Razorpay’s Harshil Mathur & Peak XV’s Ishaan Mittal on Org Culture and What Defines It

SHOW NOTES

• Org culture begins on Day One [03:57] 
• Talent and vision outweigh CV credentials [06:34] 
• Org culture evolves while its core endures [11:12] 
• What you do with feedback defines your culture [16:29] 
• Base your decisions on long-term goals [22:34] 
• On balancing PMF and the company’s metrics [27:07] 
• Building for enterprise versus mid-market clients [32:04] 
• The case for ‘healthy friction’ [35:31] 
• Tailor communication for highs and lows [38:09] 
• Agility & nimbleness: The key to continued growth [42:03]

TRANSCRIPT

Ishaan Mittal: Welcome, Harshil (Mathur). Let me quickly introduce Harshil, which I never get tired of doing. So, Harshil is the co-founder of Razorpay along with his co-founder Shashank (Kumar), he founded Razorpay eight years back and in that timeframe it has gone from an [being] upstart in a commoditized industry where differentiation was not possible, and everything that had to be done is done, to now Razorpay being the most innovative payments platform of India, the largest payments platform of India and still growing the fastest, to a point where many innovations that Razorpay has done have been taken up by not just competitors in India, but also globally. 

I’ll refrain from giving specific examples, but so many times you’ve discussed that Razorpay launched something and a global competitor in the US or Europe picked it up. So [there is so] much to say about the industry that was completely done; all it takes is one team to come with an innovative thought process and an audacity to not accept the status quo to change the industry. So here we have Razorpay and Harshil. Thank you, Harshil, for joining us. 

Harshil: Thanks Ishaan, always a pleasure talking to you.

Ishaan: We partnered with Razorpay around four and a half years back. And it has been a tremendous learning process for us as well, watching their journey. Harshil, the topic of the session or the theme [today] is org journey. So, we would love to talk more about that aspect of Razorpay building. And I’m sure given how key this topic is, we’ll touch upon innovation, product, business, everything. But maybe just to start with, and many have heard the story, but I would still request you to take a couple of minutes to share with everyone the journey of starting Razorpay, how you and Shashank founded it.

Harshil: No, sure. So I think the journey for us started about over nine years back. When both me and Shashank had just graduated from college, we were both at our jobs: I was working in the Middle East, Shashank was working in the US. And that’s when we discovered that it is quite challenging for a startup or an early stage company to accept payments in India. 

And the reason was that while there were a lot of payment companies at that time, most of them were targeting large enterprises, because that’s where the volumes were, that’s where the business and revenues were. And this is 2014, when we went around Google and researched more about it, we realized almost every startup faced the same challenge. 

And while startups were coming up in a big way in 2014, they were not considered very lucrative as a segment because the largest startup was Flipkart [which was] about less than a billion dollars in valuation. There’s nothing else even in the proximity of it. And so, nobody was really targeting it.

But what we felt is that, and what we had seen happening in markets like the US and others, is that as the ecosystem scales up as startups scale up, a lot of business can be made just around that. So with that thought process, we started researching more on that area. And as we discussed more, talked more, we felt just the right place to build a business around. And so without any background in the finance and banking world, we just started getting deep into building payments for businesses and specifically startups and SMEs (small and medium enterprises) in India. 

And yeah, it took us almost a year, year and a half from there to do our first live transaction, but that allowed us to like, when we launched, we got really rapid progress right from Day One, because it was just a market waiting to be subbed. So we got 300 to 400 sign ups in one day. We got amazing traction right out of the gate. And within a year or so, we became the de facto choice for startups in India. And that’s where the journey began.

Org culture begins on Day One [03:57]

Ishaan: Perfect, and Harshil, just after you and Shashank started, and I have often heard and referred to the starting, founding team of Razorpay as a soccer team, right, so multiple players are playing the game for the team to win. Talk a little about how that first core Razorpay team came together, the team that worked out of the penthouse for many, many months, before you guys had a proper office. How did you choose those people? How did those conversations go?

Harshil: Yeah so when we started building Razorpay, of course we needed a team to scale up and most of the early folks came from our circle, like people that we knew and had to work with in college or somewhere outside college. And the reason for that, I think, there were two reasons for that one is, of course, in an early stage startup, which is completely non-funded, it’s very hard for anyone else, it’s [hard] to convince anyone else to join, except for people who know you and who can believe that, okay, you’ll build something great. 

And the second reason is that we needed a bunch of generalists at that point of time. We were not really looking for specialists, but people who could oversee tech across the board. Not front end or back end, but be full stack across the board. We had three people who we put on the business side of things and they handled everything from sales to marketing, to legal, to reviewing contracts, to signing rent agreements and everything. 

