Rahul Pagdipati Zebpay

In India, Cryptocurrency is one of those tech innovations that has hit more headlines than any other! From influencers promoting it on social media to companies sponsoring major sporting events, the popularity of these virtual digital currencies has risen in India.

In this episode of the Founder Thesis podcast, Akshay Datt speaks with Rahul Pagidipati, CEO, ZebPay, India’s biggest cryptocurrency exchange. He is a second-generation Indian American and has been a part of the global start-up ecosystem for the past 20 years.

Rahul fondly recalls his earlier days when he started numerous ventures in India and the US and fell in love with investing. This is when he came across Bitcoin and Blockchain and decided to invest in ZebPay. Little did he know that the company will face uncertainty due to RBI’s ban on cryptocurrency.

However, in 2020, after a two-year hiatus, ZebPay was relaunched, with Rahul taking over as CEO.

Tune in to this episode to hear Rahul speak about how ZebPay is disrupting the way people transact and invest with its ground-breaking financial innovations.

Key takeaways:

  • Experience of running a venture in India in the late 90s.
  • India’s response to cryptocurrency.
  • The ZebPay’s survival story.


Episode Transcript

Full show notes are appended below. If you prefer a printable file, please use this link.

Rahul Pagidipati: Hi, I’m Rahul Pagidipati. I’m the co-CEO of ZebPay, which is one of India’s biggest Bitcoin exchanges. We help Indians all over the world, not just in India, help them buy Bitcoin

00:00:41

VO: Crypto, Ethereum, NFT, blockchain. Do all these words sound like Greek to you? Well, they sounded the same to us also till we heard this fascinating conversation in which Akshay Datt actually sits down with Rahul Pagidipati who is a crypto investor and also the co-CEO of ZebPay, which is among the top three crypto exchanges in India. Rahul brings to the conversation a unique mix of perspectives. He’s a second-generation Indian-American who started up a venture in India. He’s a very early believer and investor in Bitcoin and cryptocurrency and being a part of that ecosystem in the US, he’s at the forefront of cutting-edge financial innovations that would disrupt how humans transact and invest for decades to come. Here’s Rahul talking about how he discovered India and his journey.

00:01:35

Akshay: So, Rahul, what’s the connection to India? I mean you don’t sound like you’ve grown up in India. Did your parents migrate to the US? 

00:01:48

Rahul: Yeah, sure. So I live in Durham, North Carolina. I’m here with my wife, she’s a cardiology professor at Duke University. And you’re right, I was born and raised in the US. My parents immigrated to America before I was born and I kind of fell in love with India. Been an Indian American since I was a kid. But then I moved back to India when I was 21 kind of fell in love with entrepreneurship, realized there’s so much potential there, and moved there to start up a company. And I lived there in my early twenties up until about 25 or so. And the company which is still running, it’s called Anion Healthcare Services and employs 400 people. And because of that early formation of living in India in my twenties, I had always loved it and have been fascinated with the culture and growth and all that. 

00:02:53

Akshay: So what made you want to come to India? You did your undergrad in the US and then, so this was like a gap year thing, you thought you’ll see the world before…?

00:03:08

Rahul: Yeah, so I went to university for my undergrad in the US, and this was during the dot com, bubble boom, you know.

00:03:14

Akshay: Right, pre 2k.

00:03:18

Rahul:  And realized that there’s so much phenomenal engineering talent coming out of India, so why don’t we go to the source? And so went searching for where all this stuff and all these people come from and then fell in love there. But I am now based in the US. Other than those 3-4 years where I lived there, I spent most of my time in America, but I go back and forth quite a bit. Covid has changed that but I would always go to India a couple of times a year. And looking for really cool entrepreneurial adventures and investing. I would say I consider myself both an entrepreneur and an investor, probably maybe more an investor. I’m slightly more an investor than an entrepreneur. And even though I’m both, they are related because what investors are looking for is finding great entrepreneurs and entrepreneurs are looking for finding great investors to back them. The cool thing, because I’ve done both, you have a good, you know, 360° angle of how things work. 

00:04:26

Akshay: So I want to know about your entrepreneurial journey from scratch. Tell me about how you ended up starting a company in India way back in 1999, 

00:04:38

Rahul: Yeah, this is when I was a teenager, almost 19, 20, 21 years old and I had always been in love with building businesses and I would read books about entrepreneurship. My older brother, he’s a couple of years older than me, he also loved it too. And so we were reading books and magazine articles about all these cool people doing technology stuff, right? And at this point this stuff like Michael Dell. Michael Dell had started Dell computers, he started in his college and I was in college. Well, I was like, “Hey, if you could do it then I could do it too.” This was very early as the internet and it was very clear to me the internet was going to be a massive game-changer in the world and so I thought how can we do this? How can I make a big impact on this and then, where can I get the most bang for the buck? And it was pretty clear to me that there’s a lot of cool innovation happening in America and back then these things like Yahoo and eBay and Amazon were out. And I really kind of saw that India was going to be like the next big, big space for this. So this company has now been sold, it was called India World. My brother had met the founder, his name is Rajesh Jain. We almost invested in that company. It was pretty interesting. If we would have done it, it would’ve been a phenomenal return, would have gotten like 20 times our money, and in six months because this is the dot com bubble. 

00:06:12

Akshay: But how did you have money to invest? From your parents?

00:06:15

Rahul: Yeah, it wasn’t a ton of money. It was just me and my brother, my sister and my parents and I mean I would say it wasn’t zero, but it was like 100 or 200 thousand dollars. 

00:06:29

Akshay: Which in rupees is quite a bit.

00:06:32

Rahul: Exactly, but back then, my parents were both physicians, they had been running a small business. It was not vastly successful, but was it also tiny? No. You know, it was like a couple of employees and it was making enough money. Where the first step is, can you start a sustainable business? But that’s anything that could be like a food truck, it could be small, it could even be a cab, right? You’re making enough money that you’re not basically on the street. And so and what the real step from going from there to the next step is just lowering your expenses so that you have savings. If you live beneath your means you can then get capital to invest back into new ideas and that’s what we did. It sounds crazy but you do everything as frugal as possible. And so we had some money, we thought investing this in India seemed like a cool idea. The deal didn’t work out with the founder of India World. And I was like well you know if we don’t do that, why don’t we just start our own business instead of owning a small fraction, a minority interest of India World, we can own 100% of the business we startup. So I told my parents that we’re going to put $200,000 into this business. It’s not to that, give me $200,000, I was 21 years old then and then I’ll go to India and I’m going to start a company right? And the family can own this and that’s what I did. So I didn’t use all $200,000 at once. I spent like $5,000 and $10,000, went to India, and then hired a team, and built stuff. And kind of learning from mistakes, a ton of mistakes, built the company up to 120 employees. We were making money and then the dot com crash happened. We lost money, went back down to three employees. 

00:08:34

Akshay: This was within a year you hit 120 employees? 

00:08:39

Rahul: Like in about 18 months. 

00:08:42

Akshay: Wow, what did you start? What was it?

00:08:44

Rahul: A bunch of different stuff. Services stuff, building products, lots of different things.

00:08:55

Akshay: Like a mini Infosys. 

00:08:58

Rahul: Yeah, it was. We were trying to do a mini Indian Yahoo right. And some things were working. Some things weren’t. 

00:09:05

Akshay: You were in services or products also?

00:09:08

Rahul: Both. Building e-commerce, electronic bookstores, right? Things like that. And it hit us that we can’t spend more money than we’re making, right? Because of a lot of things like this, you should spend more, you should figure out how to borrow or, just lead forward. That’s why we had a downside. But you know when we dialed it back, hey listen, only spend what we can. That’s why we went down to 3-4 employees, focused on money-making services. And then we kind of moved into healthcare services. The reason we picked that is that both my parents are doctors, we kind of knew the healthcare space decently well and that’s actually what works. So what ended up happening was at this low point, I was like well what I do now? It was a good time to go back and finish up college also went and got my MBA, my law degree but I was still the CEO of this company that you know, we had 3-10,15 employees around that we would be doing medical building services or medical billing software or helping people figure out, how to do coding online and things like that. So during this time what we did was on the entrepreneur branch of what became big, the really big company was Freedom Health. And my father, my brother, I and my sister, we kind of all worked together and said, “Hey listen, you know insurance is the best place to be.” So, my dad, he’s a risk-taker, decided to take all of his net worth. We took all of our net worths and we put it all together and we started a company called Freedom Health. This is the thing about having, you talk about the background of stories. At this point, we had multiple failures so you say Anion wasn’t a failure, but it wasn’t a win. It was like a zombie tech company at that point. You had to go through lots of ups and downs. But my dad had started like 25-30 companies and 90% of them had failed or like failed or not done great. And this is the 31st company.

00:11:25

Akshay: These were all like side hustles?

00:11:29

Rahul: I would say, yes and no. The first business which was doing better than losing money was a clinical lab. My mom is a pathologist and ran a small clinic, it was a small business like maybe made 2 million dollars of revenue and probably made you know, let’s say $300,000 a year in profit. So not amazing, but not tiny, it’s enough to live a pretty good life in America. And so from this small lab which is making a little bit of money, right? My dad said you know what, I’m gonna take my entire retirement savings and the cash flow from the clinical lab and let’s go start a health insurance company. Right? And he had all of us kids kind of put in the time. My brother moved back from New York from investment banking and we started an insurance company. We just basically took our entire net worth and said, you know what, let’s see if we can get it, it was about a couple million bucks, $2 million, $3 million all together but 2 million dollars initially. And we started a company called Freedom Health and what Anion became, in a sense because we knew how to run…

00:12:46

Akshay: A back office for Freedom Health.

00:12:48

Rahul: It became the back office for this company. But Freedom Health is the one that took off and this company became honestly massive. You know, we went from 0 to $100 million in revenue in about three years. 

00:13:01

Akshay: Wow, and without any external funding. 

00:13:04

Rahul: Yeah. Through like lots of this just stretching and maximizing and we brought in a couple of smaller shareholders, eventually, cash them out. And at this point, we had every single dollar we had at the clinical lab, every single dollar we sold all of our real estate. You know, my parents had a second home, they sold that and put everything we got into this. At this point, probably about $10 million of capital has gone into the business. 

00:13:35

Akshay: And this is what, like reselling insurance or as an actual full-on insurance company?

00:13:40

Rahul: Full-on insurance company. Yeah, a health insurance managed care company. 

00:13:47

Akshay: And so with underwriters and like the whole deal, wow.

00:13:51

Rahul: Yeah. Well, it was complicated stuff. We grew it, you had to give amazing benefits. So, we weren’t profitable, we’re losing money, but we’re growing. At this point, we realized that we’re out of ammo. We decided we should probably find someone who can then become the majority owner. A guy named, a cool entrepreneur named Dr. Karan Patel had kind of been around the block before. He had sold his business for $200 million several years ago. He had an uncompleted expiration. He came in and he bought the majority stake of freedom. So we stayed on as his minority partners and he bought a majority stake and we took our money off the table but retained equity and big minority equity in the same company. And at this point is roughly 2007-2008, right before the financial crisis. Very lucky timing by doing it right before everything tanked. And he came in and at this point, I just finished my law degree in my MBA from Kellogg at Northwestern Law school. So I went back to grad school, kind of was still running Anion and I’m still helping out at a high level on Freedom Health. And then we sold after, so the majority stake of Freedom Health to Dr. K. He grew it along with our help from 100 million revenue to almost two billion in revenue. And it became the largest private health insurance company in America at this point. And so over 10 years, it took about 10 years from 2008 to 2018. Lots of hard work. Same thing. Every incremental dollar profit went back into growth. We raised a lot of capital, Dr. K put in some money we raised by another 25 million dollars of total capital. But other than our capital and that $25 million we raised, there was no other capital. And we sold for two billion bucks, almost to about $1.8 billion. And then during this path, what I was doing is I loved entrepreneurship but also loved investing. And so what happened was within the family, my parents were more physicians, kind of step back from day-to-day operations. My brother didn’t move to more like there’s an operator like we would invest in companies and businesses and along that path, I took more the investor role where I would basically like a value investor, try to value businesses if we had any excess cash that our business would throw off, reinvest back into it. If not, then we just kind of sit on cash or reinvest back into our core operations. And so if we find a great, if we find a great idea we invest and it was a lot of small public companies, like you know these are small companies worth less than 50 million dollars and for 3, 4, 5 years I just spent.

00:16:43

Akshay: And you would buy a minority share or a majority share?

00:16:46

Rahul: A significant minority stake, these are public companies. So between 1% to max 10-15% but one million to $10 million of capital going. I fell in love with investing, reading endless reports, and understanding cash statements, balance sheets, things like that. And during this path of really honing my investing skills stumbled upon Bitcoin and Blockchain. Anion was still going on, we had the three or four people team learn about Bitcoin, what is mining? How does that work? And they spent a ton of research on this stuff. And they came back with that this is interesting, but we’re not sure what it is. And I said, okay, well, let’s research more. And when you start researching, this is something that could vastly change health insurance, which is what we’re still doing then.

00:17:50

Akshay: Okay, like Blockchain as a technology. 

00:17:53

Rahul: Blockchain and smart contracts could dramatically change the way health insurance could work. And so, slowly, step by step convinced the family that we should make major investments in this space. By the time that we sold Freedom Health, we had decided to move, other than healthcare, our other masthead of investing would be in Blockchain. And so, but a similar amount of capital into a crypto Blockchain investment of that. Very simple. It’s Bitcoin and ether, those are very simple. It’s a public token almost like we believed in a store of value and believed in the idea of smart contracts and decentralized apps. They were going to be a mass thing and we thought these two were the leaders, they have already got a massive market share and they’re gonna continue to win market share. 

00:18:49

Akshay: What price did you buy Bitcoin for?

