Policybazaar ranks #257 in the Hurun Unicorn Index 2020. He talks about the conception of Policybazaar, the vision and adaptation plans for the post Covid-era and more in this dialogue.
Commencing from an insurance comparison platform to now becoming a marketplace for insurance buyers, how has Policybazaar's journey been so far?
Basically, we were looking at starting something new, and we found this opportunity where-in we could serve the people of India and cater to their protection needs by providing them insurance. This thought came to our minds 12 years ago when I was in UK. Seeing how the foreign countries operated, we realised that they do have higher taxation when compared to that of India. But then, what they also have is a very strong social security net. This Social Security net does give people confidence to go about their lives, with limited uncertainty about tomorrow. I remember once having a conversation with my brother in law, and we were discussing, why do Indians save so much for our families and for the kids. He said, ‘look, at the end of it why do you save? You save for a rainy day. And in UK, the rainy day is actually covered by the government.”. That statement caught my attention, it made a very important point. I think the large reason why Indians save so much is because of lack of social security. The social security that we have is minimalistic and not something that a middle class could rely on. That got me thinking and had me worried. I come from a family, which has been in the military for four generations. Heroism aside, what that really meant was everybody had a pension, everybody had their health care taken. The longer they live, the more money they made. Contrary to my family, I was, in a private job and one day, I may not have my salary. So, all of this basically came together in setting up Policybazaar, which is all about creating “Social Security Net” for the middle class in India – enabling a platform that equips people with contingent resources to manage health care costs or any unfortunate event like that disease or disability, or even pensions. That was the genesis of Policybazaar and we were 18 co-founders.
18 co-founders seems a little difficult to manage? We hear stories of 2 member partnership firms splitting in less than a year. What was the secret glue? Who was the leader?
The secret glue was being “unselfish” throughout the journey. Nowadays, what I see is the leader takes 90% of the equity and leaves 5 or 10 percent for the others. But, in our case, the ratio might be more like 30:70 where the leader would have 30 and the 70 would be with the other members of management, etc. and that I think, that is a more equitable and sustainable cap-table.
Has Covid-19 impacted your business?
Not really. There are challenges working from home, but there's enough consumer demand and that has kept us in good stead. So, business has continued and it's worked okay. We are in line with the plan, lending business went down, but the insurance business really grew fast.
Are you happy with the current growth rate?
This year, overall target is to grow about 50%. We are going to hit 50%. What's interesting is different businesses have different growth rates and projections. So I think there are lot of moving parts but the saving grace was we had 17 different businesses, and while four-five did bad, the rest did well . So overall, it balanced out.
What is your vision in terms of expanding the market share of your core business?
It’s not about the market share. It's about the market itself. I'm keen on expanding the market. In India, the middle class can easily afford social security through insurance as it does not cost much. People have to spend a little and gain a significant coverage. We want that to expand. For instance, when people go to hospitals and have an insurance policy, the policy takes care of unplanned expenses that occur in an untimely manner.
How do you see the digital transformation in insurance? How do you see that evolve?
Digital basically means a transparent transaction without human intervention. Insurance sector is a direct benefactor of the aforementioned use case as consumers get a chance to see the products themselves before buying. Going digital in the insurance sector is integral to wipe out the information asymmetry between the insurance company, the product and the consumer. A consumer should be able to independently study available products and purchase their choice off the shelf. Only around 10 % of the industry is digital today which we should increase to around a 70%.
In one of your interviews, you said the access to capital in India is unprecedented. Do you think access to high risk capital is adequate in India?
Absolutely, and I think it will only keep increasing because there's unprecedented supply of money in the world. What that means is as the series D & E take place, the series A & B will also keep happening. However, I think what happened in between was that many half-thought through ideas were getting funded. Now, there is a little more to this, what you would call founder check, to know what are the intentions of the founder? Is this a flip game? Is this a build game? I think there's a little more diligence on that, which is essential. I think there are a lot of investors who are comfortable investing in companies that will not make money immediately. That in itself, every year is getting better. So I really encourage young people to become entrepreneurs.
Is it a trend in which all entrepreneurs are going outside India because there is infrastructure availability outside the country?
I think, the lack of infrastructure and all the issues we have in India are the opportunity. The whole world is investing in India. Some people are finding it easier to operate abroad probably because of some of their customers. So, for example, Canada or Cambridge or Oxford might have some extra supply of higher end AI specialists, you might go and set up there. But In my view, the prime opportunity in India is so much bigger than any other place in the world today.
What according to you are the industry trends post COVID?
The most trending change is already everything going digital. I think this trend is here to stay. There are less meetings, more video calls. I think that trend is here to stay & keeps the environment clean since we don’t have to travel for these meetings. Covid-19 was an intervention to stop us from moving about too much and I think this intervention is good.
Work from home or work from office?
Work from home
Book you're currently reading?
Given an opportunity, what would you do in your free time, an Iron man or a peaceful, chilled out vacation?
Would love to do another Ironman
Do you like art?
I have nothing in cultural, nothing. My wife has an interest in art, but when I go to museums, etc., I get bored.
If you started all over again, would you bootstrap Policybazaar or raise funds?
Will not bootstrap, but I would have taken lesser funds than I did.
Three favourite start-ups in India?
Lenskart, Delivery, First cry.
Favourite Indian entrepreneur?
Sahil Barua, the founder of Delhivery
Three core non-negotiable values to be followed by upcoming entrepreneurs
1.Being Unselfish 2.Truthfulness 3.Discipline.
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