EP060 - Wealthtech - In conversation with Satyen Kothari, Founder & CEO Cube Wealth

Summary

In this episode of India Fintech Diaries, hosts Elroy and Hoon delve into the rapidly evolving landscape of wealth management technology in India, also known as Wealthtech. The guest on the episode is Satyen Kothari, the founder and CEO of Cube Wealth. The conversation unveils Satyen's entrepreneurial journey from working at Apple to building multiple companies in Silicon Valley before diving into India's fintech space. The podcast covers the Cube Wealth platform's unique value proposition in guiding middle-class professionals towards smarter investment strategies amidst a plethora of choices. Satyen shares insights on the changing investment behaviors in India, the innovative essence of Cube Wealth, and the overall state and future of wealth management in India.

Highlights

• Satyen Kothari started his journey in Silicon Valley, where he founded three companies before moving back to India to establish Cube Wealth. 🚀
• Cube Wealth operates with a philosophy of non-intrusive investing, emphasizing a 'fill it and forget it' strategy for busy individuals. 🧘‍♂️
• The personalized wealth coaching offered by Cube Wealth combines technology and human touch to navigate the complex investing landscape presented by numerous financial products in India. 🤝
• Their business model challenges traditional high-margin product sales, opting instead for integrity and customer-first advisory. 💪
• Despite technological advancements, the reliance on human advisors reflects Indian investors' need for a personalized touch in managing their wealth. 🧑‍💼

Key Takeaways

• Satyen Kothari's entrepreneurial spirit began at a young age, cultivated by his father's engineering background and further fueled by an early interest in computer programming. 🧠
• Cube Wealth aims to offer automated yet personalized wealth management services for busy professionals who may not have the time to manage investments manually. 🤖
• There is a significant gap in the wealth management services for affluent middle-class individuals in India, which Cube Wealth seeks to fill by offering smart advisory beyond simple savings. 🏦
• The mindset towards investing in India has shifted from traditional assets like gold to more market-based instruments, driven by better regulatory frameworks and economic growth. 📈
• Satyen emphasizes the simplicity and long-term perspectives in investing, where the aim is for users to set up and let their investments grow with minimal disruptions. 🌱

Overview

Satyen Kothari's entrepreneurial journey reflects a passionate pursuit of innovation and problem-solving, beginning with his days at Apple and later as a dynamic founder in Silicon Valley. His current venture, Cube Wealth, brings a fresh perspective into the Indian fintech space, particularly in catering to the needs of the middle-class investor.

Cube Wealth is built on the foundation of providing robust, personalized wealth management services that balance human interaction with technological efficiency. The platform simplifies the investment process for busy professionals, focusing on long-term wealth growth through diversified investment strategies.

The conversation with Satyen provides deep insights into the investment trends in India, highlighting how Cube Wealth addresses the challenges faced by middle-class Indian investors. The platform thrives on delivering exceptional value through expert advisory services and a user-friendly app, fostering trust and transparency in wealth management.

EP060 - Wealthtech - In conversation with Satyen Kothari, Founder & CEO Cube Wealth Transcription