So, I think getting that broad mix of generalists was important, but the most important aspect was that the team had a lot of trust in both me and Shashank because they were in some ways our friends or batchmates and [people] who knew us. So that’s how we got like the first eight, 10 members out of about nine members for the early team into Razorpay. Five out of them are still part of Razorpay, over the last nine years. 

So, I think a lot of those people grew as the org grew and have taken different positions and leadership roles over time. So, that created a really strong base for the org in some ways because as the organization grew and different functions came up, these folks moved out into a lot of those different functions. But what that created was that the original culture of Razorpay somewhere stayed true as the organization scaled up because these people carried the culture with them and would question back whenever things were going out of place. So the feedback loops were fairly strong right from Day One.

Talent and vision outweigh CV credentials [06:34]

Ishaan: All right. And Harshil, you talked about how you picked from your friends and your batch and your circle, but the circle was pretty large, right? You and Shashank were two batches of IIT Roorkee. You guys would have picked from say a few hundred people, at least a hundred people. What was the number one or top one or two criteria that you were looking for in picking the first few members?

Harshil: I think we were looking, honestly, we’re looking for people who we thought were really… like college is a great time to build those relationships and see people in close proximity. So people who we really liked and respected in the sense that we knew that these people, wherever they go, they’ll create something great. And would really put the hard work and dedication behind it to build something amazing. I think that was the primary criteria.

The secondary criteria was that we were looking for people who had very…like in colleges they would have dabbled in multiple things, because in early stages of the company, you really need generalists who are willing to move out and do multiple things together versus sticking to just one core thing. And, I think you can find such people in work and other places as well, but I think college is a great time to find out a lot of those people. So, we narrowed down on that. 

The last aspect was people, in some ways, we felt [who had] a high sense of integrity. And again you see that a lot in college, that there are people who have a high sense of integrity. And I think it was not very tough to filter with these three pieces out. Some of the folks that you want to get, not everyone got convinced, honestly. And so, to a lot of people we would go out and say, “Hey, why don’t you join us? We’re building something amazing.” And a lot of people had good jobs and family obligations and wouldn’t take it up. 

So, I think we approached like 15, 20 people, and then we were able to get like nine or 10 out of them convinced, a lot more joined later on as well, like the people we had approached early, but they joined in two years, three years out. As the org grew, some of them joined after that. So, we kept the relationship going from there.

Ishaan: Got it, got it. That’s quite impressive. So in some ways, what you are saying is, you hired for input metrics versus output metrics. You were willing to let go of the lack of pedigree, or big names on a CV for what you know as an inherent talent in these people or the smarts or the hustle.

Harshil: Yeah, in the early stage, right, I think the hustle and having that cohesive team, which is willing to go and do anything that’s far more important. And I’m glad that we really didn’t go out and try to have people with pedigree or like with 10, 15, 20 years in the first five, 10 employees. I mean, of course we got that as the 14th, 15th [employee] but with the five, 10 [employee], I’m glad that we didn’t do that because the kind of odd jobs and things that you have to do and really get into trenches it’s just really hard for somebody coming with a lot of experience because they’re not used to that. Like when you’ve worked in a large company, you generally have a lot of doors open, but really knocking on those doors and getting those to … convince them to really open it is something that people with … I think the most remarkable aspect for a lot of these people is that they had a lot to prove. So they fought much harder because they wanted to prove themselves. They wanted to create a career for themselves. They didn’t really have anything to fall back on.

Ishaan: Yeah, got it. I’ll just share that this is a theme that we hear quite widely that, one, founders back themselves to hire people that they are able to recognize as talented on inherent input metrics without, you know, a big name, 10 years experience on the CV, etc. And many of these people actually become very important parts of the org. We have seen this in multiple companies. Few initial people who have been hired, who you wouldn’t pick as if you hired a recruiter and they gave you the top 10 people for the job, they would not make it, they would not make it to the top 20, top 30, but that person had the hustle and you know, believed in the vision and that matters a lot in the initial journey. 

Harshil, I’ll just add on the engineering side also. I heard Shashank say something very similar in one of the chats we had where he said, “For the engineers also I looked for engineers who were talented [but] may not have landed the perfect job. But the world is ignoring them simply because they don’t have a Google or an Amazon on their CV.”

Harshil: Yeah, out of these eight or nine people, three of them were engineers and full stack engineers across the board. Again, like some of these are the most impressive engineers.