00:18:53

Rahul: It was like all over. I’m still, we’re still buying today, but we first started buying. I first heard about Bitcoin back when it was about five or $10, but we didn’t buy it until about 7500 bucks. It is funny because when I bought 100 bucks, I’m like, oh man, this thing used to be 5-10 dollars but it was like 10x back then right? And so, but yeah, but we’ve been buying back then and holding on and still buying now. So I knew about ZebPay and the team and I met the founders and the management team at a Bitcoin conference in New York. And at this point, this is right when the RBI decision had happened on a kind of making Bitcoin per se, very hard with banking, right? People saying it was made illegal, it wasn’t. It was just, they put, they put up a lot of, let’s say, hurdles in place. Yeah. And convince the founders that hey, listen, we are entrepreneurs and investors, we’d like to buy a significant minority stake in the company. We decided to do it at that time.

00:20:22

Akshay: Tell me a bit about ZebPay history also, like how did it start? And I believe it’s almost like a seven-year-old company now. 

00:20:33

Rahul: Yeah, ZebPay, a cool company founded by three phenomenal entrepreneurs. Mahin Gupta was more the CTO role, Saurabh Agarwal was the founding CEO, and Sandeep Goenka was more like a CMO and COO. These three guys all have entrepreneur backgrounds. Mahin had started the very first Bitcoin exchange in India, it’s called BuySellBitCo.in. We bought some bitcoin from him back then. I knew about him. I knew he was a very solid guy.  Same thing, because of regulatory hassle and whatever he kind of shut down BuySellBitCo.in. And I was kind of morphing ZebPay. By building a phenomenal product, it ended up becoming the largest Bitcoin exchange in India during 2015, 16, 17, you know, the run-up in Bitcoin prices And had 65-70% market share, they were doing well, and then all of a sudden the door got slammed shut with the Reserve Bank of India, right? And then they try to get global, they try to build a global market, but it’s hard, it was hard competing. The founders kind of decided, “Hey, listen, you know, if we can’t operate in India, it’s not worth doing this stuff.” And so they kind of wanted to step down. I was like, “Well, listen, you guys can step down, but like, I don’t want to quit. Like I think it’s really important that ZebPay stays alive.”

00:22:08

Akshay: And when did you invest in ZebPay?

00:22:10

Rahul: The first investment happened in 2018 and then at the end of 2019, basically in 2020 January is when I bought the majority stake. And the same thing that happened in this scenario is that I told the family that this is not the time to quit. We should be doubling down on  ZebPay. The family office, we have a family office called Anion Capital, which is all this family-run capital. They didn’t want to do the follow-on investment, but I believed in it, so I kind of took my capital and then bought a majority stake. That was roughly about a year and a half ago.

00:22:58

Akshay: What made you switch from being an investor to an operator, and putting in your money into it? What made you want to do that? 

00:23:11

Rahul: It’s simple, let’s say I love Bitcoin, right? And so I felt this before I negotiated before WazirX had sold out to finance. I felt that I had seen what happened with Mt. Gox. Mt. Gox was another Bitcoin exchange, which kind of had a ton of market share and it really kind of hurt the Bitcoin industry when it went down and I was like, you know what, if ZebPay quits, it’s bad for the industry, bad for Bitcoin, bad for India. Sometimes you just have to, in wartime, in times of war, times of like, you know, uncertainty, a leader just has to step up, even though, you realize that I’m not probably even the best person for this, but if no one else does this, then we all fall And so, I decided that this is something which I was passionate about, this is something that I wanted to run until the very end and convinced my wife that this was a thing that we should do and it was something that I love doing and she luckily believed in me too. And we just did it and decided to jump into the deep end of the pool.

00:24:24

Akshay: So what was the peak of the value of transactions through ZebPay pre RBI ban coming in or the RBI restrictions coming in? 

00:24:36

Rahul: Yeah sure. We did about $3 billion in volume total. You know the peak would have been maybe about 30, 40, 50 million dollars a day, maybe $20-30 million a day. And it was massive. ZebPay was one of the biggest exchanges in the world at that point. 

00:24:56

Akshay: Wow, okay. During the long winter of crypto, so what did it come down to, and tell me about that. 

00:25:09

Rahul: Sure. So the RBI happened in the spring of 2018. ZebPay made the strategic decision to expand abroad, which was very hard because we’re competing against massive players.

00:25:20

Akshay: You invested pre-RBI decision or post that? 

00:25:23

Rahul: Post, like right after that. We were rough in July of 2018. 

00:25:28

Akshay: Very, very contrarian call.

00:25:30

Rahul: Yeah. You realize that we believe in the company, the team, the brand and we wanted to come, like I said, we wanted to invest in India and the Blockchain. And so during the winter, it was awful like Bitcoin had taken from $20,000 down to $3,000 and either had gone from like $400 down to 100 bucks and luckily I’ve been through a couple of cycles. I realized that this is something that we believe in. So I convince the family, I don’t know when it’s going to bottom, but as long as we invest over the long run, we’ll do fine. And so that’s what we did. So we were heavy buyers of Bitcoin and ether back when everything was falling right. And we were not just in Bitcoin and Ether we made investments in ZebPay, the family office also made investments in a company called Brave Browser. It’s kind of, I don’t know if you’ve heard of Brave Browser?

00:26:27

Akshay: Privacy focussed, yeah.

00:26:29

Rahul: We made investments in coin base, in a lot of really cool funds. These are things like Pantera and crypto-focused Blockchain hedge funds and invested heavily like and made like I said Blockchain, the other focus here for the family office other than healthcare. And then during this pattern this winter, you know, let’s say it was cold and dark and depressing, but usually, you just had to put one foot ahead of itself and then move forward. And because it was cold, dark, and depressing, that’s why I think a lot of the old employees and the founders wanted to get out. So a lot of people left, a lot of the best people left. But luckily a lot of really good people, phenomenal people stayed on and they believed in the product, believed in the company and I was really lucky to meet these people. And then when I decided to become CEO like I said, very lucky these people believed in the vision, they stuck on board and we were 40 employees back when I became CEO and now we’re almost 200, there are 180 employees now, right? And so got lucky, focused hard on fixing the product and making it better and better. And the RBI decision was overturned by the Supreme Court three-four months after I became CEO. And then it was full steam ahead. It was just rebuilding brick by brick. The big issue is that we lost our lead as being the number 1 player. And also, you know, let’s say, technical infrastructure on how to scale and a couple of companies that are out there are doing well too. But really what we realized is that what we have to do is stick to our core principles of what we want to do and, and we’ll be fine. And that is providing phenomenal service, trying to up the game on the technology, the product right? And doing it at a very, very low cost. And so that’s what we’re trying to build, basically the best way you can buy Bitcoin at the lowest possible price and the best possible service. 

00:28:47

VO: If you like to hear stories from founders then we have tons of great stories from entrepreneurs who have built billion-dollar businesses, just search for The Founder Thesis podcast on any audio streaming app, like Spotify, Gaana, Apple Podcasts and subscribe to the show.

00:29:11

Akshay: Yeah. So, what has the build-up journey been like? At the lowest, what kind of monthly transactions were happening, and what is it today? Tell me about that.

00:29:22

Rahul: The company’s doing well. It’s phenomenally profitable And we actually plan on making these documents public, but didn’t even raise that much capital, but doing north of 35 million dollars in revenue almost like say $20-25 million dollars before I came on board, right? And this is a business which people were lining up to invest in. Like we had a lot of really famous Silicon Valley venture capital firms wanting to invest in the company. But then like I said, they backed off once the RBI decision happened. And then, of course, the revenue number exactly, it went to zero, when we invested like, it went to nothing and that’s a big reason why we decided what we do to stay afloat. And I mean ZebPay honestly for like a week or two, there was a good chance that we just wanted to shut down, right? And so you know what, it’s not working. We return money to shareholders. And that was in a sense a plan and what I realized when I came on as the CEO is all we have to do is just have to make enough money to survive and not die. And that was the goal, the goal for me coming back on board was thriving. It was not, it was not thriving, it was just surviving so that we could live to fight another day. But since then we’ve come back and we’ve done over a billion dollars a month. I don’t know how much we’re doing each day, but what we do is say between 10 and on really good days, $50 million in volume per day. I think we’re probably maybe the third biggest exchange now. WazirX is number one I think, we are at 11.2 million. So, WazirX is about 60. So, still doing a ton of volume, but our goal right now is to build back more market share, drive the cost of buying crypto down almost to zero. 

00:31:15

Akshay: How would you do that? 

00:31:18

Rahul: Yeah. So this is the innovation of the business model. And I’ve been figuring out how we can build a long-term sustainable business. Yeah, the big asset here is what we’ve done now is, we have a phenomenal leader named Avinash Shekar, who is the CFO and then became the President, and now the co-CEO. So he’s still, he’s still fine-tuning it, but the core point on how we have to drive is the question here. You kind of need, not just capital, you need business model innovation. And my thesis on this is if we can become like a company that is more mutually focused, right? A company that is owned by its members. And what I mean by this, you know what a cooperative is, we want to become more like a Bitcoin cooperative in the longer run. And what my intent is because I’m the majority owner of ZebPay right now is I want to somehow create a trust which will then give the economic benefit of our, let’s say, our company back to not just at the show, but back to our members, that’s our customers. And there’s a lot of complexity here. We’re trying to, but we want to somehow have beneficial economic ownership back on the Blockchain. And how do you, how can you drive the cost of buying? It’s kinda like this, imagine if you’ve heard of a cooperative bank. How a cooperative bank works, is that the actual people who are doing the deposits are the owners, right? So their cost of funds is lower. So at the end of the year, if we can basically take half of the money that we’re making and give rebates back to customers, right? I envision that it can be a way, way low-cost provider. The other way you can do stuff is that you can make the trading fee zero. And you can also move some of the income into DeFi, you help people get money through decentralized financial products. DeFi is cool because you have things called liquidity mining, people will probably wonder what that is. It’s a way of adding capital onto the Blockchain and you’re getting paid because your money is tied up into a smart contract versus being tied up in cold storage. I don’t know if you are familiar with the word cold storage and what it is? 

00:33:35

Akshay: No. There’s a lot of stuff that you have to break down and simplify. 

00:33:40

Rahul: Yeah, sure. So really when you own something like Bitcoin you can kind of own it in like three different ways. You can own it, let’s say in cold storage which is you figured out a way to own the private keys is like your password to your Bitcoin in a secure manner that has not ever touched the internet. It’s very hard for someone a hacker to get access to these because these keys are not directly connected to the internet. Like they’re in some, it’s a seed key connected offline in a sense. The other way you can do it is you can keep your Bitcoin in a centralized provider. Something like a ZebPay, a separate locker or coin base, or a block lot. And what we do is we then keep a good bit in cold storage. We keep some warm wallets, hot wallets. We also lend some out to other customers. And the benefit of this is that if you lose your password you can come back to us. The other benefit is we pay interest on it. So we have a great service called earn and lend and you can make interest off of your crypto right? And then the last thing you can do is if you want to you can probably keep your crypto on a decentralized type of wallet. I mean something like a Brave Browser. You can use a crypto wallet on Brave. You can use a crypto wallet like on a metal mask, you can use a third-party wallet. There’s a bunch of these. These types of wallets are also, but you shouldn’t put a ton of money here. This is the type of money you have in a real wallet like you know a few 100 bucks at maximum right? You shouldn’t keep a ton of money in there. The most amount of money you keep is more involved or in storage. Yeah, go ahead.

00:35:35

Akshay: I still didn’t get what is a decentralized wallet. 

00:35:38

Rahul: Yeah, a decentralized wallet would be like, you can put a wallet into your browser. Right? And what this means is Brave has a crypto wallet built into the browser. So when you’re browsing you’re on like it’s a publisher and there’s a paywall there, you click a button. The Bitcoin doesn’t live in your wall, but it’s a simple password you put in and it’s kind of built into your browser. Right? And this is like a decentralized wallet, it’s connected to in a sense of Bitcoin but it’s not it’s not as secure as what a cold storage wall would be. 

00:36:20

Akshay: Right. Okay. So these are the three ways in which you can own Bitcoin and you also spoke about DeFi, decentralized finance. What exactly is that? Can you break that?

00:36:36

Rahul: DeFi is fascinating to me, it stands for decentralized finance and it’s the opposite of centralized finance which I’d say is the current system we have right now. It’s a current system which is widely used. There are central banks that work with large, blue-chip retail banks, and any of these things like ICICI, HDFC, things like that, and they also have smaller regional banks as well. But like the biggest banks have the best relationship with the central banks and this is, it works in a lot of different countries. Right? And so what the way DeFi works is you don’t need a counterpart to do actual financial activities. And so when you go to a bank right now you go to a bank, you give them your rupees, give them your dollars and they will then take that they use their capital. They will then meet someone who wants to loan a house and they will underwrite a loan and say, “Listen you give me the title of your house and I’ll give you a 50% loan to value your house costs one crore, you have 50 lakhs down, I’ll give you a loan for 50 lakhs and if you don’t pay me, I’m gonna foreclose on your house.” In the same way, DeFi works if you have one ether or one Bitcoin right? And imagine it’s one Bitcoin and you can go into a smart contract and you can lock up your Bitcoin into a smart contract. My Bitcoin is now worth $40,000. This smart contract will then loan you a 50% loan to value, it’ll loan you $20,000. But the price of Bitcoin can fluctuate, right? So the price of Bitcoin goes up greatly, it goes $200,000, you’re still welcome when the price of Bitcoin drops down to $30,000, you have to give in another $10,000 a Bitcoin. Or what the smart contract will do is it will just liquidate $5,000 of your Bitcoin right? And so now what happens is your loan to value is better, right? And it just auto-executes. That’s pretty cool. Like you know someone can come in and get bids on your Bitcoin. And so that way DeFi’s pretty phenomenal because now there’s like 50 billion dollars in DeFi. It’s more than that, it is a massive amount of capital and most of it is happening on ethereum but other chains are doing a lot of really cool stuff and this is really where I say, I think the world’s going, the world’s moving into a DeFi world. 

00:39:06

Akshay: Okay. So how does this tie into your business model innovation in that picture? 