• 00:00 - 00:30 [Music] welcome to the India fintech Diaries the only podcast Focus exclusively on the Indian fintech market I'm Elroy and I'm hon in each episode we dive into the latest trends ideas Innovations business models and personalities that are shaping India's fch landscape we also invite amazing guests who are innovators
• 00:30 - 01:00 and Industry players they driving the chain that is helping make Financial Services more modern Innovative and inclusive in India come join us as we explore the chining landscape of fintech in India welcome to India fintech Diaries to show for all things Indian fintech I'm your host Elroy and I'm your host hon Elroy in the last few years the entire landscape of retail investing in India has changed from new products to Old products in new ofar the modern retail investor has a wealth of choices
• 01:00 - 01:30 and the space is ever evolving to understand how we got here and what's in store for the future we have with us sattin kotari founder and CEO at Cube wealth welcome to indiach diary Satan thank you for having me both of you Satan you've had a very interesting Journey so far I noticed that you actually begin your entire career at Apple and then you of course enter the world of digital payments and kind of conquered that space and now you're looking at technology enabled investing so for the sake of a listeners we have
• 01:30 - 02:00 to hear a little more about you and know a little more about your entrepreneurial Journey absolutely Elroy so from a very early age I loved building things I remember my father is a mechanical engineer and he used to design machines for his Factory and I used to peek over his shoulder to whatever he was designing ask questions have have ideas which were probably silly but he always encouraged them and that led to an very early age of getting a Lego set that I I
• 02:00 - 02:30 think I squeezed every last brick out of it played with it for eight years with one set which is an alien concept to kids today who get who get an abundance of toys right um and then absolutely stumbled into computer programming in the e8th grade so it's been layers and layers of building and just the building the nature of the building changes so starting companies was part of that Journey um so I did my masters in computer science in the US at Stanford then I interned at Apple while I was
• 02:30 - 03:00 there worked at a couple of companies and at 26 started my first company by no means was the journey perfect I would call it highly imperfect maybe um made lots of mistakes realized I needed to learn a lot of things but fortunately or maybe it's a streak of masochism that I kept going at it uh one company after another so I actually had three companies before I even moved to India and started getting into the world of
• 03:00 - 03:30 fintech uh three companies in Silicon Valley so it's it's been a long journey it's about five companies deep now with Cube wealth but each one is in a very different domain I believe life is short you should try many things as opposed to become a domain expert only in one thing and go deeper and deeper but that's just my personality so I've been enjoying it it's it's been everything from SAS to design Consulting to social empath eCommerce to as you said digital payments with Citrus payments and now
• 03:30 - 04:00 Cube which is in the investing world so yeah it's been an excellent and painful Journey satin I was also hearing to some earlier conversations that you have had and interviews that you have given and there were some very interesting anecdotes related to Citrus pay and pay you deal can you give more details on that deal as well you know so we started Citrus out with a very simple Playbook right saying that software is going to be the Game Changer in payments and both of you know the payments space well so you know it was build Des CC Aven
• 04:00 - 04:30 process behind before we started Citrus so we came with a software first mindset saying you had all these failures in in the pipes that can make payments go through how can we do uh retries automatically how can we have payment Gateway switching at the back end depending on how rates change for merchants so that was our strength halfway through the Journey in about 2013 I remember we were
• 04:30 - 05:00 uh I was speaking with jitendra at a conference in uh in Vietnam and we started talking about why in in our sales team we were facing so much pressure from people like pu who were undercutting us because they had deeper Pockets people like B desk who had deeply entrenched relationships uh that were hard to shake and he said where can we go that uh that these guys are not strong in and I remember taking a long walk there and and at that time the
• 05:00 - 05:30 India mobile Commerce Market was at 2% and I was just thinking to myself well this is a number that has to go up there's no other way I mean India people are going to afford cheap smartphones before they ever get to laptops or tablets even if they get there so we took a very early bet around 2013 to start building sdks for Mobile payment gateways and that became a strong element for us as a differentiator and the market market so we knew we were
• 05:30 - 06:00 being a thorn in the sides of pay and build desk already and then fun enough it was 2015 at money 2020 in Copenhagen that I got randomly invited by a VC to attend a pay you party and my first reaction was I shouldn't be there these are our biggest competitors and he said ah come on it's it's you know nobody cares it's a party so I show up and I I see luron who was I think I I don't know