Org culture evolves while its core endures [11:12]

Ishaan: Yeah, cool. So moving on from the early days of just hiring to culture, which is something you mentioned and you talked about how these people from the beginning kind of understood the culture and values and carried them along, right? So instead of two founders building culture, now there’s this core team, which has been building culture for many years. Harshil, talk about the beginning of the journey? When you are two people, you define the culture, then you are, let’s say, 10, 12, at every concentric circle as it increases, how do you ensure that the single thread of culture stays intact?

Harshil: So, first of all, the culture does evolve as the org scales up. So it doesn’t stay static. And which is kind of fine because as the org scales up, some of the aspects of culture do need to change. 

What is true is that the core aspects of the culture remain constant throughout. And the way we’ve done it is like, the first is that culture has to be a very conscious [thought]. You’d have to be really conscious about your culture and you do really pay close attention to it. Like by default, it will move in directions that you don’t control. And the culture is always shaping up. It’s like a background thing that’s constantly moving and going in a certain direction. And unless you’re conscious about it, it’ll go in directions that you don’t want to. 

So, a lot of times you define the right culture and everything is great and you have the best culture, let’s say at this point of time. A year out it will be a very different place unless you’re taking constant conscious steps to keep it in a certain direction. So that’s the first aspect that you need to be very conscious about where you want, how you want your culture to be. And you need to constantly take steps to make it move in that direction. 

The second aspect is feedback loops. Like one of things I said is that we had these eight, nine people who understood the Razorpay culture from early days. So as they spread out to different teams, they’ll constantly…and it’s not just the first 10 people, I’d say it’s the first 30, 40, 50 people, who’ve seen, who have worked closely with the founders directly and who’ve seen and understood what they mean by different culture values or what they mean by the culture of the org. And so, as the organization grows, those initial set of people constantly play… become your feedback loop, because these are the first people who will come and crib, “Hey, the org culture is deteriorating. It’s not the same. The decision making is not the way it used to be. There’s more politics,” and stuff like that. So these are the people who come and complain and crib to you first when things start going the wrong direction. So, it’s important to listen to that. Like it’s easy for leaders to say, “Hey, this is how it happens now. This is how the org is now.” And when you listen to that and act on it, that defines the culture. And when you listen to that and don’t act on it, that also defines the culture. That’s all. So what you do based on that information is really setting up the culture. So what do you allow and what you disallow is at the end of the day that really sets it up. 

The last thing is that there are some structural elements needed to make culture flow. And those structural elements change as the org scales up. So initially there are no structural elements. It’s what the founders say and do and how the founders decide that really becomes a culture. And that’s the first definition of what a culture is, what the founders really do. So when you are faced with a question, or when you are faced with a fork [in the road], and you decide that, “Hey, you can do this and add some short term revenue,” or, “You can do this and do the right thing for the customer long term,” what do you decide in that small decision, I think everyone is looking and observing what the founders are doing, and that defines the culture in the initial days.

As org scales then of course you need this, but you need more because when you cross 50-60 employees, then not everyone interacts with the founders. Then you have different teams and those teams are interacting between them. So you need some guiding principles and that’s what we in the org call culture values. That these are the three or four culture values. And just putting them out there that, “Hey, we believe in transparency,” it’s enough [and] people understand from there. 

When you cross again, the second stage, which is like 500 employees, then just those values are not enough, because let’s say you say, “customer-first,” then at large, as I mentioned, because you’ve 500, 600 employees, people don’t understand what customer first means. Does that mean giving everything away for free or does that mean something else? So you need to start putting some definitions around those values that, “Okay, these are what these culture values mean, these are what these things mean.” This is not, just words on the wall, but a little more context around those words, and so on and so forth. 

So as the org scales up, you need to become even more and more prescriptive about a culture. In the initial days, it’s just the founders doing, there’s not even a culture value out there. And as a company reaches like 2000, 3000 employees, like if you look at Zomato or even Razorpay, almost all large organizations have a culture handbook of sort, which is as prescriptive as culture can get, because you don’t just give lines against the culture, you give actual examples that, “Hey, if you’re faced with this decision, what do you do there?” 

So, the prescriptive part needs to grow as the organization scales up. And that’s the last aspect of culture. I keep it at last because sometimes you will feel that that is the most important aspect that, hey, having these culture values or having a culture handbook, somewhere keeps the teams aligned or gives them a manifesto to fall back on, but the first two or three aspects are a lot more important. And getting it right, and then this. Last one can create some sort of a guiding light to drive that culture.

What you do with feedback defines your culture [16:29] 

Ishaan: Very interesting. I’ll pick one or two things that I found very interesting. One is, you said it very well, that you will always get feedback. What you do with that feedback really defines culture, but as you said, what you don’t do about it, also defines culture and sometimes even more. So inaction or what you ignore on what you let happen in the org—please remember, everybody notices everything—and that really defines culture, that’s one small thing, one small behavior that you let it slide. So don’t think that, you know, “it’s happening [but] nobody noticed. It’s okay.” People notice everything and they almost think it has your approval.