00:39:12

Rahul: Sure. What I envision happening is, DeFi is complex. It’s kind of hard to understand and people want a lot of hand-holding. And so what I think ZebPay is doing is, our goal is because we are in many ways a fiat on-ramp. We’re helping people get into crypto using traditional fiat rails. We want to help, we’re going to make DeFi easy, right? And so we’re working on a lot of different, really cool things like that. For example, most people want DeFi type returns because DeFi can give you great returns.  But they don’t know how to use a smart contract, they don’t know how to use a wallet. So we’re going to be able to come in and you just put your money in our hands and we’ll do all the complex stuff for you and you’ll get a good return, We’ll give you the interest rates, you can get on DeFi. I envision something like that. As our goal is to make it easy and simple for people. 

00:40:05

Akshay: Okay, and how far along are you in that product journey? 

00:40:10

Rahul: We have two major products right now. One is called ZebPay which is our main flagship product and the other part of it is called Zeb dot com.

00:40:15

Akshay: Which is essentially a transaction platform. You can buy, sell and store crypto on the ZebPay platform.

00:40:21

Rahul: Exactly, yeah, the other part is called Zeb dot com. It’s really a simple version, like a much easier version of and we already have a new product right now where you can get interested and that’s a large part of it right now is being put into DeFi right, and eventually happen is you’ll be able to borrow and lend from ZebPay, but even the funding that comes from the DeFi protocols, not from customers themselves. So you’ll be able to deposit some Bitcoin if you have one Bitcoin, you want to go, you need some money to go pay a student loan or pay for your daughter’s wedding, you can just borrow money on your Bitcoin and pay interest on it. So it’s live today, but we’re constantly making the UI and UX easier and better. We brought on a phenomenal new tech team, we’re upping our game and all these things. 

00:41:17

Akshay: Okay, are you targeting Indian customers only for this, or is this like a global product? 

00:41:31

Rahul: Yes, we’re global, we’re in a few exchanges, which does have a global presence. We’re probably 80-90% in India, right? And we’re life targeting India, it’s where we want to win and dominate, right? But in the longer run, Blockchain and crypto is a global phenomenon. So what happens is that we become a dominant brand within the South Asian framework for decentralized financial services, right? So it’s easy for you, it’s easy for anyone, you know. So our mission, we talked about this is financial freedom. We want to figure out, we’re fighting for financial freedom and we think the best way is through Blockchain and specifically in India, so we want to win in India. But as I said, I do envision a little longer in the next couple of decades. We probably have a South Asian bent. But we are working globally in places like the United States and Canada and the UK. Right now we’re in Singapore, Australia, and India, those are our core markets. But we envision expanding and that’s where we’re legally there. You can buy crypto in pretty much every place other than in America on crypto pairs. But we envision having crypto-fiat where you’re able to buy Bitcoin for dollars or Canadian dollars in the next year or so. 

00:42:50

Akshay: Okay, how did you do the build-up again? You told me that the team went down to a pretty small number and now you’re back to about 200 people. So tell me about what you did once you took charge of that. 

00:43:10

Rahul: Sure. That was the hard part. Back when, during the crypto winter, convincing people that spring and summer were coming, it’s hard because it was dark and so we just went step by step. So luckily, a lot of people believed in the company, believed in the team, believed in maybe me as the leader and convinced, like say four or five people to come to join with us, they mostly stuck with the company and really at that point and just step by step, it’s just like I said, stopping the bleeding, making sure we’re not losing money. Once we had stabilized, then just brick by brick and like phenomenal person by person going out, recruiting people into his and this, we’re trying to build, we were trying to win, we want to build for the long run and can you help us do it? And luckily for the team, it’s amazing, it’s getting better and better every day. We have phenomenal people who are spread around the world as people and in Australia, Canada, and Europe, in America and India, and Singapore. We have great people spread all over and I’m just amazed at our team the word we use within ZebPay is this idea of Ohana and Ohana is the Hawaiian word for family. Even though I guess we’re corporate in form, we’re trying to manage, we operate with an Ohana framework, and the idea there is, we want a win-win-win for all stakeholders. And I look at this like there are three major stakeholders in most companies, there are shareholders, there are the employees and there are customers. And usually, in most companies, they’re kind of like, “Hey listen, your job is to create and keep a customer, but in the end, you’re trying to drive shareholder value.” I see this a little bit differently. What we want to do is we want to kind of have a win-win-win, where we treat them all equally. All treat everyone like a family. So our framework is if you treat customers, employees, and shareholders like family, with the kind of Ohana ethos and you, get incentives and you get economics in place, this is where you can get a win-win-win type framework. And what I mean by that is, so right now, customers want what’s best for them, which I understand. They want the highest product, the highest quality product, highest service at the lowest price. So our employees want a great work environment, they want to get paid well, they want great coworkers with happy people with kindness. And shareholders, the same thing, they want to invest in companies which have a great mission and stuff like that. And so if we believe we can connect all three of these things, we can honestly get an inflection point in growth. So now this is what Bitcoin has done like Bitcoin, it hasn’t raised any venture capital, right? It’s been able to become like a trillion-dollar asset because they’ve done a great job of connecting product-market fit. And I remind a lot of the ZebPay team is that don’t look at ZebPay as being a company, look at us as being an extension of Bitcoin and ether, like our job and our ethos is that we’re trying to blockchain the world through financial freedom and what this means is we make Bitcoin and Ether if we make these amazing technologies widespread, we can spread them all over India, it’s a win-win-win. And so that’s what I envision happening over the next couple of years, is that Bitcoin and ether holders, people who hold this stuff have the automatic economic benefit with what ZebPay does. And so if you believe in Bitcoin and ether, then you’re going to believe in ZebPay because that is going to give you kind of extra returns back to you. 

00:47:14

Akshay: Okay. So, right now Bitcoin is pretty much like a rich man’s plaything in India. Maybe it’s not the case in the US, but here it’s like people who have some money to burn are the kind of people who invest in Bitcoin because it’s high risk and it is an unknown mystery right now.

00:47:37

Rahul: It’s considered high risk. No, one big thing that I want to clear up. A lot of people think that when you buy Bitcoin you have to buy one single Bitcoin. Right? Did you know that you can buy a fraction of a Bitcoin? I don’t know if you knew that or not. 

00:47:52

Rahul: Yes.

00:47:54

Rahul: Yeah, so and I would say many people think that it’s already run away, right? It’s already only for rich people. The fallacy in that thought process is that remember as I told you when I bought Bitcoin with about 100 bucks, it has already gone up 10 times, right? And my legal team or the compliance prices is, it’s where Bitcoin going is undervalued or I don’t know if it’s undervalued, but I do know this, it’s undervalued for the long run meaning that Bitcoin prices going up. It has been in the past and I’m pretty sure it will in the future. The reason why is the supply is limited, the demand is going up and so I think Bitcoin is going to go from $40,000 to $400,000. When? I don’t know, it might be one year, it might be five years. But the thing is it has a much higher chance of increasing than the value of the rupee does or the dollar does or even real estate. Right, so let’s say you know your current investment right now, you might be buying some sort of equity stock, say Apple stock or you might be buying some piece of real estate. It’s hard for Apple to go up 10 times the value. Apple’s already a pretty big asset. So if you look at the risk-reward of what Bitcoin offers, it’s still massive, right? Meaning that Bitcoin as a brand is very likely to be the most valuable brand in the world. And people are like, what do you mean? Yeah, so pop quiz. So what do you think are the most valuable brands in the world right now? Do you know what the biggest brands are?

00:49:33

Akshay: Google, Microsoft, Apple.

00:49:38

Rahul: Yeah. Right, that’s exactly it, Google, Microsoft, Apple, Facebook. Okay now, what are the biggest brands? You know if you go ask most people, most of them have heard of Bitcoin, it is pretty amazing, Right? Bitcoin as a brand, it’s kind of like what Google was in 2005 people have heard of Google, they don’t know what it was like. Facebook in 2008-09, knew its social networking but they weren’t using it. Bitcoin is the same way. People heard of Bitcoin. They think it’s expensive but man their brand value is going to grow, as the price goes up, as more people are using it, and the same thing with either. You’ve probably heard of ethereum, right? But other than those two to show you about brand value, what are the other coins or cryptocurrencies that you’ve heard of? 

00:50:24

Akshay: The ones that Elon musk talks about.

00:50:26

Rahul: Dogecoin. Right. Yeah. Have you heard of any other ones? 

00:50:31

Akshay: No. No. 

00:50:33

Rahul: Right. And, interestingly, the reason why you’re exactly right is that people don’t care about the fifth or 10th, or 100th coin. Right? And that’s why Bitcoin will continue to accrue value because people want high rewards plus also safety and that’s what Bitcoin offers. Bitcoin offers really good growth but because it is a blue-chip company, it’s a blue-chip asset, it won’t go down as much anymore.

00:51:01

Akshay: But in a way couldn’t you say it’s a collective shared delusion. I mean, owning Apple is owning a revenue stream? Apple makes products and those products profitably. You know but what are you learning when you’re running Bitcoin other than a shared understanding. 

00:51:26

Rahul: Yeah exactly, you make a very very very good point. So when you own a share of Apple and Apple is a company that sells products and services right? But it is that, but it is just a brand meaning you’re only buying an Apple product or service because you believe in it. I mean it’s like Nike, you’re only buying a Nike shoe because you believe in it. Now, Bitcoin doesn’t sell iPhones or shoes but Bitcoin’s brand. It stands for financial freedom. So what you’re buying when you buy Bitcoin is, see when you earn one Bitcoin right now you can do two things with your Bitcoin. You can sit on the Bitcoin just put it in cold storage or you can lend it out. And so imagine, you own one Bitcoin, it costs $40,000. With ZebPay I think you get 1 or 2%. 

00:52:23

Akshay: Per month?

00:52:26

Rahul: Per year and now, you know that’s not all because I can get 10% on my rupees right? The nuance is you can get 10% on your rupees but is going to depreciate against Bitcoin. Right? And so what Bitcoin gives you like it actually can give you interest if you want to keep an interest in rupees, keep it in rupees, want to keep it in Bitcoin, keep it. So with Apple right now, Apple will give you dividends and the same thing, Apple gives you like 100%. I’m saying the actual income you get from your Apple stock is less than the income you get from your Bitcoin, right? So you actually can get money off your Bitcoin if you choose to. 

00:53:09

Akshay: Who are the people, how do you pay interest in Bitcoin? Who’s borrowing it? And why do they borrow it?

00:53:16

Rahul: Sure. So there’s a lot of people that borrow it. They borrow it because they want to short it, they want to hedge against it, right? Or like the other thing is people are providing as collateral to do a loan. For example, like I said like you know how you could borrow dollars using your Bitcoin, right? Just like some people want to borrow Bitcoin and then use it for like, you know buying more crypto or buying more ether or selling against something. So there’s a lot of different people. There’s a lot of different use cases, there are tons of them. 

00:53:53

Akshay: Okay, hasn’t RBI again tightened the screws. I believe that banks are now not allowed.

00:54:01

Rahul: I would say we’re still operating, most banks are pretty open stuff. It’s really about musical chairs. Some banks want to…

00:54:18

Akshay: First, tell me what is the mandate from RBI?

00:54:20

Rahul: It’s fully legal? Bitcoins are legal. You can buy it, it’s still like in a sense in limbo that there are no clear regulations on it. It’s considered a digital asset. They’re recommending it or not recommend it. But the core point is that it’s not illegal.

00:54:42

Akshay: And how is that? Is RBI discouraging it? They’re telling banks not to allow it?

00:54:47

Rahul: No, RBI is not discouraging it, it’s just that they’re not promoting it, right? And so some banks still believe that the circulars are valid, luckily they cleared this up a few months ago. So listen, the circular has been struck down by the Supreme Court. Bitcoin is legal. 

00:55:02

Akshay: And what did that circular say? 

00:55:06

Rahul: The original circular was that Bitcoin is, in a sense high risk, we don’t condone it. So we’re going to cut off banking services to all Bitcoin and crypto businesses. But then the Supreme Court overturned that it’s too restrictive. And since that time, we have had some good banking relations, a lot of banks do accept it. A lot of banks are taking it now, right? But I said it can change the way and so what we’re lucky, we’ve been around for seven years, and for a long time we are blue-chip crypto financial services firms. So banks love working with us and we’re always opening doors, we are always talking to banks and they’re great partners for us and we’re great partners for them. 

00:55:57

Akshay: So if I was to want to invest in crypto through ZebPay, then I would just be able to use my debit card and do the transaction.

00:56:06

Rahul: Yeah exactly. You connect, you log in, you do your KYC. You connect your bank account and you buy Bitcoin, it is simple. You just log in and you just come in and you can buy something. What we recommend is, you know, dollar cost averaging and buying small amounts of Bitcoin over the long run. And in fact, that’s what I do. I actually, every single day I buy a little bit of ether. And if you do this strategy, the thing I remind people is, people are like, “Wow Rahul, you knew about Bitcoin back when it was $10.” Yeah, I did and I did nothing about it for the first year. Right? Imagine if I’d put in like $1 per day back then it’s a dollar per day and the same thing happens now, if you put in $1 per day, do it over the long run, you’re gonna get phenomenal, phenomenal returns. And that’s what we recommend. And that’s exactly what Zeb, our new app, is doing right. 

00:57:07

Akshay: And this can be automated? I can just give a mandate and it will just debit x rupees every day.

00:57:16

Rahul: Yeah, and we have 1000 people that are doing this right now and it’s growing every single day. We recommend dollar-cost averaging over the long run. And if you do this, I believe this promotes financial freedom in the world, right? 

00:57:34

Akshay: How are you going to make it more ubiquitous in India, you know, more accessible to people beyond just say tier-one city folks, like maybe the top 1% of India currently would be either investing or considering investing in Bitcoin. And how do you go to the next 10% or the next 30%? 