• 06:00 - 06:30 if he's still the global CEO of puu but at that time he was and we just talk and he sees my badge and he's like ah you the you the guy making making me get headaches in India so we just started on that note of just like let's rip at each other and we just got along really well and we were showing each other the UI of different apps that we loved at the party itself and you know it was like it was competitors but respectful competitors and got along so the next
• 06:30 - 07:00 day the lauron says Ah you know what tomorrow let's get a glass of wine he's French of course that's how that's how all meetings happen I said sure why not the conference is Mega boring I'm happy to do any excuse to get out of the beds uh so me I show up in the evening and I don't realize it but he has his entire Senior Team there and I was like I thought we were just getting a glass of wine but apparently they wanted to understand what we were doing in India what our plans were and you know with
• 07:00 - 07:30 you guys the way I am pretty transparent I was the same with him I was like you know it's it's going to be a tough journey I think India is going to Boom but we're going to keep keep competing with each other we going to keep playing on our software strengths and you know it just seated it that way he was in touch once in a while and then a few months later we had a banker who had very deep connections with them who was helping us raise our CVC and the banker came back and he's like hey would you guys want to talk to them about some potential deal cuz lauron keeps asking about you guys I
• 07:30 - 08:00 like well why not so the end of that story was it was a simple I gate crashed a party led to a glass of wine and a year and a half later we had what still I think is the biggest cash fintech deal in India at 130 million pretty expensive glass of wine for L I don't think he's regretting it I think they went public with their Global portfolio so of course yeah he played it smart too because he wanted
• 08:00 - 08:30 to build a Emerging Markets portfolio I think otherwise in terms of just pure numbers as we saw even the build Des deal didn't go through right it just doesn't make sense yet with especially with UPI but I think he played it smart with the bigger picture and that worked out well for us I think yeah the deal worked out well on both sides that's what's count and these are rare So if you there is a win across that area for both the players that's fantastic absolutely and and you mentioned the keyword rare and I remember when we got
• 08:30 - 09:00 the proposal you know rightfully everybody was thinking whether we should take it or no and maybe I was the only one convinced we absolutely had to so I remember talking to moit at zya talking to theu at B next uh to amri and Jen I said guys I understand the emotions involved I know we are on an upswing we can make this a bigger company but this is a gamechanging amount in India deals don't happen we had only raised 20 odd Millions so everybody was going to make
• 09:00 - 09:30 money it was all cash our team members were going to make a lot of money which would have changed their lives so I remember lots of calls with with a little nervousness on mind saying are we seriously not going to take this deal is somebody oh those were fun fun few days yeah and sat it seems you have a knack of catching the waves when they start so you were right on the money when the payments process was starting and then it comes to wealth which is
• 09:30 - 10:00 your latest Venture so if Elroy and satin you see the equity investing shown strong growth in the country I think there are about 10 million demat accounts that were added in the first six months of last year taking the total tally for the last two years to about 30 million and even ay reported that retail a grew by like 30% in November 23 as compared to November 22 and even on the Sip side if you see which is the mode of investment that a lot of people are now adopting about 3 million sips were registered in November 23 alone and
• 10:00 - 10:30 earlier I think there was a downturn on the fixed return revenues like fds but those are back in Vogue with the rate environment change and then there are new investment methodologies of P2P loans invoice factoring so there's so much happening in the wealth area and with the penetration sat which is like so small right now it is just going to go up as you said it was for mobile Commerce payments at that point of time so since you have seen this change in Behavior so what's your you on what's
• 10:30 - 11:00 driving this change in investing behavior and where do you see this going as as far as the country is concerned that's a that's an excellent question so if you think back right even as little as maybe 15 years ago Indians didn't invest in the stock market we had so many scams happening in the '90s if you guys remember harad meta scam you know Etc that it was supposed to be the game of of the Insiders not for everyday people so we love to put our money in jewelry gold real estate then we had I
• 11:00 - 11:30 think we started seeing the first phase of people saying ah maybe I should dabble in the markets especially as the economy opened up and companies were growing and I what you just rolled out as statistics is showing the acceleration of that the Snowball Effect where people are very comfortable everybody assumes you have to have some mutual funds now right 10 years ago that wasn't the case so I think a lot of it is mult well multiple factors one we are a rapidly growing economy which has a
• 11:30 - 12:00 middle class upper middle class that has extra money to invest second I think there's that that fear of missing out which is if I don't invest I just save in the traditional ways I will not manage to keep up my lifestyle with my peers you know uh Charlie Munga often says that more than greed it's envy that drives decisions and and this is a very big element here third is The Regulators have done a fantastic job uh very often we as Indians love to