Harshil: Yeah. And then they think that they [will] try to replicate that, “Okay, this is what I’ve seen the founders do. So this is what I can do. And I’m sure that the founders will like it if I do this.” So it carries on from there.

Ishaan: Yeah. And Harshil in that context, and I know we have had some of these situations, right, but I want to make this tactical. So you talk about culture and we also talk about talent. But many times, these two streams don’t flow together. Many times in an org, these can flow in opposite directions where you have a very talented individual who, for some unfortunate reason, becomes at odds with your culture, right? Now the person is very talented, is contributing hugely to the business or the product or engineering, or is a phenomenal salesperson, but is hurting the culture. What do you do? 

Harshil: Yeah. So it’s a tough call. And this is where your culture gets defined, with what you do in that situation. These are some of the situations that really define a culture. 

So, I remember in one of the earlier days we hired a strong leader, an engineering leader. And he was very good, like in terms of execution on improving the engineering efficiency and [he] improved everything significantly. But we quickly realized, and this is where the early folks came in who started cribbing that the way things are being done are not in line with our culture. Nothing wrong with the person themselves, it’s just that our culture was quite different in the way that person was used to operating. 

So, there are people who come from large organizations who are used to driving things with authority and stuff like that. There are organizations where that doesn’t work. 

Now, we could have accepted that and said, “Hey, the outcomes that this person is bringing are much more important than letting the culture stay the same.” And sometimes that is the right answer. For us, we realized that, we figured that the kind of, what we want to build, the kind of innovation that we want to drive in the org wouldn’t happen with the kind of culture we have set out for ourselves. So if we let it change, then from being an engineering-driven org, and a tech-driven org that we had set out to be, we’ll be a business or a sales-driven org. And that is not the right outcome for us in the long term. 

So we took a quick call and decided to let the person go. And it was a hard decision because we had hired and taken a lot of effort to get the person in. There were a lot of positive outcomes in the short term that are happening out of it, but we had to take that call and I think even the engineers were surprised because even when they were cribbing or saying that it’s not happening right, none of them expected us to take that call. Like they expected us to maybe listen to it, maybe reprimand or maybe change courses a little and stuff like that. But we realized that the [person’s] culture is so different, and we realized that small, simple feedback loops can’t fix it because it was quite a wide lead difference. 

And what happened next from there was that the engineering leaders and people under him quickly understood how important culture is for the org. So they became more comfortable with raising some of these smaller issues to us. The outcome is not necessarily the same in all cases, but ensure that the feedback groups become even stronger because people realize that, “Hey, the org really values the culture that is set up for it.” 

So there are countless examples of this in various different teams. And, and I’m not saying that we have been right all the time. There have been cases where we’ve also taken a call, which is not right in hindsight and took us longer or maybe three, six months longer to realize that, “Hey, we need to take a different call now,” but as long as you’re conscious about it and constantly evaluating it, I mean, as long as…if you’re able to do that, then you will be able to get it eight out of 10 times right. And, I think that’s what will flow in the org.

Ishaan: Got it. Yeah, I think this is again, a particular one that if I reflect back on, most agony situations founders have had on people discussions has been this: friction between a very talented person at odds with your culture. And I mean, I can tell you with enough examples that I’ve never seen a founder regret the decision of prioritizing culture, ever. It’s a very, very tough decision, as Harshil said, because in the short term, it hurts. You truly have a talented person who is delivering, but in the medium long term, it’s going to…

Harshil: I would like to call out that sometimes there’s a fine line. So see, there are some things which are core to culture and some things are just a way of working and you need to figure out what is the delta between them? So, sometimes you don’t like a founder, people don’t like a leader because they do things in a different way than you would do, right? And that doesn’t mean that they are not aligned with the culture. So, that boundary is important to understand that it’s not just about, okay, they are doing something, let’s say they are doing sales in a different way than you would do sales. That doesn’t mean they are not aligned with the culture versus if they are leading or running the org or managing the team in a different way than what you would do that could be misaligned with the culture. So that boundary is important to understand. You’re not hiring people to do exactly what you do. You want them to come up with their own ways of doing and that’s where a lot of innovative things and practices come from. So you want to learn from the experience. You want to get people who bring in a new style of working. But that cannot go odds with the culture, the core culture talents that you have.

