve. It’s not just about creating a culture. We are focusing on creating a healthy culture where everyone has a certain freedom, ownership, accountability. It’s more about that creating that healthy work environment and less about org structure, we are letting that evolve on its own. We have spoken to a lot of founders and every company to some extent has a unique org structure.

Akshay 1:06:24

Right. My last question to you, by when do you think you’ll become a unicorn? Or is that something you don’t think about?

Sambhav 1:06:35

Honestly, we don’t look at a time frame for that. We have other milestones in our heads. Being a unicorn is more of a byproduct or outcome of our growth, so we are chasing the milestones that we have set like we want X number of active users or Y volume. But it’s never for the purpose of becoming a unicorn soon. It’s more about chasing our growth and mission. Very few conversations between Kush and me or within the team about that. It comes up as a joke, recently during the fundraise, the team brings it up. It always comes up as a joke, but we don’t discuss it.

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