• 12:00 - 12:30 complain about the government and Regulators but here when it comes to sebi RBI I think they have infused so much faith in the system that people are comfortable that that our money will be relatively safe if we put it in there it won't be scammed out very easily so a lot of these things have come together to say we must invest now that's only part two right there's the third wave which is how do I invest properly which is I don't think a lot of people
• 12:30 - 13:00 have figured out if you see the big boys in in the wealth Tech space whether it's the zeras the grows they are DIY platforms hey come in what do you want to buy go for it right and and I wish investing was that easy if if it was that easy everybody would be rich so I think we are going to wait for the third wave which is um I've tried investing on my own looked easy I saw the billboard saying uh this mutual fund had 40%
• 13:00 - 13:30 returns last year I went and bought it somehow it didn't give me 40% this year what's going on so I think third wave is where Cube wealth is focused saying how do we guide you to build a proper balanced portfolio for short-term medium-term long-term based on your risk profile based on how many kids you have how many defend parents you're taking care of what your expenses are but also very importantly how do we in this Jungle of options out there find really high quality assets and advisors for you
• 13:30 - 14:00 and in India this is the most exciting part right now because you have so many finex disrupting Banks as you said with invoice discounting P2P loans Etc that you have Alternatives of what you can invest in the problem is the Alternatives get too too complex and too confusing right so you have more than 1500 mutual fund schemes how does an ordinary person start RBI has more than 50 plus P2 registered companies which
• 14:00 - 14:30 one do you pick how do you invest so this is going to be the fun part and and it's going to be a great journey because the next 10 years of the economy keeps doing what it's doing there is money to be made for sure if everybody plays it smart you know S have a confession to make I was probably one of your earliest customers when cubeb first launched I distinctly remember you getting on a WhatsApp conversation with me and my assigned RM to help clarify details to some of the products you had at Cube belt unfortunately then I couldn't continue my investment Journey with Cube
• 14:30 - 15:00 weth but uh and that was simply because of restrictions on trading and Investments I had at my then employer but nevertheless I've followed Cub bel's Journey over the last couple of years and today I've seen it grown toward 18,000 crores in AUM and has had a good track record of delivering for its customers in terms of returns for the sake of a listeners it would be great if you could explain to us what Cube wealth is all about and I'm also equally curious what prompted you to set up Cube wealth fresh from exit at uh so the
• 15:00 - 15:30 problem statement we trying to tackle is the fact that if you are a afluent middle class professional in India you have nobody willing to help you and give you great advice right who do you go to and we all grew up in middle class families me and my whole team I remember my father used to struggle where to invest it was the same problem with us who do you go to today you can go to your bank harm who has a quarterly quot of which mutual fund they have to sell you you can go to your local mutual fund
• 15:30 - 16:00 ba Uncle next door who might be very well intention but their knowledge is very limited to just mutual funds and that to to whether good or bad based on what they've heard so you're really stuck and I'm talking about people who have maybe about you know 10 20 lakhs to a couple of crores in the bank right so at that level you're taking your money seriously but it's not big enough money where a private Banker will show up which is in the typically in the couple
• 16:00 - 16:30 of millions minimum dollars right so that's 10 crores plus so what do you do I and and let's say you you have a full-time job whether it's in finance in IT Tech media this is not your area of expertise investing right so you can try and build a parallel career to become a really good investor or you flub around a bit and you try and guess what to do so this is the problem statement we decided to address we said we must solve
• 16:30 - 17:00 this problem for this category of hardworking busy professionals as we call them uh who have little time they don't have many questions uh they don't want to do daily trading fno Etc our platform doesn't have any of that because that's not the idea of of cube you want to build a steady long-term portfolio that you check in once in a while once you set up your sips it's autopilot I set a challenge to my team that how in frequently does our user need to open our app that it's the
• 17:00 - 17:30 inverse metric to every other app which counts daus and Maus right you shouldn't open it it should be on autopilot we'll send you a monthly email which shows your portfolio if you set up a sip great it'll de debit it from your bank there a moment and and again I use Charlie Munga and Warren Buffett very often and I'm also reading a very interesting book right now by palak Prasad of nalanda and and one of his three points for successful investing now I assume you
• 17:30 - 18:00 guys know nand a very successful uh yeah investing firm the third point he says don't be lazy investing in investing be very lazy right and this is so interesting it's probably the only thing in the world where you benefit if you don't take too many actions it's when you when you get triggered by something you heard at a party or what a friend gave you as a tip and you make transactions based on that that's when you're going to mess up and lose money so cube is designed along