00:58:00

Rahul: ZebPay has millions of users. And so, but yeah, we want 100 million users, right? It is education. We’re educating people to hit us. And if you want to save for your kids and grandkids and financial freedom, is it? This is one of the best asset classes in the world. It actually, positively is, and you should have some exposure, you should buy a little bit. And if we educate people by getting really good influencers and educated in the same financial advisors, right? That’s how we do it. And so I think it’s going to happen over the next couple of decades. People will not just own gold, not just own stocks, not just own real estate. Bitcoin is going to be one of the central points of a well-diversified financial, let’s say a person’s net worth. 

00:58:55

Akshay: So what is your customer acquisition strategy? Like do you do paid ads or social media? 

00:59:09

Rahul: It’s all a mix. It’s paid media, SEO, and advertising. The other thing is referral marketing, really up in the game on getting people to refer to more of their friends and family to join. It’s good. 

00:59:27

Akshay: What’s the strategy? What’s your referral marketing plan? 

00:59:32

Rahul: So the main thing is people get 50% of the fees for anyone they refer for a particular amount of time. But what we want to do ideally is not just pay a dollar amount, but also give, like I said, my goal is driving costs down to zero. So like we’re still working with a team on this. We’re trying to figure out ways of maybe adding in some sort of token with economics which benefits the more people you refer, the more benefits you get. Right. And we haven’t figured it out yet. But it would be something like that. Imagine that if you refer 10 people, then you get much better deals and much better rebates, right? 

01:00:19

Akshay: Got it, okay. So what is the cost of transacting? Like you want to drive it down to zero, what is it that it costs you? And there will be some costs for you and what is it that costs to the customers? 

01:00:36

Rahul: Yeah exactly. So luckily, we’re an open order book or an open order book exchange. So what this means is that we don’t buy and sell ourselves. We just help individuals buy and sell with each other. Right? And so we charge about roughly 10 basis points. 10 to 15 basis points. It depends maybe on 10 to 20 based on the maker versus taking me or whether you’re the one that hit the bid or ask. I mean that said whether you actually, you can say I want to sell a Bitcoin for $40,000 while the price is $41,000. Right? And what ends up happening here is someone has to come and buy it from you. So that’s what a taker fee or maker fee is? So we charge fees there. And the other thing we do is charge membership fees. The goal of this long term is we’re trying to build a premium product where we have phenomenal benefits for our members. Right? And there are also network fees. Whenever you send Bitcoin on a network, you do pay a fee to the network. So we put a limit on there because we have wallet costs, infrastructure costs. But like I said, my long-term goal is to be one of the highest quality exchanges at the lowest possible cost. So we compare ourselves to like what the large exchanges do and which would concentrate to drive costs down every single day. 

01:01:55

Akshay: What is the network fee? 

01:01:58

Rahul: Yeah, that kind of depends upon, as each network is different, but so let’s say, sending like, one Bitcoin on the Bitcoin network might cost like a .0004 and then we’ll charge points like .0006. Like we’ll charge more than that because we have to do all the accounting and mechanism and do they,?is richer open-source open-sourced these and things like that? Right? That goes to the Bitcoin miners. We don’t keep much of that. 

01:02:14

Akshay: Yeah. Right. Okay. And so what if you were to become like a zero brokerage?

01:02:25

Rahul:  You know the idea is that in the longer run, we can eventually drive, I do think we can drive the cost down to zero. I anticipate that it might take, um, you know, one or 2 or three years. But once you’re at scale, because this is just a marketplace, you can make it, if you survive and you can get people coming on board. The cost can be almost nothing. Right? And that’s what I want to do because that’s how you, that’s like India is not a super-wealthy country, right? We need to lower the cost as much as possible to make it widespread. 

01:03:07

Akshay: Yeah. What stops you from doing that today? And just finding investors to fund it. 

01:03:13

Rahul: Yeah. I mean, that’s the way we could go. But any investor who comes in is going to say you can do this but then, they want to invest in return. And so, but like I said if we’re driving costs down to zero…

01:03:30

Akshay: That’s a more sustainable way to do it. 

01:03:33

Rahul: Well, here is the thing. How do we return the money to investors? The thing is, we’re trying to balance both growth, high-quality, high service, and also getting a ton of customers. And so it is being dealt with and we’re thinking about that. What we’re trying to figure out is whether we want to raise capital? Do we want to go on our own? And we haven’t decided yet for sure. 

01:03:56

Akshay: Yeah. If you were to raise capital, what kind of valuation would you be thinking? 

01:04:01

Rahul: I mean you see a lot of stuff now, I think CoinSwitch raised about $200 million at a $500 million valuation. Sounds like CoinDCX supposedly is raising capital in billion-dollar valuations. You know, I would say I think ZebPay is worth around $500 million to a billion. So we’re profitable. We’re making money. We’re growing, we don’t need the capital. And so we’re open, we’re constantly talking with people, but as I said because we don’t need the capital, we haven’t been actively thinking about it. 

01:04:37

Akshay: Yeah. What do you think ZebPay will be like 10 years from now? 

01:04:44

Rahul: So that’s the thing, I envision us moving more into becoming DAO-like. And what I mean is a DAO stands for Decentralized Autonomous Organization. What idea does that even mean? These are, I look at them as I imagine like the way you know Bitcoin is digital gold, a DAO is like a digital company. What does that mean? Right now a company has shares, shareholders, customers, employees and there are legal structures. In the long run, there’s a cool decentralized company called Uniswap which is basically a DAO and what I envision is over the long run ZebPay will be more DAO-like. 

01:05:32

Akshay: Yeah. How would making ZebPay a DAO benefit Rahul? Would you have like a lot of coins after DAO then and therefore that’s how it would benefit you. Because you are no longer a CEO then. Right? I mean there is no such thing as a CEO for a DAO or like a founder. 

01:05:51

Rahul: Exactly. In many ways becoming a DAO, you have to be a little bit selfless. I would say Bitcoin a little bit like this. Bitcoin is a DAO institution, Nakamoto if he kept all the coins, he would be much more rich than he is now but he isn’t that rich because he kind of gave it away. So if we become a DAO in a sense, I’m giving up a lot of stuff, I’d be giving up a lot of equity and economic value but the benefit here is by giving the value back to the customers, back to the consumers, right? The members win and the members can decide, there’s no CEO but there’s a group of people who are running it. Maybe a group of like 7 or 12 people. You don’t need tons. And then it’s more open source. If you go look at innovation happening, it’s happening on an open source framework. If you look at these, these are say, a browser, it’s an open source, and there’s a lot of open source like Wikipedia, right. Wikipedia is like an open-source encyclopedia. See you could eventually imagine Wikipedia into a DAO and then you know what? You have a premium version of Wikipedia which costs a bit extra. But has some higher quality content. See you can design Wikipedia into a DAO. And I’m not saying it’s a good idea or not. But the point there is that in the future new business models and new organizations were organized around token economics and DAOs rather than being venture capital-backed and corporations. 

01:07:31

Akshay: Okay. That’s like a pretty interesting vision of the future. You know, like for the last 20 or so years. I believe that most studies say that inequality is rising, the top 1% is getting richer and the bottom 50% is getting poorer. But something like what you are envisioning as a decentralized kind of a future, would that like reverse the strength or?

01:08:04

Rahul: Yeah, I would say a big part of my personal belief, right? So I think I always use as a quote, always say that see, in my mission, you know, my goal isn’t to make rich people richer. If you’re looking at Bitcoin, then you’re worried about the rich getting richer, it’s like I’m going to make poor people not poor, right? And that doesn’t mean poor people become rich. It just means that if you can help people out of poverty, the world will be a vastly better place than helping rich people just have a ton more capital. And I think systems like this help solve that, right? If you can imagine Facebook is owned by Facebook users, imagine Twitter is owned by Twitter users. Imagine, you told me Google’s massive, right? In fact, on one of our portfolios comes Brave Browser, a cool company. It’s got 35 million monthly active users and 30 million daily active users, an amazing company, right? They are growing fast because they’re giving a lot of economics back to their users. You should go to Brave dot com, download the browser, you’ll see some cool stuff. If the more you use Brave, the more they have a cool token called BAT the basic attention token. The more tokens you make, you make money. How do I do that? It’s because…

01:09:30

Akshay: Yeah, you can monetize your attention. Wow, that’s amazing. 

01:09:34

Rahul: And listen, I’ve made 3, 4, 5 hundred dollars just for free browsing on Brave. Right? And you can too. You can go to Brave download and if you want to, you can keep it with a BAT token. So if you want, you can convert it to rupees. Come to ZebPay and convert that back to rupees if you want. There are four million people in India who are doing this right now. 

01:09:58

Akshay: So somebody who’s earning a couple of lakhs a year, which means let’s say he takes home Rs 20-30,000 a month. And he’s saving, let’s say, 3000 a month. Would you recommend someone like that to also take advantage of crypto?

01:10:16

Rahul: Positively, like I believe in this with my heart and soul. And what I mean by that is that this is one of the best places for capital. You should always keep a little bit of cash for emergencies, but other than that like I think Bitcoin, ether, BAT, these tokens are some of the best-performing assets in the world over the next several decades. It would be almost impossible for any other asset to do as well. That’s just because it comes down to supply and demand. It comes down to trends. It comes down to technology, based on a mix of all the above Bitcoin, ether, BAT, these tokens are some of the most important innovations of our lifetime. 

01:11:09

Akshay: This would be as liquid as investing in mutual funds. I

01:11:13

Rahul: t’s better, it’s more liquid. It’s 24 hours, seven days week liquidity. And if they ever go abroad, they don’t have to wait. If they’re in Singapore, they are in Sri Lanka, right? They can convert it into whatever they want and then convert it back into the local currency. They can use it directly. I envision in 10 years from now you’ll be able to use your Bitcoin to pay for a hotel in Sri Lanka. 

01:11:41

Akshay: So, these investment companies like Zerodha and Grow, if they start offering the same kind of product like investing in Bitcoin. So wouldn’t that be like a pretty adverse event for ZebPay?

00:12:00

Rahul: I think yes and no. Yes, since it’s a new competitor and no, in the sense that I think the more the merrier to be honest. I see as Bitcoin becomes more widespread, the price goes up and you want a ton of people taking this stuff as we do, right. ZebPay itself is a large Bitcoin. We own Bitcoin on our balance sheet. We love it. We think other companies should own Bitcoin on their balance sheet. And so Zerodha should move in. You know, Paypal is already in the space, and Grow could be moving in. There’s another company we’re talking about partnering with called Vested Financial, have you heard of them? A cool company, they help people in India buy the US stocks? And so if you want to buy Apple or Tesla, you can go through them. I think slowly over time a lot of, let’s say Fintech companies will allow Bitcoin and that’s I think that’s a good win for everyone.

01:13:01

Akshay: Are you also planning to offer NFTs on ZebPay?

01:13:08

Rahul: Yeah. So we were one of the very first people studying the stuff. We haven’t announced it yet, but I’ll give you a preview now. We’re working with a cool company called  Yak and it’s phenomenal. They’ve designed, if you go, if you go to Yak dot in or if you google yak emoji, what Yak has done is they’ve made these cool emoji usernames. And to me what an NFT, is a cool idea for people who don’t know what it’s called. It’s a Non Fungible Token. The idea behind this is that you can give a token value to almost anything, both the physical world asset, but also a scarce digital asset. Right? People probably heard someone making, you know an image and it’s selling for $1 million. You can do this with MP3, with a video file, and with even a piece of software. Exactly what Yaks have done is they made an NFT out of emojis. So you can own an emoji, for example, if you go to my Twitter profile, you’ll see that I own apple, apple, apple. So three apples in a row and you’ll be able to type in apple, Apple apple for example, into the brave browser and it will go to my page. So it’s like a mix of a domain name, a crypto address, or an email address, right? All these things will resolve in the back end. And what’s amazing is they sold hundreds, tens of thousands of these things, tons of them to tens of thousands of different people. Right? And we’re going to partner with them. We’re launching a zebra token, we’re excited about this. This is a zebra emoji, right? And the idea behind the zebra token is the more zebras you have, the more value you’re going to get. Well actually, I’d love for you to test it out, man, you know? So the idea here is that if we can build like an NFT with something unique, with a utility value to it. There’s a lot of cool things, right? So, for example, you have a zebra heart, zebra heart zebra, like a five letter emoji username with your altering zebras and hearts. This would be like your ID now, as someone, I could send you Bitcoin to zebra Heart, zebra heart, right? And it can be a Bitcoin, ether, whatever. But what’s also cool is you can make that your username and it’s censorship-resistant. So in the long run I think people will eventually make it, this would be like a cool way for online identity. And ZebPay is wanting to launch customer-facing with Yak, we plan on integrating it into our NFT platform. And allowing users to buy high-quality NFTs like this. 

01:15:56

Akshay: So can you have fractional ownership of NFTs also? Like say, digital art that got sold through NFTs, can there be fractional ownership of that? That is also the same as Bitcoin only that it’s like a blockchain contract. Okay. 

01:16:12

Rahul: You know there’s a famous thing called crypto punks, they are probably some of the most famous NFTs that are out there. You can kind of wrap them up and you can fractionalize them. So a normal crypto punk costs $40,000, right? Just like Bitcoin. See, you technically, again you can only own one full crypto punk, but the cool thing about fractionalization is you can own like a piece of it and that’s what’s happening. People are people buying pieces of art in a sense. 

01:16:41

Akshay: And so do you plan to make this available also? 

01:16:45

Rahul: Yeah, so we’re working with a cool team right now. We’re incubating a team to figure out housing, to help artists, creators, and all of the above to move into the space.

01:16:58

VO: If there is one takeaway from this conversation, then it is this. Don’t wait to invest in cryptocurrency. Head on to ZebPay dot com and start investing now. 

If you like the Founder Thesis podcast, then do check out our other shows on subjects like marketing, technology, career advice, and more. Visit thepodium.in for a complete list of all our shows. 

This episode of the Founder Thesis podcast is brought to you by Long Haul Ventures. Long Haul Ventures is the long haul partner for founders and startups that are building for the long haul. More about them is at www.longhaulventures.com.

[End of Transcript]

In India, Cryptocurrency is one of those tech innovations that has hit more headlines than any other! From influencers promoting it on social media to companies sponsoring major sporting events, the popularity of these virtual digital currencies has risen in India.

