The age of copy-pasting a western startup idea in India and hoping it to work is long gone. Unlike the west, India is a low trust high faith society. And as a society, we don’t trust someone or something easily (therefore low trust). But we are also a society of high faith and put in an exorbitant amount of faith in entities we trust i.e. if we do trust someone (or something) for a long enough duration we go on and put our faith in everything they have to offer.
When MS Dhoni comes on an ad and enacts how Khatabook can help run a small business easier or how GoDaddy can make a small local store grow into a nationwide store, viewers put their faith in the offering. After all, under his leadership, our country won two world cups. How can he be wrong? No one questions if Dhoni knows anything about running a small store or if he has even used either of these services. Even politicians arguably the most powerful personalities in a country like India need celebrity endorsement and capitalize on the faith people have in the celebrity. India’s spend on celebrity endorsement as %age of marketing spend is one of the highest in the world. Getting celebrities to endorse you is a great hack but one cannot be a short-term opportunist in this long game.
Baba Ramdev was the OG influencer of India before even the term influencer was coined. He built a community and then monetized it in such a manner that it’s giving big FMCGs a run for their money. Consumers do not question the quality of the product he sells or endorses. While the concept of community in the west is driven largely by a volume of people, in Bharat community goes where faith is. Communities in India are driven by entities who have been bestowed with the unconditional faith of their followers.
Entities with a large following are not the same as the entities that have people’s faith. The following does not directly equate to revenue. A political leader might have a huge following but they cannot make their followers use or consume a particular product. While political leaders need celebrities to endorse their rallies, I haven’t seen a Bollywood star getting an endorsement from a political leader at a movie launch. Someone who has your faith can make you part away from a portion of your wallet. This is more than just having followers, this is power.
With this insight in mind, I find it surprising when people question the business model of CRED. And they don’t question the model of say Reliance Jio. At the end of the day, they are all in the business of making people have faith in them. I refuse to believe that a new entrant in the market could have pulled off what Reliance did with Jio. Consumers would not have trusted that new entrant and would have suspected that something is wrong, free internet is too good to be true. But it was reliance giving free internet to everyone and consumers already had faith in reliance. Reliance can come tomorrow and start any business it wants to and consumers will welcome it with open arms. Not because it’s cheap but because they know that they won’t get cheated. Anyone who thinks India is a discount-seeking society is largely wrong and wouldn’t make it big. Discount is just to get people in so that the company at least gets an opportunity to win their trust for the first time. Trust compounds into faith. And once the company has won faith, they can have a large share of consumer’s wallets by diversifying horizontally. Earning someone’s trust and getting it to compound into Faith is not an easy job though.
Bharat is not a deep market. As such to make a substantial revenue one needs to go horizontal. Paytm which started as an online recharge service, offers products, wallets, mutual funds, airline tickets, and whatnot. Both Paytm and Flipkart have done a great job in compounding trust into faith and then capitalizing on it. There’s another company that’s playing this long game – Zerodha. Zerodha from its inception till now has remained true to its motto of being customer-centric and doing right by them. The trust in Zerodha has already started to compound. Zerodha has introduced “Nudge” that will make them lose on revenues and transactions but will accelerate the compounding of trust into faith. Once that happens Zerodha will be uniquely positioned to go horizontal offering to its consumers, i.e. if they want to. I won’t be surprised if 5 years from now Zerodha and CRED will be direct competitors.
Having trust compound into faith is the long-term game winning startups of Bharat will need to play.