• 18:00 - 18:30 that philosophy saying you know we used to joke we should have called it uh fill it forget it after that Honda Hero Honda ad uh it should be that way right just fill it forget it don't worry come back for when you need to have access to the money and that's that's the ideal way to build it so that's how we've built it yeah it's it's it's meant for people who are busy who want somebody to take responsibility to guiding them to how to invest even shortterm instead of keeping
• 18:30 - 19:00 money in their bank account how you can use these alternative assets to get better returns but not put too much in it our team very often tells our clients you're putting it too much in all assets please reduce it we the only firm which probably tells you don't invest in our products Beyond a limit where to put it in mutual funds we also say don't put too much in mutual funds for the long-term that's where you can take a concentrated bet so we' just integrated with small case which has 9 7 fund managers from the 97 we took two months
• 19:00 - 19:30 to short list about three fund managers based on quality checks Etc so all the stuff that you as an individual can't do we take the painful work of of doing that we interviewed the fund managers we looked at their past track records their rolling returns their investment philosophy and then we only highlighted those in the app so it's a bit of a long answer but because it's a complex problem to solve you know I don't have a picky one line on how I can I can
• 19:30 - 20:00 explain it in fact Satan I was going to say it will require a further more detailing to it considering it's such a complicated space and there are so many models existing because I think when it comes to affluent people have tried solving it completely by saying I will dedicate a wealth manager and he will only work for you which becomes super expensive which only few very wealthy people can afford to someone saying that I will completely rely on technology and do something something like a robo advisory where algorithm will choose things for you
• 20:00 - 20:30 which also does not work out because it's a very hard word money and people in India still want to talk to someone and not rely on algorithm completely because it's very very customized yeah so if you can explain that when a customer just comes in to cube wealth what is a typical Journey look like I think that would really explain for person who is just entering this space who is affluent professional sure absolutely first of all I want to clarify when I said affluent I meant affluent middle class we are not meant for the super rich who can get a private
• 20:30 - 21:00 wealth manager right so we are talking about your you know you can start with as little as a couple of thousand rupees on Cube and then you can scale up there so the journey is three folds one is without being preachy guiding you so on iOS we've already launched what's called perfect portfolio and Android it will be coming soon in perfect portfolio we ask you a lot of questions about your current life your savings your family your job your retirement plans
• 21:00 - 21:30 short-term plans long-term plans when do you want to buy a car right when when does your kid go to college what is the amount you assume you'll need at retirement based on your current income Etc so all of this is to enter it into a risk model which spits out a recommended portfolio for you now it's your money we are very respectful of that you can adjust that how much you want right you can say ah you know what you guys think I should be aggressive but I get palpitations when the market crashes I'd
• 21:30 - 22:00 rather be moderately risky they're like fine with with couple of toggles change that setting you have to be okay with it then once you get the recommendation you can decide to start acting on it this is where we have a very unique service where a wealth coach becomes available to you and these are individuals as you said algorithms can't solve it especially in a messy market like India so we have individual attention that each client gets where the existing portfolio can be sent to us for analysis
• 22:00 - 22:30 the new recommendations come in and it's not that if you send us your existing mutual fund portfolio you'll say oh it's all Bard sell everything no no no if it's good stuff it's kept in the portfolio if it's average we tell you it's average you decide yes or no sell or keep and if it's really bad because we've flagged it from our adviser for mutual funds wealth first we' say please get out of it and and the reason to do this and this is free is we want to take
• 22:30 - 23:00 baby steps to make you understand that we are here for the long term with you we only benefit as a business if you see good returns from our platform and you stay with us for the long term this is not a quick sales job where we have quarterly targets nobody has targets by the way in the team uh and another unique thing we everybody in the team invests in all these assets that you see on Cube before any of our customers sees sees them on the app so two two sidebar
• 23:00 - 23:30 items so second step is once you agree then you start investing there to we've taken many painful steps to simplify the kyc which is usually the pain point so if you enter your Adar number for one asset you just don't need to repeat that for the next asset we reuse the data everything is done through the app you buy the assets that you want and we have about 10 different asset categories now through the app itself you can set up a