In this episode of the Founder Thesis podcast, Akshay Datt speaks with Rahul Pagidipati, CEO, ZebPay, India’s biggest cryptocurrency exchange. He is a second-generation Indian American and has been a part of the global start-up ecosystem for the past 20 years.

Rahul fondly recalls his earlier days when he started numerous ventures in India and the US and fell in love with investing. This is when he came across Bitcoin and Blockchain and decided to invest in ZebPay. Little did he know that the company will face uncertainty due to RBI’s ban on cryptocurrency.

However, in 2020, after a two-year hiatus, ZebPay was relaunched, with Rahul taking over as CEO.

Tune in to this episode to hear Rahul speak about how ZebPay is disrupting the way people transact and invest with its ground-breaking financial innovations.

Key takeaways:

  • Experience of running a venture in India in the late 90s.
  • India’s response to cryptocurrency.
  • The ZebPay’s survival story.


Episode Transcript

Full show notes are appended below. If you prefer a printable file, please use this link.

Rahul Pagidipati: Hi, I’m Rahul Pagidipati. I’m the co-CEO of ZebPay, which is one of India’s biggest Bitcoin exchanges. We help Indians all over the world, not just in India, help them buy Bitcoin

00:00:41

VO: Crypto, Ethereum, NFT, blockchain. Do all these words sound like Greek to you? Well, they sounded the same to us also till we heard this fascinating conversation in which Akshay Datt actually sits down with Rahul Pagidipati who is a crypto investor and also the co-CEO of ZebPay, which is among the top three crypto exchanges in India. Rahul brings to the conversation a unique mix of perspectives. He’s a second-generation Indian-American who started up a venture in India. He’s a very early believer and investor in Bitcoin and cryptocurrency and being a part of that ecosystem in the US, he’s at the forefront of cutting-edge financial innovations that would disrupt how humans transact and invest for decades to come. Here’s Rahul talking about how he discovered India and his journey.

00:01:35

Akshay: So, Rahul, what’s the connection to India? I mean you don’t sound like you’ve grown up in India. Did your parents migrate to the US? 

00:01:48

Rahul: Yeah, sure. So I live in Durham, North Carolina. I’m here with my wife, she’s a cardiology professor at Duke University. And you’re right, I was born and raised in the US. My parents immigrated to America before I was born and I kind of fell in love with India. Been an Indian American since I was a kid. But then I moved back to India when I was 21 kind of fell in love with entrepreneurship, realized there’s so much potential there, and moved there to start up a company. And I lived there in my early twenties up until about 25 or so. And the company which is still running, it’s called Anion Healthcare Services and employs 400 people. And because of that early formation of living in India in my twenties, I had always loved it and have been fascinated with the culture and growth and all that. 

00:02:53

Akshay: So what made you want to come to India? You did your undergrad in the US and then, so this was like a gap year thing, you thought you’ll see the world before…?

00:03:08

Rahul: Yeah, so I went to university for my undergrad in the US, and this was during the dot com, bubble boom, you know.

00:03:14

Akshay: Right, pre 2k.

00:03:18

Rahul:  And realized that there’s so much phenomenal engineering talent coming out of India, so why don’t we go to the source? And so went searching for where all this stuff and all these people come from and then fell in love there. But I am now based in the US. Other than those 3-4 years where I lived there, I spent most of my time in America, but I go back and forth quite a bit. Covid has changed that but I would always go to India a couple of times a year. And looking for really cool entrepreneurial adventures and investing. I would say I consider myself both an entrepreneur and an investor, probably maybe more an investor. I’m slightly more an investor than an entrepreneur. And even though I’m both, they are related because what investors are looking for is finding great entrepreneurs and entrepreneurs are looking for finding great investors to back them. The cool thing, because I’ve done both, you have a good, you know, 360° angle of how things work. 

00:04:26

Akshay: So I want to know about your entrepreneurial journey from scratch. Tell me about how you ended up starting a company in India way back in 1999, 

00:04:38

Rahul: Yeah, this is when I was a teenager, almost 19, 20, 21 years old and I had always been in love with building businesses and I would read books about entrepreneurship. My older brother, he’s a couple of years older than me, he also loved it too. And so we were reading books and magazine articles about all these cool people doing technology stuff, right? And at this point this stuff like Michael Dell. Michael Dell had started Dell computers, he started in his college and I was in college. Well, I was like, “Hey, if you could do it then I could do it too.” This was very early as the internet and it was very clear to me the internet was going to be a massive game-changer in the world and so I thought how can we do this? How can I make a big impact on this and then, where can I get the most bang for the buck? And it was pretty clear to me that there’s a lot of cool innovation happening in America and back then these things like Yahoo and eBay and Amazon were out. And I really kind of saw that India was going to be like the next big, big space for this. So this company has now been sold, it was called India World. My brother had met the founder, his name is Rajesh Jain. We almost invested in that company. It was pretty interesting. If we would have done it, it would’ve been a phenomenal return, would have gotten like 20 times our money, and in six months because this is the dot com bubble. 

00:06:12

Akshay: But how did you have money to invest? From your parents?

00:06:15

Rahul: Yeah, it wasn’t a ton of money. It was just me and my brother, my sister and my parents and I mean I would say it wasn’t zero, but it was like 100 or 200 thousand dollars. 

00:06:29

Akshay: Which in rupees is quite a bit.

00:06:32

Rahul: Exactly, but back then, my parents were both physicians, they had been running a small business. It was not vastly successful, but was it also tiny? No. You know, it was like a couple of employees and it was making enough money. Where the first step is, can you start a sustainable business? But that’s anything that could be like a food truck, it could be small, it could even be a cab, right? You’re making enough money that you’re not basically on the street. And so and what the real step from going from there to the next step is just lowering your expenses so that you have savings. If you live beneath your means you can then get capital to invest back into new ideas and that’s what we did. It sounds crazy but you do everything as frugal as possible. And so we had some money, we thought investing this in India seemed like a cool idea. The deal didn’t work out with the founder of India World. And I was like well you know if we don’t do that, why don’t we just start our own business instead of owning a small fraction, a minority interest of India World, we can own 100% of the business we startup. So I told my parents that we’re going to put $200,000 into this business. It’s not to that, give me $200,000, I was 21 years old then and then I’ll go to India and I’m going to start a company right? And the family can own this and that’s what I did. So I didn’t use all $200,000 at once. I spent like $5,000 and $10,000, went to India, and then hired a team, and built stuff. And kind of learning from mistakes, a ton of mistakes, built the company up to 120 employees. We were making money and then the dot com crash happened. We lost money, went back down to three employees. 

00:08:34

Akshay: This was within a year you hit 120 employees? 

00:08:39

Rahul: Like in about 18 months. 

00:08:42

Akshay: Wow, what did you start? What was it?

00:08:44

Rahul: A bunch of different stuff. Services stuff, building products, lots of different things.

00:08:55

Akshay: Like a mini Infosys. 

00:08:58

Rahul: Yeah, it was. We were trying to do a mini Indian Yahoo right. And some things were working. Some things weren’t. 

00:09:05

Akshay: You were in services or products also?

00:09:08

Rahul: Both. Building e-commerce, electronic bookstores, right? Things like that. And it hit us that we can’t spend more money than we’re making, right? Because of a lot of things like this, you should spend more, you should figure out how to borrow or, just lead forward. That’s why we had a downside. But you know when we dialed it back, hey listen, only spend what we can. That’s why we went down to 3-4 employees, focused on money-making services. And then we kind of moved into healthcare services. The reason we picked that is that both my parents are doctors, we kind of knew the healthcare space decently well and that’s actually what works. So what ended up happening was at this low point, I was like well what I do now? It was a good time to go back and finish up college also went and got my MBA, my law degree but I was still the CEO of this company that you know, we had 3-10,15 employees around that we would be doing medical building services or medical billing software or helping people figure out, how to do coding online and things like that. So during this time what we did was on the entrepreneur branch of what became big, the really big company was Freedom Health. And my father, my brother, I and my sister, we kind of all worked together and said, “Hey listen, you know insurance is the best place to be.” So, my dad, he’s a risk-taker, decided to take all of his net worth. We took all of our net worths and we put it all together and we started a company called Freedom Health. This is the thing about having, you talk about the background of stories. At this point, we had multiple failures so you say Anion wasn’t a failure, but it wasn’t a win. It was like a zombie tech company at that point. You had to go through lots of ups and downs. But my dad had started like 25-30 companies and 90% of them had failed or like failed or not done great. And this is the 31st company.

00:11:25

Akshay: These were all like side hustles?

00:11:29

Rahul: I would say, yes and no. The first business which was doing better than losing money was a clinical lab. My mom is a pathologist and ran a small clinic, it was a small business like maybe made 2 million dollars of revenue and probably made you know, let’s say $300,000 a year in profit. So not amazing, but not tiny, it’s enough to live a pretty good life in America. And so from this small lab which is making a little bit of money, right? My dad said you know what, I’m gonna take my entire retirement savings and the cash flow from the clinical lab and let’s go start a health insurance company. Right? And he had all of us kids kind of put in the time. My brother moved back from New York from investment banking and we started an insurance company. We just basically took our entire net worth and said, you know what, let’s see if we can get it, it was about a couple million bucks, $2 million, $3 million all together but 2 million dollars initially. And we started a company called Freedom Health and what Anion became, in a sense because we knew how to run…

00:12:46

Akshay: A back office for Freedom Health.

00:12:48

Rahul: It became the back office for this company. But Freedom Health is the one that took off and this company became honestly massive. You know, we went from 0 to $100 million in revenue in about three years. 

00:13:01

Akshay: Wow, and without any external funding. 

00:13:04

Rahul: Yeah. Through like lots of this just stretching and maximizing and we brought in a couple of smaller shareholders, eventually, cash them out. And at this point, we had every single dollar we had at the clinical lab, every single dollar we sold all of our real estate. You know, my parents had a second home, they sold that and put everything we got into this. At this point, probably about $10 million of capital has gone into the business. 

00:13:35

Akshay: And this is what, like reselling insurance or as an actual full-on insurance company?

00:13:40

Rahul: Full-on insurance company. Yeah, a health insurance managed care company. 

00:13:47

Akshay: And so with underwriters and like the whole deal, wow.

00:13:51

Rahul: Yeah. Well, it was complicated stuff. We grew it, you had to give amazing benefits. So, we weren’t profitable, we’re losing money, but we’re growing. At this point, we realized that we’re out of ammo. We decided we should probably find someone who can then become the majority owner. A guy named, a cool entrepreneur named Dr. Karan Patel had kind of been around the block before. He had sold his business for $200 million several years ago. He had an uncompleted expiration. He came in and he bought the majority stake of freedom. So we stayed on as his minority partners and he bought a majority stake and we took our money off the table but retained equity and big minority equity in the same company. And at this point is roughly 2007-2008, right before the financial crisis. Very lucky timing by doing it right before everything tanked. And he came in and at this point, I just finished my law degree in my MBA from Kellogg at Northwestern Law school. So I went back to grad school, kind of was still running Anion and I’m still helping out at a high level on Freedom Health. And then we sold after, so the majority stake of Freedom Health to Dr. K. He grew it along with our help from 100 million revenue to almost two billion in revenue. And it became the largest private health insurance company in America at this point. And so over 10 years, it took about 10 years from 2008 to 2018. Lots of hard work. Same thing. Every incremental dollar profit went back into growth. We raised a lot of capital, Dr. K put in some money we raised by another 25 million dollars of total capital. But other than our capital and that $25 million we raised, there was no other capital. And we sold for two billion bucks, almost to about $1.8 billion. And then during this path, what I was doing is I loved entrepreneurship but also loved investing. And so what happened was within the family, my parents were more physicians, kind of step back from day-to-day operations. My brother didn’t move to more like there’s an operator like we would invest in companies and businesses and along that path, I took more the investor role where I would basically like a value investor, try to value businesses if we had any excess cash that our business would throw off, reinvest back into it. If not, then we just kind of sit on cash or reinvest back into our core operations. And so if we find a great, if we find a great idea we invest and it was a lot of small public companies, like you know these are small companies worth less than 50 million dollars and for 3, 4, 5 years I just spent.

00:16:43

Akshay: And you would buy a minority share or a majority share?

00:16:46

Rahul: A significant minority stake, these are public companies. So between 1% to max 10-15% but one million to $10 million of capital going. I fell in love with investing, reading endless reports, and understanding cash statements, balance sheets, things like that. And during this path of really honing my investing skills stumbled upon Bitcoin and Blockchain. Anion was still going on, we had the three or four people team learn about Bitcoin, what is mining? How does that work? And they spent a ton of research on this stuff. And they came back with that this is interesting, but we’re not sure what it is. And I said, okay, well, let’s research more. And when you start researching, this is something that could vastly change health insurance, which is what we’re still doing then.

00:17:50

Akshay: Okay, like Blockchain as a technology. 

00:17:53

Rahul: Blockchain and smart contracts could dramatically change the way health insurance could work. And so, slowly, step by step convinced the family that we should make major investments in this space. By the time that we sold Freedom Health, we had decided to move, other than healthcare, our other masthead of investing would be in Blockchain. And so, but a similar amount of capital into a crypto Blockchain investment of that. Very simple. It’s Bitcoin and ether, those are very simple. It’s a public token almost like we believed in a store of value and believed in the idea of smart contracts and decentralized apps. They were going to be a mass thing and we thought these two were the leaders, they have already got a massive market share and they’re gonna continue to win market share. 

00:18:49

Akshay: What price did you buy Bitcoin for?

00:18:53

Rahul: It was like all over. I’m still, we’re still buying today, but we first started buying. I first heard about Bitcoin back when it was about five or $10, but we didn’t buy it until about 7500 bucks. It is funny because when I bought 100 bucks, I’m like, oh man, this thing used to be 5-10 dollars but it was like 10x back then right? And so, but yeah, but we’ve been buying back then and holding on and still buying now. So I knew about ZebPay and the team and I met the founders and the management team at a Bitcoin conference in New York. And at this point, this is right when the RBI decision had happened on a kind of making Bitcoin per se, very hard with banking, right? People saying it was made illegal, it wasn’t. It was just, they put, they put up a lot of, let’s say, hurdles in place. Yeah. And convince the founders that hey, listen, we are entrepreneurs and investors, we’d like to buy a significant minority stake in the company. We decided to do it at that time.

