Kunal Shah has just sold his four-year-old online mobile recharge venture FreeCharge, which he started with friend Sandeep Tandon, to Snapdeal for a whopping $400 million, the largest deal to date in India's consumer internspace. Here is an excerpt from a Times of India interview with him.
How did FreeCharge happen?
The idea came when Sandeep (Tandon) and I were doing a marketing solutions company. Sandeep is an engineer by training, and has built businesses, and I have known him for 15 years. We learnt about interesting marketing techniques that drive consumer behaviour. We started PaisaBack that ran cashback and promotional discount campaigns for organized retailers. While running this, I found that 95% of the invoicing of a mobile store was recharges. I was always a postpaid consumer and never knew that recharges were that big. I realized then that a huge amount of traction could be gained in online recharges, especially if we could somehow make it free. FreeCharge was launched on August 15, 2011. One of our early partners was McDonald's and this helped build our consumer base quickly. When we started, there weren't many believers in this category. Even today it's not mentioned in any ecommerce report as a category. It feels great to be a pioneer. There are at least six clones now.
Were the incentives you offered key to your success?
We believe behaviour changes happen when there is an incentive or motivation of some sort. Consumers who are transacting offline need a little incentive to come online and transact. Giving coupons and subsidizing things make people do that. For the youth, it helps them multiply their pocket money. If you can get an extra burger with a recharge, it's a big thing for a coffee date. v How long can you keep giving such incentives?
Incentives are sponsor advertisements from other companies. We merely position the incentive.We create footfalls for them.Merchants pay us to list their coupons.
Why did you sell out?
If I were going home, it would be a sellout. I'm not going home. I'm continuing in FreeCharge as CEO, doing what I want to do, which is to build a great ecosystem. We have taken big targets. We grew 1,000% last year and we want to do even more this year.
Why did FreeCharge move from Mumbai to Bengaluru?
Bengaluru brings a very interesting mix of people who have worked in product companies and who have worked abroad. No other city has that level of talent.We had people from Zynga games coming into our company. We see amazing value coming from Bengaluru. But I think the talent pool is be ginning to emerge everywhere.
Best Regards,
Educate, Empower, Elevate
Prof. Bholanath Dutta
Founder, Convener & President- MTC Global
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