Base your decisions on long-term goals [22:34]

Ishaan: Super. Let’s shift gears a bit. From pure talent or people and culture part of org journey, the business side of org journey, Harshil, maybe again, going back in time, when you start, and particularly a B2B (business-to-business) sales business there are two balancing forces you’re trying to strike, right? You’re trying to make sure your product has PMF (product-market fit), you get sales, you get your first customer, but at the same time, you’re trying to build a business that is a long term successful business. 

Now, ideally, both things should flow together, but sometimes they don’t, right, because to get that one client, to get that one product out, you have to do some things for the short term which you wouldn’t have done if you just didn’t have any pressure to, you know, sell or have revenues. How do you balance the two forces?

Harshil: Yeah, it’s quite a hard problem. So again, like it, I get to decide what are some of the core principles of a business and you can’t deviate a bit from that, but a lot of times you have to sacrifice one or two aspects of it to make success in the short term. Like I’ll give an example… in B2B, one of the challenges that most companies face is that you are a product-based company, but you’re constantly pulled in the direction of being a service-based company. Like say where every customer is coming in and asking for a lot of customizations, but you have decided yourself to be a product-based company. 

Now what do you do there? You can win a client by building three or four custom things that they have asked. But that sets the tone that they might keep asking for more custom things. And you might end up becoming a service-type organization. So that’s a common example that I feel almost every B2B company faces. We have faced ourselves. 

What we did to counter that, in the early days like for example, any customer would get in and say, “Hey, you built three custom things for us and we’ll go live with you.” There are times where we took the call to build a custom series. 

The difference is that the custom thing that we are building, is this long term maintainable or can we in the long term modularize it? If that is possible, then we have taken a call to build those out versus if those are things that will always be custom and will always have to be client-specific, then we’ve taken a call to not build it out. And again, the boundary is hard and it’s the engineering team and the product teams’ call to decide what they’re picking up, but having, taking that call is important. 

So, I’ll give you an example. There was a very large customer that we met in the early days and we were doing X amount of volume and that customer alone was doing like thousand X of that volume. And [with that] customer, we got connected because of an investor, and they were quite interested in going live with us, but they needed at most 200 features to go live with us. 

And we could have built it out and taken it live, but we realized that this is not long-term maintainable, like, we can’t modularize any of these features. And, we are not getting even a single other customer who would use these features right now because we are not at that scale. So if we [had] built it out, we become a company that serves that one customer and we can’t lose that customer because if our volume goes from X to 200x or a thousand X per month then you can’t afford to let it drop down back to X. So, that moment we took a call and we actually ended up refusing to participate in that requirement and we told that, “Hey, I don’t think we’re ready for that scale.” It took us almost five years after that to get that customer back. Today we power them, but it took us almost five years to get them back. But, that was a time when we needed to take this call.

Now there are counterexamples to this. There were a lot of small customers that said, “Hey, if you build this one additional feature…,” for example, we had a shipping company that wanted to go live. And they said, “If you build a module for us to accept shipping details and billing details, which a payment company doesn’t, then we would go live with you.” That was a small thing. We actually modularized it. And today, we allow any customer to accept shipping and payment details if they want to. So, it became actually a feature of the platform that we could sell to not just one customer but to a lot of other customers. 

So as long as whatever customization you’re doing is replicable and helps you achieve at least 10, 20, a hundred more customers at that point of time, then it’s okay to do some of those things, but you can’t do if it is just for that one customer and you will not have any of the customer, at least in the near foreseeable future. Those are examples of business decisions you have to make, some of which are long term and make sense for the company, but at the same time might be distracting in the short term. 

On balancing PMF and the company’s metrics [27:07]

Ishaan: Actually, this theme of keeping the long term in mind through every deliberate decision is something I have at least noticed you guys do across functions. Like even on code base, etc., always keeping in mind what it will need to be in the long term, investing for the long term. Taking these customer calls, taking calls on building out functions for the long term, even from the early days, has been quite good to see. Harshil, one question that the team had in these early days when you talked about doing things for your early customers, was how do you track your PMF? How do you know, yes, you’re focusing on the long term and you’re thinking about modularizing, but you know, you have to kickstart the business. It has to still work. How do you know?

Harshil: First of all, I think a lot of companies don’t even know at what state do you say that your company has hit the PMF, right? So that’s the first challenge. I think a simple thing that I’ve seen, and it was even, we didn’t realize honestly, that when have we hit PMF. 

But in hindsight, when suddenly the conditions that are the hardest problems for your company become around, how do you serve your customers versus how do you get customers? I think that is for me the definition of PMF. So I remember like in the early days, of course, we had a lot of challenges. In getting new customers on board and all discussion was on, “How do we get a new customer?” And suddenly the tone changed that in a lot of discussions, it was like, “How do we get more engineers? We have customers who are not able to go live because we need this feature, or they need this thing or support is going bad,” and stuff like that. So what we people call scaling issues. When you start facing scaling issues, that I think is the definition of PMF, that’s when you have hit PMF and your biggest problem now is how do you sell the customer that you’re able to get on board. 