00:20:22

Akshay: Tell me a bit about ZebPay history also, like how did it start? And I believe it’s almost like a seven-year-old company now. 

00:20:33

Rahul: Yeah, ZebPay, a cool company founded by three phenomenal entrepreneurs. Mahin Gupta was more the CTO role, Saurabh Agarwal was the founding CEO, and Sandeep Goenka was more like a CMO and COO. These three guys all have entrepreneur backgrounds. Mahin had started the very first Bitcoin exchange in India, it’s called BuySellBitCo.in. We bought some bitcoin from him back then. I knew about him. I knew he was a very solid guy.  Same thing, because of regulatory hassle and whatever he kind of shut down BuySellBitCo.in. And I was kind of morphing ZebPay. By building a phenomenal product, it ended up becoming the largest Bitcoin exchange in India during 2015, 16, 17, you know, the run-up in Bitcoin prices And had 65-70% market share, they were doing well, and then all of a sudden the door got slammed shut with the Reserve Bank of India, right? And then they try to get global, they try to build a global market, but it’s hard, it was hard competing. The founders kind of decided, “Hey, listen, you know, if we can’t operate in India, it’s not worth doing this stuff.” And so they kind of wanted to step down. I was like, “Well, listen, you guys can step down, but like, I don’t want to quit. Like I think it’s really important that ZebPay stays alive.”

00:22:08

Akshay: And when did you invest in ZebPay?

00:22:10

Rahul: The first investment happened in 2018 and then at the end of 2019, basically in 2020 January is when I bought the majority stake. And the same thing that happened in this scenario is that I told the family that this is not the time to quit. We should be doubling down on  ZebPay. The family office, we have a family office called Anion Capital, which is all this family-run capital. They didn’t want to do the follow-on investment, but I believed in it, so I kind of took my capital and then bought a majority stake. That was roughly about a year and a half ago.

00:22:58

Akshay: What made you switch from being an investor to an operator, and putting in your money into it? What made you want to do that? 

00:23:11

Rahul: It’s simple, let’s say I love Bitcoin, right? And so I felt this before I negotiated before WazirX had sold out to finance. I felt that I had seen what happened with Mt. Gox. Mt. Gox was another Bitcoin exchange, which kind of had a ton of market share and it really kind of hurt the Bitcoin industry when it went down and I was like, you know what, if ZebPay quits, it’s bad for the industry, bad for Bitcoin, bad for India. Sometimes you just have to, in wartime, in times of war, times of like, you know, uncertainty, a leader just has to step up, even though, you realize that I’m not probably even the best person for this, but if no one else does this, then we all fall And so, I decided that this is something which I was passionate about, this is something that I wanted to run until the very end and convinced my wife that this was a thing that we should do and it was something that I love doing and she luckily believed in me too. And we just did it and decided to jump into the deep end of the pool.

00:24:24

Akshay: So what was the peak of the value of transactions through ZebPay pre RBI ban coming in or the RBI restrictions coming in? 

00:24:36

Rahul: Yeah sure. We did about $3 billion in volume total. You know the peak would have been maybe about 30, 40, 50 million dollars a day, maybe $20-30 million a day. And it was massive. ZebPay was one of the biggest exchanges in the world at that point. 

00:24:56

Akshay: Wow, okay. During the long winter of crypto, so what did it come down to, and tell me about that. 

00:25:09

Rahul: Sure. So the RBI happened in the spring of 2018. ZebPay made the strategic decision to expand abroad, which was very hard because we’re competing against massive players.

00:25:20

Akshay: You invested pre-RBI decision or post that? 

00:25:23

Rahul: Post, like right after that. We were rough in July of 2018. 

00:25:28

Akshay: Very, very contrarian call.

00:25:30

Rahul: Yeah. You realize that we believe in the company, the team, the brand and we wanted to come, like I said, we wanted to invest in India and the Blockchain. And so during the winter, it was awful like Bitcoin had taken from $20,000 down to $3,000 and either had gone from like $400 down to 100 bucks and luckily I’ve been through a couple of cycles. I realized that this is something that we believe in. So I convince the family, I don’t know when it’s going to bottom, but as long as we invest over the long run, we’ll do fine. And so that’s what we did. So we were heavy buyers of Bitcoin and ether back when everything was falling right. And we were not just in Bitcoin and Ether we made investments in ZebPay, the family office also made investments in a company called Brave Browser. It’s kind of, I don’t know if you’ve heard of Brave Browser?

00:26:27

Akshay: Privacy focussed, yeah.

00:26:29

Rahul: We made investments in coin base, in a lot of really cool funds. These are things like Pantera and crypto-focused Blockchain hedge funds and invested heavily like and made like I said Blockchain, the other focus here for the family office other than healthcare. And then during this pattern this winter, you know, let’s say it was cold and dark and depressing, but usually, you just had to put one foot ahead of itself and then move forward. And because it was cold, dark, and depressing, that’s why I think a lot of the old employees and the founders wanted to get out. So a lot of people left, a lot of the best people left. But luckily a lot of really good people, phenomenal people stayed on and they believed in the product, believed in the company and I was really lucky to meet these people. And then when I decided to become CEO like I said, very lucky these people believed in the vision, they stuck on board and we were 40 employees back when I became CEO and now we’re almost 200, there are 180 employees now, right? And so got lucky, focused hard on fixing the product and making it better and better. And the RBI decision was overturned by the Supreme Court three-four months after I became CEO. And then it was full steam ahead. It was just rebuilding brick by brick. The big issue is that we lost our lead as being the number 1 player. And also, you know, let’s say, technical infrastructure on how to scale and a couple of companies that are out there are doing well too. But really what we realized is that what we have to do is stick to our core principles of what we want to do and, and we’ll be fine. And that is providing phenomenal service, trying to up the game on the technology, the product right? And doing it at a very, very low cost. And so that’s what we’re trying to build, basically the best way you can buy Bitcoin at the lowest possible price and the best possible service. 

00:28:47

VO: If you like to hear stories from founders then we have tons of great stories from entrepreneurs who have built billion-dollar businesses, just search for The Founder Thesis podcast on any audio streaming app, like Spotify, Gaana, Apple Podcasts and subscribe to the show.

00:29:11

Akshay: Yeah. So, what has the build-up journey been like? At the lowest, what kind of monthly transactions were happening, and what is it today? Tell me about that.

00:29:22

Rahul: The company’s doing well. It’s phenomenally profitable And we actually plan on making these documents public, but didn’t even raise that much capital, but doing north of 35 million dollars in revenue almost like say $20-25 million dollars before I came on board, right? And this is a business which people were lining up to invest in. Like we had a lot of really famous Silicon Valley venture capital firms wanting to invest in the company. But then like I said, they backed off once the RBI decision happened. And then, of course, the revenue number exactly, it went to zero, when we invested like, it went to nothing and that’s a big reason why we decided what we do to stay afloat. And I mean ZebPay honestly for like a week or two, there was a good chance that we just wanted to shut down, right? And so you know what, it’s not working. We return money to shareholders. And that was in a sense a plan and what I realized when I came on as the CEO is all we have to do is just have to make enough money to survive and not die. And that was the goal, the goal for me coming back on board was thriving. It was not, it was not thriving, it was just surviving so that we could live to fight another day. But since then we’ve come back and we’ve done over a billion dollars a month. I don’t know how much we’re doing each day, but what we do is say between 10 and on really good days, $50 million in volume per day. I think we’re probably maybe the third biggest exchange now. WazirX is number one I think, we are at 11.2 million. So, WazirX is about 60. So, still doing a ton of volume, but our goal right now is to build back more market share, drive the cost of buying crypto down almost to zero. 

00:31:15

Akshay: How would you do that? 

00:31:18

Rahul: Yeah. So this is the innovation of the business model. And I’ve been figuring out how we can build a long-term sustainable business. Yeah, the big asset here is what we’ve done now is, we have a phenomenal leader named Avinash Shekar, who is the CFO and then became the President, and now the co-CEO. So he’s still, he’s still fine-tuning it, but the core point on how we have to drive is the question here. You kind of need, not just capital, you need business model innovation. And my thesis on this is if we can become like a company that is more mutually focused, right? A company that is owned by its members. And what I mean by this, you know what a cooperative is, we want to become more like a Bitcoin cooperative in the longer run. And what my intent is because I’m the majority owner of ZebPay right now is I want to somehow create a trust which will then give the economic benefit of our, let’s say, our company back to not just at the show, but back to our members, that’s our customers. And there’s a lot of complexity here. We’re trying to, but we want to somehow have beneficial economic ownership back on the Blockchain. And how do you, how can you drive the cost of buying? It’s kinda like this, imagine if you’ve heard of a cooperative bank. How a cooperative bank works, is that the actual people who are doing the deposits are the owners, right? So their cost of funds is lower. So at the end of the year, if we can basically take half of the money that we’re making and give rebates back to customers, right? I envision that it can be a way, way low-cost provider. The other way you can do stuff is that you can make the trading fee zero. And you can also move some of the income into DeFi, you help people get money through decentralized financial products. DeFi is cool because you have things called liquidity mining, people will probably wonder what that is. It’s a way of adding capital onto the Blockchain and you’re getting paid because your money is tied up into a smart contract versus being tied up in cold storage. I don’t know if you are familiar with the word cold storage and what it is? 

00:33:35

Akshay: No. There’s a lot of stuff that you have to break down and simplify. 

00:33:40

Rahul: Yeah, sure. So really when you own something like Bitcoin you can kind of own it in like three different ways. You can own it, let’s say in cold storage which is you figured out a way to own the private keys is like your password to your Bitcoin in a secure manner that has not ever touched the internet. It’s very hard for someone a hacker to get access to these because these keys are not directly connected to the internet. Like they’re in some, it’s a seed key connected offline in a sense. The other way you can do it is you can keep your Bitcoin in a centralized provider. Something like a ZebPay, a separate locker or coin base, or a block lot. And what we do is we then keep a good bit in cold storage. We keep some warm wallets, hot wallets. We also lend some out to other customers. And the benefit of this is that if you lose your password you can come back to us. The other benefit is we pay interest on it. So we have a great service called earn and lend and you can make interest off of your crypto right? And then the last thing you can do is if you want to you can probably keep your crypto on a decentralized type of wallet. I mean something like a Brave Browser. You can use a crypto wallet on Brave. You can use a crypto wallet like on a metal mask, you can use a third-party wallet. There’s a bunch of these. These types of wallets are also, but you shouldn’t put a ton of money here. This is the type of money you have in a real wallet like you know a few 100 bucks at maximum right? You shouldn’t keep a ton of money in there. The most amount of money you keep is more involved or in storage. Yeah, go ahead.

00:35:35

Akshay: I still didn’t get what is a decentralized wallet. 

00:35:38

Rahul: Yeah, a decentralized wallet would be like, you can put a wallet into your browser. Right? And what this means is Brave has a crypto wallet built into the browser. So when you’re browsing you’re on like it’s a publisher and there’s a paywall there, you click a button. The Bitcoin doesn’t live in your wall, but it’s a simple password you put in and it’s kind of built into your browser. Right? And this is like a decentralized wallet, it’s connected to in a sense of Bitcoin but it’s not it’s not as secure as what a cold storage wall would be. 

00:36:20

Akshay: Right. Okay. So these are the three ways in which you can own Bitcoin and you also spoke about DeFi, decentralized finance. What exactly is that? Can you break that?

00:36:36

Rahul: DeFi is fascinating to me, it stands for decentralized finance and it’s the opposite of centralized finance which I’d say is the current system we have right now. It’s a current system which is widely used. There are central banks that work with large, blue-chip retail banks, and any of these things like ICICI, HDFC, things like that, and they also have smaller regional banks as well. But like the biggest banks have the best relationship with the central banks and this is, it works in a lot of different countries. Right? And so what the way DeFi works is you don’t need a counterpart to do actual financial activities. And so when you go to a bank right now you go to a bank, you give them your rupees, give them your dollars and they will then take that they use their capital. They will then meet someone who wants to loan a house and they will underwrite a loan and say, “Listen you give me the title of your house and I’ll give you a 50% loan to value your house costs one crore, you have 50 lakhs down, I’ll give you a loan for 50 lakhs and if you don’t pay me, I’m gonna foreclose on your house.” In the same way, DeFi works if you have one ether or one Bitcoin right? And imagine it’s one Bitcoin and you can go into a smart contract and you can lock up your Bitcoin into a smart contract. My Bitcoin is now worth $40,000. This smart contract will then loan you a 50% loan to value, it’ll loan you $20,000. But the price of Bitcoin can fluctuate, right? So the price of Bitcoin goes up greatly, it goes $200,000, you’re still welcome when the price of Bitcoin drops down to $30,000, you have to give in another $10,000 a Bitcoin. Or what the smart contract will do is it will just liquidate $5,000 of your Bitcoin right? And so now what happens is your loan to value is better, right? And it just auto-executes. That’s pretty cool. Like you know someone can come in and get bids on your Bitcoin. And so that way DeFi’s pretty phenomenal because now there’s like 50 billion dollars in DeFi. It’s more than that, it is a massive amount of capital and most of it is happening on ethereum but other chains are doing a lot of really cool stuff and this is really where I say, I think the world’s going, the world’s moving into a DeFi world. 

00:39:06

Akshay: Okay. So how does this tie into your business model innovation in that picture? 

