12/02/2023
Cred's financials are in the news. It doesn't make money. It lost Rs. 1300 Cr last year alone. Easily over 2100 Cr overall.
Interestingly, Mr. Kunal Shah's first company - Freecharge - also never made money. The only time Freecharge earned something was when it was sold to Snapdeal (which unfortunately has also never made money).
Snapdeal acquired Freecharge for $400 million, and then sold it to Axis Bank for $60 million in less than two years. That, in the world of business, is called "Sad". But a sad outcome for Snapdeal (and its investors) was a partially happy outcome for the investors of Freecharge. And so after much fanfare, Mr. Shah started Cred.
Now I have no reason to be upset about Indian founders convincing foreign investors to use dollars for bonfire. It's awesome! But how beautiful would it have been if Mr. Kunal Shah used his legendary persuasion skills to build something "useful", you know. All that charisma and you're building Cred? It's like Robinhood stealing rich people's money for trips to Las Vegas.
Friends of mine are building Zinc Gel batteries because they're cleaner and greener. Another friend is making a replacement of thermocol with paddy waste. Many others are trying to solve real problems. Important problems. And then there's Cred.
And it's not just about money. Just like a monkey hitting keys at random for infinite time will someday end up writing The Hamlet with perfection (it's called infinite monkey theorem), I'm sure a smart person with a billion dollars can gather enough smart people and resources to (someday) build a business that makes more than it spends.
But Cred? Wasting people's time with slot machines and giving them Rs. 4 cashback? And for a what! A future in lending? What do these people tell themselves? I think about all the talented (and conscientious) engineers, designers, managers working in a company whose ads are more "useful" than its core product. What an existential dread.
Cred is a real outlier, and a big question mark on the entire entrepreneurial and venture capital ecosystem. Flipkart, Paytm, Zomato may be loss making, but atleast they brought a paradigm shift. There's impact. Though I'm so glad we have great role models in Zerodha, Zoho, Easemytrip, etc. They really set things in perspective.
Profitability is important. But if it's not in sight, at least there should be some impact in the story. Otherwise, what's the point?
P.S. I'm building Seneca. Senior entrepreneurs, investors and techies could read the Open Pitch and get in touch. Cheers!
Source :: LinkedIn