And I think in the early days when you’re trying to get PMF, your core … I think in the zero-to-one journey of getting PMF, I think the only focus has to be on getting customers on board. You can’t really optimize, like whatever’s said and done, you can’t really optimize for the long term, or anything like that. Your focus is just to get these first 10 customers on board. And really do whatever it takes to get them on board. Of course, the bandwidth is limited so you really can’t do anything and everything anyway, but you have to really get those 10 customers on board. 

The only thing that is important is that the metric at that point of time cannot be a growth metric. For a payment company in the early zero-to-one stage, the metric was not, how do you get like [these many] crores (million) of GMV (gross merchandise value) or [these many] crores (million) of revenue. The only metric was getting 10 customers on board. And as long as you have the right metrics, you’ll not get distracted. So, if a large company approached us at that point of time and said, “Hey, we can go live with you,” but metric is just to get these 10 customers on board, I would not spend time with a large company because I know it’ll take a lot of effort to close one large company than 10 small companies. So, automatically you will prioritize what is needed to get PMF right versus focusing on other things, which can be a lot more distracting. 

So, that is one way that I’ve seen companies are able to… and at least for us it worked that we were able to focus ourselves on just getting PMF. And it’s not just in the early days, even today, whenever we launch a new product, the only metric that we give to the new product is getting 10, 20 customers. We don’t give them a GMV goal or a revenue goal. 

So, for pre-PMF, the only goal has to be the number of customers or something like that and post PMF… But still in the growth phase, the top metric has to be a growth goal, which in a payments company would be something like a GMV.

Ishaan: Do you want 10 customers for a specific ICP (ideal customer profile)?

Harshil: No, it depends on what the priorities are. For a payment company like ours, we really didn’t care where those 10 customers came from. So we just needed to get 10, 15 customers. In the early days, for example, it could be a specific customer base. 

For example, when we launched payroll, we launched payroll specifically targeting startups. So in that case, the PMF was defined as getting 10 startups on board. We wanted to be even more tightly focused on getting startups only and not anything else. The teams would come back and say, I can get this small shop on board and we were really clear that we only want startups right now, and then we’ll expand from there because that is what we had set as the growth path for that product.

Ishaan: In our case, payments is a more ubiquitous product. So we want to sell across. So, it doesn’t, hasn’t mattered, but Harshil, in the subsequent products, let’s say a checkout product, etc., the ‘which 10 customers’ has been narrower, right?

Harshil: Yeah, that is why I gave the example of payroll. We were very clear that only we want startups and early-stage startups. So we were very clear that only less than 50 employee startups were on the payroll. So it is product dependent. In payments, it was broad, but it was also somewhere self-controlling that when you want to get 10 customers, the priority is just on getting the number of customers on board, then ultimately it was startups. Like we couldn’t really get large companies on board in that short amount of time.

Building for enterprise versus mid-market clients [32:04]

Ishaan: Maybe one question, which is also my favorite topic of discussion in the board meeting is that, Harshil, as you scale, in the beginning in a B2B business, you’re a product and engineering centric business. And then over a very long timeframe, at some point it starts shifting towards more sales, right? Now, whether it always should stay product and engineering centric, but the importance of sales keeps changing over time. In Razorpay’s journey, could you talk about that? And also do that in the context of how in the beginning you started with startups and companies, but over time we have become the merchant, payment gateway of choice for even enterprise clients. Now that is a very different way of building and selling. So how has that transition happened? 

Harshil: Yeah, so I think it was at a very early stage, I think quite early in our journey, we started to focus on enterprises. And this is like almost a year after our launch, the sales became a very important aspect of… So, in an enterprise B2B space, sales has to be as important as product and tech because enterprise sales works in a very close conformity with the sales teams. 

So the way we… the first thing that we did was we segregated two things. So we had our SME (small and medium-sized enterprises) side of things, which we said is completely product and tech driven. And even today, at whatever scale we are, product and tech is the primary driver of our SME business. So SME sales is an assistive function, and the product and tech is the driving function. So they take the final call and sales and marketing are assisting functions. 

On the enterprise side of things, things are a little different where sales and product are together as the driving function and tech, and marketing are supportive functions. So, that is based on how the customer interest is, that is based on how and what customers value more or how do you get new customers. So in an enterprise sales process, sales becomes an important aspect. 