00:39:12

Rahul: Sure. What I envision happening is, DeFi is complex. It’s kind of hard to understand and people want a lot of hand-holding. And so what I think ZebPay is doing is, our goal is because we are in many ways a fiat on-ramp. We’re helping people get into crypto using traditional fiat rails. We want to help, we’re going to make DeFi easy, right? And so we’re working on a lot of different, really cool things like that. For example, most people want DeFi type returns because DeFi can give you great returns.  But they don’t know how to use a smart contract, they don’t know how to use a wallet. So we’re going to be able to come in and you just put your money in our hands and we’ll do all the complex stuff for you and you’ll get a good return, We’ll give you the interest rates, you can get on DeFi. I envision something like that. As our goal is to make it easy and simple for people. 

00:40:05

Akshay: Okay, and how far along are you in that product journey? 

00:40:10

Rahul: We have two major products right now. One is called ZebPay which is our main flagship product and the other part of it is called Zeb dot com.

00:40:15

Akshay: Which is essentially a transaction platform. You can buy, sell and store crypto on the ZebPay platform.

00:40:21

Rahul: Exactly, yeah, the other part is called Zeb dot com. It’s really a simple version, like a much easier version of and we already have a new product right now where you can get interested and that’s a large part of it right now is being put into DeFi right, and eventually happen is you’ll be able to borrow and lend from ZebPay, but even the funding that comes from the DeFi protocols, not from customers themselves. So you’ll be able to deposit some Bitcoin if you have one Bitcoin, you want to go, you need some money to go pay a student loan or pay for your daughter’s wedding, you can just borrow money on your Bitcoin and pay interest on it. So it’s live today, but we’re constantly making the UI and UX easier and better. We brought on a phenomenal new tech team, we’re upping our game and all these things. 

00:41:17

Akshay: Okay, are you targeting Indian customers only for this, or is this like a global product? 

00:41:31

Rahul: Yes, we’re global, we’re in a few exchanges, which does have a global presence. We’re probably 80-90% in India, right? And we’re life targeting India, it’s where we want to win and dominate, right? But in the longer run, Blockchain and crypto is a global phenomenon. So what happens is that we become a dominant brand within the South Asian framework for decentralized financial services, right? So it’s easy for you, it’s easy for anyone, you know. So our mission, we talked about this is financial freedom. We want to figure out, we’re fighting for financial freedom and we think the best way is through Blockchain and specifically in India, so we want to win in India. But as I said, I do envision a little longer in the next couple of decades. We probably have a South Asian bent. But we are working globally in places like the United States and Canada and the UK. Right now we’re in Singapore, Australia, and India, those are our core markets. But we envision expanding and that’s where we’re legally there. You can buy crypto in pretty much every place other than in America on crypto pairs. But we envision having crypto-fiat where you’re able to buy Bitcoin for dollars or Canadian dollars in the next year or so. 

00:42:50

Akshay: Okay, how did you do the build-up again? You told me that the team went down to a pretty small number and now you’re back to about 200 people. So tell me about what you did once you took charge of that. 

00:43:10

Rahul: Sure. That was the hard part. Back when, during the crypto winter, convincing people that spring and summer were coming, it’s hard because it was dark and so we just went step by step. So luckily, a lot of people believed in the company, believed in the team, believed in maybe me as the leader and convinced, like say four or five people to come to join with us, they mostly stuck with the company and really at that point and just step by step, it’s just like I said, stopping the bleeding, making sure we’re not losing money. Once we had stabilized, then just brick by brick and like phenomenal person by person going out, recruiting people into his and this, we’re trying to build, we were trying to win, we want to build for the long run and can you help us do it? And luckily for the team, it’s amazing, it’s getting better and better every day. We have phenomenal people who are spread around the world as people and in Australia, Canada, and Europe, in America and India, and Singapore. We have great people spread all over and I’m just amazed at our team the word we use within ZebPay is this idea of Ohana and Ohana is the Hawaiian word for family. Even though I guess we’re corporate in form, we’re trying to manage, we operate with an Ohana framework, and the idea there is, we want a win-win-win for all stakeholders. And I look at this like there are three major stakeholders in most companies, there are shareholders, there are the employees and there are customers. And usually, in most companies, they’re kind of like, “Hey listen, your job is to create and keep a customer, but in the end, you’re trying to drive shareholder value.” I see this a little bit differently. What we want to do is we want to kind of have a win-win-win, where we treat them all equally. All treat everyone like a family. So our framework is if you treat customers, employees, and shareholders like family, with the kind of Ohana ethos and you, get incentives and you get economics in place, this is where you can get a win-win-win type framework. And what I mean by that is, so right now, customers want what’s best for them, which I understand. They want the highest product, the highest quality product, highest service at the lowest price. So our employees want a great work environment, they want to get paid well, they want great coworkers with happy people with kindness. And shareholders, the same thing, they want to invest in companies which have a great mission and stuff like that. And so if we believe we can connect all three of these things, we can honestly get an inflection point in growth. So now this is what Bitcoin has done like Bitcoin, it hasn’t raised any venture capital, right? It’s been able to become like a trillion-dollar asset because they’ve done a great job of connecting product-market fit. And I remind a lot of the ZebPay team is that don’t look at ZebPay as being a company, look at us as being an extension of Bitcoin and ether, like our job and our ethos is that we’re trying to blockchain the world through financial freedom and what this means is we make Bitcoin and Ether if we make these amazing technologies widespread, we can spread them all over India, it’s a win-win-win. And so that’s what I envision happening over the next couple of years, is that Bitcoin and ether holders, people who hold this stuff have the automatic economic benefit with what ZebPay does. And so if you believe in Bitcoin and ether, then you’re going to believe in ZebPay because that is going to give you kind of extra returns back to you. 

00:47:14

Akshay: Okay. So, right now Bitcoin is pretty much like a rich man’s plaything in India. Maybe it’s not the case in the US, but here it’s like people who have some money to burn are the kind of people who invest in Bitcoin because it’s high risk and it is an unknown mystery right now.

00:47:37

Rahul: It’s considered high risk. No, one big thing that I want to clear up. A lot of people think that when you buy Bitcoin you have to buy one single Bitcoin. Right? Did you know that you can buy a fraction of a Bitcoin? I don’t know if you knew that or not. 

00:47:52

Rahul: Yes.

00:47:54

Rahul: Yeah, so and I would say many people think that it’s already run away, right? It’s already only for rich people. The fallacy in that thought process is that remember as I told you when I bought Bitcoin with about 100 bucks, it has already gone up 10 times, right? And my legal team or the compliance prices is, it’s where Bitcoin going is undervalued or I don’t know if it’s undervalued, but I do know this, it’s undervalued for the long run meaning that Bitcoin prices going up. It has been in the past and I’m pretty sure it will in the future. The reason why is the supply is limited, the demand is going up and so I think Bitcoin is going to go from $40,000 to $400,000. When? I don’t know, it might be one year, it might be five years. But the thing is it has a much higher chance of increasing than the value of the rupee does or the dollar does or even real estate. Right, so let’s say you know your current investment right now, you might be buying some sort of equity stock, say Apple stock or you might be buying some piece of real estate. It’s hard for Apple to go up 10 times the value. Apple’s already a pretty big asset. So if you look at the risk-reward of what Bitcoin offers, it’s still massive, right? Meaning that Bitcoin as a brand is very likely to be the most valuable brand in the world. And people are like, what do you mean? Yeah, so pop quiz. So what do you think are the most valuable brands in the world right now? Do you know what the biggest brands are?

00:49:33

Akshay: Google, Microsoft, Apple.

00:49:38

Rahul: Yeah. Right, that’s exactly it, Google, Microsoft, Apple, Facebook. Okay now, what are the biggest brands? You know if you go ask most people, most of them have heard of Bitcoin, it is pretty amazing, Right? Bitcoin as a brand, it’s kind of like what Google was in 2005 people have heard of Google, they don’t know what it was like. Facebook in 2008-09, knew its social networking but they weren’t using it. Bitcoin is the same way. People heard of Bitcoin. They think it’s expensive but man their brand value is going to grow, as the price goes up, as more people are using it, and the same thing with either. You’ve probably heard of ethereum, right? But other than those two to show you about brand value, what are the other coins or cryptocurrencies that you’ve heard of? 

00:50:24

Akshay: The ones that Elon musk talks about.

00:50:26

Rahul: Dogecoin. Right. Yeah. Have you heard of any other ones? 

00:50:31

Akshay: No. No. 

00:50:33

Rahul: Right. And, interestingly, the reason why you’re exactly right is that people don’t care about the fifth or 10th, or 100th coin. Right? And that’s why Bitcoin will continue to accrue value because people want high rewards plus also safety and that’s what Bitcoin offers. Bitcoin offers really good growth but because it is a blue-chip company, it’s a blue-chip asset, it won’t go down as much anymore.

00:51:01

Akshay: But in a way couldn’t you say it’s a collective shared delusion. I mean, owning Apple is owning a revenue stream? Apple makes products and those products profitably. You know but what are you learning when you’re running Bitcoin other than a shared understanding. 

00:51:26

Rahul: Yeah exactly, you make a very very very good point. So when you own a share of Apple and Apple is a company that sells products and services right? But it is that, but it is just a brand meaning you’re only buying an Apple product or service because you believe in it. I mean it’s like Nike, you’re only buying a Nike shoe because you believe in it. Now, Bitcoin doesn’t sell iPhones or shoes but Bitcoin’s brand. It stands for financial freedom. So what you’re buying when you buy Bitcoin is, see when you earn one Bitcoin right now you can do two things with your Bitcoin. You can sit on the Bitcoin just put it in cold storage or you can lend it out. And so imagine, you own one Bitcoin, it costs $40,000. With ZebPay I think you get 1 or 2%. 

00:52:23

Akshay: Per month?

00:52:26

Rahul: Per year and now, you know that’s not all because I can get 10% on my rupees right? The nuance is you can get 10% on your rupees but is going to depreciate against Bitcoin. Right? And so what Bitcoin gives you like it actually can give you interest if you want to keep an interest in rupees, keep it in rupees, want to keep it in Bitcoin, keep it. So with Apple right now, Apple will give you dividends and the same thing, Apple gives you like 100%. I’m saying the actual income you get from your Apple stock is less than the income you get from your Bitcoin, right? So you actually can get money off your Bitcoin if you choose to. 

00:53:09

Akshay: Who are the people, how do you pay interest in Bitcoin? Who’s borrowing it? And why do they borrow it?

00:53:16

Rahul: Sure. So there’s a lot of people that borrow it. They borrow it because they want to short it, they want to hedge against it, right? Or like the other thing is people are providing as collateral to do a loan. For example, like I said like you know how you could borrow dollars using your Bitcoin, right? Just like some people want to borrow Bitcoin and then use it for like, you know buying more crypto or buying more ether or selling against something. So there’s a lot of different people. There’s a lot of different use cases, there are tons of them. 

00:53:53

Akshay: Okay, hasn’t RBI again tightened the screws. I believe that banks are now not allowed.

00:54:01

Rahul: I would say we’re still operating, most banks are pretty open stuff. It’s really about musical chairs. Some banks want to…

00:54:18

Akshay: First, tell me what is the mandate from RBI?

00:54:20

Rahul: It’s fully legal? Bitcoins are legal. You can buy it, it’s still like in a sense in limbo that there are no clear regulations on it. It’s considered a digital asset. They’re recommending it or not recommend it. But the core point is that it’s not illegal.

00:54:42

Akshay: And how is that? Is RBI discouraging it? They’re telling banks not to allow it?

00:54:47

Rahul: No, RBI is not discouraging it, it’s just that they’re not promoting it, right? And so some banks still believe that the circulars are valid, luckily they cleared this up a few months ago. So listen, the circular has been struck down by the Supreme Court. Bitcoin is legal. 

00:55:02

Akshay: And what did that circular say? 

00:55:06

Rahul: The original circular was that Bitcoin is, in a sense high risk, we don’t condone it. So we’re going to cut off banking services to all Bitcoin and crypto businesses. But then the Supreme Court overturned that it’s too restrictive. And since that time, we have had some good banking relations, a lot of banks do accept it. A lot of banks are taking it now, right? But I said it can change the way and so what we’re lucky, we’ve been around for seven years, and for a long time we are blue-chip crypto financial services firms. So banks love working with us and we’re always opening doors, we are always talking to banks and they’re great partners for us and we’re great partners for them. 

00:55:57

Akshay: So if I was to want to invest in crypto through ZebPay, then I would just be able to use my debit card and do the transaction.

00:56:06

Rahul: Yeah exactly. You connect, you log in, you do your KYC. You connect your bank account and you buy Bitcoin, it is simple. You just log in and you just come in and you can buy something. What we recommend is, you know, dollar cost averaging and buying small amounts of Bitcoin over the long run. And in fact, that’s what I do. I actually, every single day I buy a little bit of ether. And if you do this strategy, the thing I remind people is, people are like, “Wow Rahul, you knew about Bitcoin back when it was $10.” Yeah, I did and I did nothing about it for the first year. Right? Imagine if I’d put in like $1 per day back then it’s a dollar per day and the same thing happens now, if you put in $1 per day, do it over the long run, you’re gonna get phenomenal, phenomenal returns. And that’s what we recommend. And that’s exactly what Zeb, our new app, is doing right. 

00:57:07

Akshay: And this can be automated? I can just give a mandate and it will just debit x rupees every day.

00:57:16

Rahul: Yeah, and we have 1000 people that are doing this right now and it’s growing every single day. We recommend dollar-cost averaging over the long run. And if you do this, I believe this promotes financial freedom in the world, right? 

00:57:34

Akshay: How are you going to make it more ubiquitous in India, you know, more accessible to people beyond just say tier-one city folks, like maybe the top 1% of India currently would be either investing or considering investing in Bitcoin. And how do you go to the next 10% or the next 30%? 

00:58:00

Rahul: ZebPay has millions of users. And so, but yeah, we want 100 million users, right? It is education. We’re educating people to hit us. And if you want to save for your kids and grandkids and financial freedom, is it? This is one of the best asset classes in the world. It actually, positively is, and you should have some exposure, you should buy a little bit. And if we educate people by getting really good influencers and educated in the same financial advisors, right? That’s how we do it. And so I think it’s going to happen over the next couple of decades. People will not just own gold, not just own stocks, not just own real estate. Bitcoin is going to be one of the central points of a well-diversified financial, let’s say a person’s net worth. 

00:58:55

Akshay: So what is your customer acquisition strategy? Like do you do paid ads or social media? 

00:59:09

Rahul: It’s all a mix. It’s paid media, SEO, and advertising. The other thing is referral marketing, really up in the game on getting people to refer to more of their friends and family to join. It’s good. 

00:59:27

Akshay: What’s the strategy? What’s your referral marketing plan? 

00:59:32

Rahul: So the main thing is people get 50% of the fees for anyone they refer for a particular amount of time. But what we want to do ideally is not just pay a dollar amount, but also give, like I said, my goal is driving costs down to zero. So like we’re still working with a team on this. We’re trying to figure out ways of maybe adding in some sort of token with economics which benefits the more people you refer, the more benefits you get. Right. And we haven’t figured it out yet. But it would be something like that. Imagine that if you refer 10 people, then you get much better deals and much better rebates, right? 

01:00:19

Akshay: Got it, okay. So what is the cost of transacting? Like you want to drive it down to zero, what is it that it costs you? And there will be some costs for you and what is it that costs to the customers? 

01:00:36

Rahul: Yeah exactly. So luckily, we’re an open order book or an open order book exchange. So what this means is that we don’t buy and sell ourselves. We just help individuals buy and sell with each other. Right? And so we charge about roughly 10 basis points. 10 to 15 basis points. It depends maybe on 10 to 20 based on the maker versus taking me or whether you’re the one that hit the bid or ask. I mean that said whether you actually, you can say I want to sell a Bitcoin for $40,000 while the price is $41,000. Right? And what ends up happening here is someone has to come and buy it from you. So that’s what a taker fee or maker fee is? So we charge fees there. And the other thing we do is charge membership fees. The goal of this long term is we’re trying to build a premium product where we have phenomenal benefits for our members. Right? And there are also network fees. Whenever you send Bitcoin on a network, you do pay a fee to the network. So we put a limit on there because we have wallet costs, infrastructure costs. But like I said, my long-term goal is to be one of the highest quality exchanges at the lowest possible cost. So we compare ourselves to like what the large exchanges do and which would concentrate to drive costs down every single day. 

01:01:55

Akshay: What is the network fee? 

01:01:58

Rahul: Yeah, that kind of depends upon, as each network is different, but so let’s say, sending like, one Bitcoin on the Bitcoin network might cost like a .0004 and then we’ll charge points like .0006. Like we’ll charge more than that because we have to do all the accounting and mechanism and do they,?is richer open-source open-sourced these and things like that? Right? That goes to the Bitcoin miners. We don’t keep much of that. 

01:02:14

Akshay: Yeah. Right. Okay. And so what if you were to become like a zero brokerage?

01:02:25

Rahul:  You know the idea is that in the longer run, we can eventually drive, I do think we can drive the cost down to zero. I anticipate that it might take, um, you know, one or 2 or three years. But once you’re at scale, because this is just a marketplace, you can make it, if you survive and you can get people coming on board. The cost can be almost nothing. Right? And that’s what I want to do because that’s how you, that’s like India is not a super-wealthy country, right? We need to lower the cost as much as possible to make it widespread. 

01:03:07

Akshay: Yeah. What stops you from doing that today? And just finding investors to fund it. 

01:03:13

Rahul: Yeah. I mean, that’s the way we could go. But any investor who comes in is going to say you can do this but then, they want to invest in return. And so, but like I said if we’re driving costs down to zero…

01:03:30

Akshay: That’s a more sustainable way to do it. 

01:03:33

Rahul: Well, here is the thing. How do we return the money to investors? The thing is, we’re trying to balance both growth, high-quality, high service, and also getting a ton of customers. And so it is being dealt with and we’re thinking about that. What we’re trying to figure out is whether we want to raise capital? Do we want to go on our own? And we haven’t decided yet for sure. 

01:03:56

Akshay: Yeah. If you were to raise capital, what kind of valuation would you be thinking? 

01:04:01

Rahul: I mean you see a lot of stuff now, I think CoinSwitch raised about $200 million at a $500 million valuation. Sounds like CoinDCX supposedly is raising capital in billion-dollar valuations. You know, I would say I think ZebPay is worth around $500 million to a billion. So we’re profitable. We’re making money. We’re growing, we don’t need the capital. And so we’re open, we’re constantly talking with people, but as I said because we don’t need the capital, we haven’t been actively thinking about it. 

01:04:37

Akshay: Yeah. What do you think ZebPay will be like 10 years from now? 

01:04:44

Rahul: So that’s the thing, I envision us moving more into becoming DAO-like. And what I mean is a DAO stands for Decentralized Autonomous Organization. What idea does that even mean? These are, I look at them as I imagine like the way you know Bitcoin is digital gold, a DAO is like a digital company. What does that mean? Right now a company has shares, shareholders, customers, employees and there are legal structures. In the long run, there’s a cool decentralized company called Uniswap which is basically a DAO and what I envision is over the long run ZebPay will be more DAO-like. 

01:05:32

Akshay: Yeah. How would making ZebPay a DAO benefit Rahul? Would you have like a lot of coins after DAO then and therefore that’s how it would benefit you. Because you are no longer a CEO then. Right? I mean there is no such thing as a CEO for a DAO or like a founder. 

01:05:51

Rahul: Exactly. In many ways becoming a DAO, you have to be a little bit selfless. I would say Bitcoin a little bit like this. Bitcoin is a DAO institution, Nakamoto if he kept all the coins, he would be much more rich than he is now but he isn’t that rich because he kind of gave it away. So if we become a DAO in a sense, I’m giving up a lot of stuff, I’d be giving up a lot of equity and economic value but the benefit here is by giving the value back to the customers, back to the consumers, right? The members win and the members can decide, there’s no CEO but there’s a group of people who are running it. Maybe a group of like 7 or 12 people. You don’t need tons. And then it’s more open source. If you go look at innovation happening, it’s happening on an open source framework. If you look at these, these are say, a browser, it’s an open source, and there’s a lot of open source like Wikipedia, right. Wikipedia is like an open-source encyclopedia. See you could eventually imagine Wikipedia into a DAO and then you know what? You have a premium version of Wikipedia which costs a bit extra. But has some higher quality content. See you can design Wikipedia into a DAO. And I’m not saying it’s a good idea or not. But the point there is that in the future new business models and new organizations were organized around token economics and DAOs rather than being venture capital-backed and corporations. 

01:07:31

Akshay: Okay. That’s like a pretty interesting vision of the future. You know, like for the last 20 or so years. I believe that most studies say that inequality is rising, the top 1% is getting richer and the bottom 50% is getting poorer. But something like what you are envisioning as a decentralized kind of a future, would that like reverse the strength or?

01:08:04

Rahul: Yeah, I would say a big part of my personal belief, right? So I think I always use as a quote, always say that see, in my mission, you know, my goal isn’t to make rich people richer. If you’re looking at Bitcoin, then you’re worried about the rich getting richer, it’s like I’m going to make poor people not poor, right? And that doesn’t mean poor people become rich. It just means that if you can help people out of poverty, the world will be a vastly better place than helping rich people just have a ton more capital. And I think systems like this help solve that, right? If you can imagine Facebook is owned by Facebook users, imagine Twitter is owned by Twitter users. Imagine, you told me Google’s massive, right? In fact, on one of our portfolios comes Brave Browser, a cool company. It’s got 35 million monthly active users and 30 million daily active users, an amazing company, right? They are growing fast because they’re giving a lot of economics back to their users. You should go to Brave dot com, download the browser, you’ll see some cool stuff. If the more you use Brave, the more they have a cool token called BAT the basic attention token. The more tokens you make, you make money. How do I do that? It’s because…

01:09:30

Akshay: Yeah, you can monetize your attention. Wow, that’s amazing. 

01:09:34

Rahul: And listen, I’ve made 3, 4, 5 hundred dollars just for free browsing on Brave. Right? And you can too. You can go to Brave download and if you want to, you can keep it with a BAT token. So if you want, you can convert it to rupees. Come to ZebPay and convert that back to rupees if you want. There are four million people in India who are doing this right now. 

01:09:58

Akshay: So somebody who’s earning a couple of lakhs a year, which means let’s say he takes home Rs 20-30,000 a month. And he’s saving, let’s say, 3000 a month. Would you recommend someone like that to also take advantage of crypto?

01:10:16

Rahul: Positively, like I believe in this with my heart and soul. And what I mean by that is that this is one of the best places for capital. You should always keep a little bit of cash for emergencies, but other than that like I think Bitcoin, ether, BAT, these tokens are some of the best-performing assets in the world over the next several decades. It would be almost impossible for any other asset to do as well. That’s just because it comes down to supply and demand. It comes down to trends. It comes down to technology, based on a mix of all the above Bitcoin, ether, BAT, these tokens are some of the most important innovations of our lifetime. 

01:11:09

Akshay: This would be as liquid as investing in mutual funds. I

01:11:13

Rahul: t’s better, it’s more liquid. It’s 24 hours, seven days week liquidity. And if they ever go abroad, they don’t have to wait. If they’re in Singapore, they are in Sri Lanka, right? They can convert it into whatever they want and then convert it back into the local currency. They can use it directly. I envision in 10 years from now you’ll be able to use your Bitcoin to pay for a hotel in Sri Lanka. 

01:11:41

Akshay: So, these investment companies like Zerodha and Grow, if they start offering the same kind of product like investing in Bitcoin. So wouldn’t that be like a pretty adverse event for ZebPay?

00:12:00

Rahul: I think yes and no. Yes, since it’s a new competitor and no, in the sense that I think the more the merrier to be honest. I see as Bitcoin becomes more widespread, the price goes up and you want a ton of people taking this stuff as we do, right. ZebPay itself is a large Bitcoin. We own Bitcoin on our balance sheet. We love it. We think other companies should own Bitcoin on their balance sheet. And so Zerodha should move in. You know, Paypal is already in the space, and Grow could be moving in. There’s another company we’re talking about partnering with called Vested Financial, have you heard of them? A cool company, they help people in India buy the US stocks? And so if you want to buy Apple or Tesla, you can go through them. I think slowly over time a lot of, let’s say Fintech companies will allow Bitcoin and that’s I think that’s a good win for everyone.

01:13:01

Akshay: Are you also planning to offer NFTs on ZebPay?

01:13:08

Rahul: Yeah. So we were one of the very first people studying the stuff. We haven’t announced it yet, but I’ll give you a preview now. We’re working with a cool company called  Yak and it’s phenomenal. They’ve designed, if you go, if you go to Yak dot in or if you google yak emoji, what Yak has done is they’ve made these cool emoji usernames. And to me what an NFT, is a cool idea for people who don’t know what it’s called. It’s a Non Fungible Token. The idea behind this is that you can give a token value to almost anything, both the physical world asset, but also a scarce digital asset. Right? People probably heard someone making, you know an image and it’s selling for $1 million. You can do this with MP3, with a video file, and with even a piece of software. Exactly what Yaks have done is they made an NFT out of emojis. So you can own an emoji, for example, if you go to my Twitter profile, you’ll see that I own apple, apple, apple. So three apples in a row and you’ll be able to type in apple, Apple apple for example, into the brave browser and it will go to my page. So it’s like a mix of a domain name, a crypto address, or an email address, right? All these things will resolve in the back end. And what’s amazing is they sold hundreds, tens of thousands of these things, tons of them to tens of thousands of different people. Right? And we’re going to partner with them. We’re launching a zebra token, we’re excited about this. This is a zebra emoji, right? And the idea behind the zebra token is the more zebras you have, the more value you’re going to get. Well actually, I’d love for you to test it out, man, you know? So the idea here is that if we can build like an NFT with something unique, with a utility value to it. There’s a lot of cool things, right? So, for example, you have a zebra heart, zebra heart zebra, like a five letter emoji username with your altering zebras and hearts. This would be like your ID now, as someone, I could send you Bitcoin to zebra Heart, zebra heart, right? And it can be a Bitcoin, ether, whatever. But what’s also cool is you can make that your username and it’s censorship-resistant. So in the long run I think people will eventually make it, this would be like a cool way for online identity. And ZebPay is wanting to launch customer-facing with Yak, we plan on integrating it into our NFT platform. And allowing users to buy high-quality NFTs like this. 

01:15:56

Akshay: So can you have fractional ownership of NFTs also? Like say, digital art that got sold through NFTs, can there be fractional ownership of that? That is also the same as Bitcoin only that it’s like a blockchain contract. Okay. 

01:16:12

Rahul: You know there’s a famous thing called crypto punks, they are probably some of the most famous NFTs that are out there. You can kind of wrap them up and you can fractionalize them. So a normal crypto punk costs $40,000, right? Just like Bitcoin. See, you technically, again you can only own one full crypto punk, but the cool thing about fractionalization is you can own like a piece of it and that’s what’s happening. People are people buying pieces of art in a sense. 

01:16:41

Akshay: And so do you plan to make this available also? 

01:16:45

Rahul: Yeah, so we’re working with a cool team right now. We’re incubating a team to figure out housing, to help artists, creators, and all of the above to move into the space.

01:16:58

VO: If there is one takeaway from this conversation, then it is this. Don’t wait to invest in cryptocurrency. Head on to ZebPay dot com and start investing now. 

If you like the Founder Thesis podcast, then do check out our other shows on subjects like marketing, technology, career advice, and more. Visit thepodium.in for a complete list of all our shows. 

This episode of the Founder Thesis podcast is brought to you by Long Haul Ventures. Long Haul Ventures is the long haul partner for founders and startups that are building for the long haul. More about them is at www.longhaulventures.com.

[End of Transcript]

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About Founder Thesis

Candid conversations with some of the most celebrated startup founders of our nation. On Founder Thesis we are on mission to uncover the secrets to building a Unicorn!

HOSTED BY

Akshay has held a lifelong fascination with the people who dare to disrupt, and with The Podium, he hopes to discover what makes one a successful disruptor.

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