Now, going back to your question, I think, how did that transition happen over time? So, what we’ve done is that the product and tech team always decides the roadmap for the features and things that get built in the org. But on the enterprise side of things, the customizations come from the sales teams. So, while the product team will constantly keep building newer features based on what they see in the SME-side of things, and build products out for that, and the sales team will basically play an assistive role in selling what is getting built. On the enterprise side of things, this was a little bit different in the sense that the sales team will tell, “This is what I need to close the next customer,” and the product team will evaluate and take a call on whether they want to build these. So the sales team will bring a bouquet of five or 10 features that they need next to sell. And then the product team will evaluate and prioritize them and take the final call on what gets built out. So it’s quite a nuanced difference in the sense that instead of the product team deciding what they’re going to build, they’re choosing out of the bouquet that the sales team is setting out for them. So, that’s how we built on the enterprise side of things. And that approach worked well for us over the years. 

Of course, it has evolved as the organization has become larger and how that approach is implemented in practice. But the basic principle is this, that in the enterprise side of things that’s how the basic principle evolves. SME is built more like a B2C (business-to-consumer) business where the product team takes the call on what is needed in the market and the marketing and sales basically in some ways give signals on where the market is heading, but the product and tech teams take the primary call on what gets built out next.

The case for ‘healthy friction’ [35:31]

Ishaan: Yeah. I think this is again, kind of tying it back to the culture piece. Quite phenomenal. It has been quite phenomenal for me to see how you guys have built this culture where product and tech are so closely coordinating with the sales team. And on both sides, there’s this healthy friction that both sides question and challenge each other.

Harshil: Yeah, and the friction is an important part of it. Like the friction basically ensures that the outcome is in the best interest of the org. It’s not like when we say product and tech is in the driving seat, it doesn’t mean that, “Hey, they’re able to do whatever they want to do. And they don’t really care about what business teams bring in.” And at the same time, it’s not building everything that business teams request for. So building the friction is the thing that keeps this in check.

Ishaan: Behind the success of Razorpay’s enterprise sales machinery, is this phenomenal coordination where sales sends a feedback loop, which is sent back to the product team and product team, then sends it back to the sales team. And even from SME to enterprise. Now, the funny thing is, Harshil, as you have noticed, right, like many of our enterprise clients were SME clients. So they themselves traveled the journey. And how you then travel the journey along with them to keep improving your product has been quite amazing.

Harshil: And this has been like, very few companies are able to do that well, not just in India, but across the world, companies are either enterprise-heavy or SME-heavy because both things run very, very differently. So creating that dichotomy was important to succeed on both sides. Otherwise most companies end up serving only one segment of the market.

Ishaan: By the way on this, again to the example of how and what leaders do and founders do kind of transcends through culture. When we were investing in Razorpay, my favorite story was when I was asking one of the CTOs (chief technology officer) of a very large company, like, “Why did you pick Razorpay?” And the guy was like, “You know, I did calls, customer calls with all the PGs [product guys]. And Razorpay was the only company in which, when I said, ‘I can’t do this,’ the guy basically opened the code base and started making changes and said, now you can do it.” And later I figured out that guy was Shashank. So he was on a customer call and making code changes as the CTO asked for it, right. Now, that builds culture, that builds a culture of customers and centricity. Similarly, I send all sorts of stuff to Harshil, but the one thing I get the fastest response on is when there’s a customer complaint. There’s a 30 to 45 minute response time. He’ll add somebody or respond back. Everything else, you know, can take time but… that again, builds culture. 

Are there any other questions? People can unmute and ask questions….

Tailor communication for highs and lows [38:09]

Rishen Kapoor (Toplyne):  Hey, Harshil, thanks for the session. My question is: the way in which you’re communicating or affecting culture across the organization, does it change when times are good versus when times are rough? When I say times are good, which is like business is killing it and times are rough [are] when it’s not.

Harshil: Yeah, so I think, the way that we are doing culture doesn’t change much, but the repeatability goes up when times are tough. So that means that like when times are tough, people want to hear a lot more around what are the core things, because when times are tough, people cut corners and try to go around things a little more because you’re not hitting goals and it’s easy to… you’re basically incentivized to find ways to grow or find ways to scale which are not right. 

So, the deviations of culture in my experience happen a lot more when the goals are not getting met and there’s a lot more pressure because the pressure does come out in odd ways. So just repeating and reiterating what the core values are and that those core values are more important than hitting our goals for one quarter or one month, I think that just becomes a lot more important. So you keep increasing the repetition around that. 

And, we’ve seen like, it’s not just at an org level, but even at a team level, when there is a team really impacted by certain goals, and they’re not able to hit their goals, you just need to repeat the culture aspects, and the longer term picture a lot more. 

And it serves two purposes. One, it ensures that the culture doesn’t deteriorate because of the tough times. But also, it gives people some bit of… some bit of comfort that, “Hey, well, this is important, but there are other aspects that are more true and more core for the company that are equally important.” And I think it’s important for people to get that comfort, that we are here for the long run. And some of these long term outcomes are more important than the outcomes in the short term that have happened.

Rishen: I have got a follow up [question] here, would you mind if I ask that? 

Harshil: Yeah, sure. 

Rishen: So Harshil, like when times are good you tend to have a lot more trust from your team. So whether you’re communicating about the future or the times will get better, or even if it be cultural values, they’ll trust you a lot more. When times are rough, that equity that you have with your team and that trust tends to be a little lower. So outside of repeating and reiterating, is there anything else that you do tactically to still continue to maintain a strong culture?

Harshil: When I say repeating and reiterating, it means like just communicating more and you’re not just communicating culture, but you’re communicating more on all aspects. So on your decision making, on things that you’re doing, on what you’re doing to correct, like you need to just be a lot more transparent when times are tough because you are right, trust is low. And the best way to build trust is to be more transparent, right. 

So, let’s say because of tough times, you have to do lower hikes in a cycle, like just being more transparent about it, that, “Hey, this is the reason that we have a lower hike the cycle because of these, these factors. And then, hopefully we’ll be able to get back on this…” It just creates a lot more…I’ve seen [it being] a lot more positive than just giving lower hikes and not explaining why it happened. So that’s an example of how you can manage a little bit on it. It won’t still be as positive as it is when times are good. Like, at the end of the day when times are positive you don’t even need to do a lot of things and people generally feel good about things. 

So you can’t completely counter that, but it does solve some bit of a trust problem that people…even when times are tough, people understand that, “Okay, at least you are taking the right calls. And we are in the loop.” That uncertainty goes away. The biggest challenge, the reason the trust goes down when times are tough is because people become uncertain, “What will happen to my job? What will happen to my growth? What will happen to the company?” So the transparency gives them comfort that, “Whatever happens, I will be in the know of it”, versus “there is something happening behind me.”

Rishen: Thank you.

Agility & nimbleness: The key to continued growth [42:03]

Ishaan: I think, see, we have talked a lot about the past Harshil, I would love to finish this on a note of the future, right, like how, how do you see, where do you see Razorpay in five years? You guys, as you recently talked about, you are in Malaysia now, expanding globally in India. We are no more a payment gateway company. We are a payments platform with current accounts, payroll payouts, credit cards, and many others. Just talk a little about where this is headed? And because the theme is culture I would love to understand from you: Where do you think you’ll have to be most deliberate and cognizant about culture in this journey?

Harshil: Yeah. So on the first aspect, our goal is to be the one single money movement platform for businesses. What it basically means is that we are building basically an AWS (Amazon Web Services)-equivalent for business finance operations. So when you start a business tomorrow, you can sign up with Razorpay, you can get access to a bank account, your payouts, your dispersals, your collections, payroll, vendor payments, cards, lending, everything under one single roof.

So, we started with payments, but over time we have expanded to all of these areas and the two things that we focus on are businesses and money movement. So we build things for businesses, we don’t have a single B2C product out there. We do build things for banks sometimes so that it can help us serve businesses better. 

And the second aspect is money flow. So we don’t do things which are too far away from money flow. So, for example, we don’t build an accounting tool because we are clear that, “Hey, this is not a part of money flow. It’s completely outside money flow.” So anything that touches money flow and is for businesses is something we’ll get into so that as a business scales up and wants to do a lot more things, they can do it in one single platform versus 10, 15, 20 different tools that they have to use today. So that’s the direction we are heading in. 

On the culture aspect, I think it’s one of the things that I said is we are constantly conscious about it. One of the things that worries me most, and I think most large companies, is losing the essence of agility and nimbleness as we scale up. Like, that’s one of the biggest things. That’s what makes a company a startup versus an incumbent, when you start losing the agility, that’s when you really lose… Like the reason we were able to scale up against 10, 15, 20 big payment companies in India is that we were agile and nimble and we were able to innovate faster than anyone else. 

And I think that’s what got us here and we you know, and the only thing that I worry about is that we don’t lose that and we are able to create specific teams and specific small teams that are still able to focus on agility and experimentation. And we don’t become happy with what we have and just keep focusing on growing the business on what we have versus contributing in building new products and new services to expand from there.

Ishaan: Fair, hopefully we will never become an incumbent. Well, thank you so much, Harshil. 

This transcript has been edited for clarity.