• 23:30 - 24:00 sip one time so that all the assets can have debits happening on that and that's it so that's your purchase history first time or on a monthly basis you can even set the date you want the Sip to be done all of that and then the third stage is where I'm very proud of it we've simplified how you track your portfolio you know it's it's one what we call the cube face we we said what does a person really care about an average person who's not an investment expert they care
• 24:00 - 24:30 about what's my portfolio amount and whether I have a profit or loss show it to me in a normalized fashion and the profit loss in percentage terms annualize it don't give me different terms which is since Inception three-year period because in across assets I can't compare it across my portfolios so that's it total amount profit loss in rupees and percentage per year that you've lost or gained across the portfolio that's it we just show that and that makes it
• 24:30 - 25:00 simple for you to know whether your portfolio is doing well or no and and we love that simplicity so three steps analysis action and then tracking certain you spoke about how you're utilizing relationship managers to give a personal touch uh to your customers I'm also curious on how you're leveraging technology to help these uh RMS or relationship advisers uh serve serve a larger number of customers so if you could delve a little bit into the
• 25:00 - 25:30 technology behind Cube wealth as well that would be useful so one of the things we had at Citrus which always dismayed me as a software guy was we had an Ops Team of 300 people and that's insane yeah sorry that's pretty insane 300 insan yeah but but I think it was much smaller than other other payment companies but it was still 300 people and I'm like we have a software company what are these guys doing how do we automate it right and it was too late in the game so we couldn't
• 25:30 - 26:00 because the business was rolling along blah blah so so what we did as an early decision at cube is we said we're not going to make this a hyper growth hyper funed company so we want to focus on automation everywhere that we can so from day one a lot of our backend systems are inbuilt we have an inbuilt CRM system and inbu in-house uh sales panel uh in-house dashboards that we use as a team so the entire portfolio we
• 26:00 - 26:30 manage is managed by one Ops person right now and we are very happy about it whenever we see a problem that keeps recurring we actually divert resources from building consumer facing stuff to building the in-house stuff and we are a very small Team guys so we are only 15 people uh which includes Consulting Partners so full-time it's 10 people so it's a lot of lot of thinking that we do instead of Brute Force work because we know this is the only way to scale up
• 26:30 - 27:00 and and we come to the business model in a bit as well which is a bit of a challenge in the space um so we use a lot of this technology in house we do Integrations deeply with our asset Partners we do retry mechanisms uh We've pushed many of these new age asset Partners to build better apis because we know weel suffer and our customers will suffer if they don't right so what appears on the surface to a customer saying You're just showing me portfolio and profit loss behind the scenes is all
• 27:00 - 27:30 the magic which makes it look so simple and works so well and satin if you look at the investor data or people who regularly trade in stocks or invest there was earlier a significant amount of geographic concentration but as India is evolving of course the trends are shifting so as you see the people who are coming on to cube wealth the sort of people are coming the SE the segment they're coming from geography they're coming on to you see any interesting Trends there which you have seen it
• 27:30 - 28:00 changing over a period of time so when we started out we were seeing the maximum customer count from Bangalore and Bombay and which makes sense right and about 6 seven years ago this is where we were known in the circles we had a lot of startup Founders who became customers so they spread the word to their teams Etc now it's more than 100 plus ZIP codes more than 10 countries across the world and which is not surprising because our referral rate is our biggest
• 28:00 - 28:30 customer acquisition engine and it's again the long game nobody refers us on day one they typically put a small amount first if we do an okay job they add to that amount they wait a year or two to see if they're getting decent returns before they start telling their friends about it so now we are about uh 6 years coming up to 6 years and that's why referral rate has really jumped because we've taken that that painful la long long path of saying no shortcuts no
• 28:30 - 29:00 Miss selling let's try and build profitable portfolios for all our customers and uh so the 10 C countries we have also now we are seeing a very in I mean obviously India is in the Limelight so you're seeing nris all over figuring out how to start in India and unless you buy a fund of funds or you have somebody who can do all the paperwork on the ground uh word of mouth is spreading that just use something like Cube it's simple uh you can control
• 29:00 - 29:30 it from anywhere and they also have wealth coaches that you can reach out which which is a very important part because people need to talk to a human about money not too often because it is a boring subject but you need to know somebody's available right and one WhatsApp call it's a direct number to an individual not a service center not a chat bot and two call backs on this one Satan going back to the point that you were saying the waves right the wave was no one was trying to invest in the stock market either directly in the stocks or
• 29:30 - 30:00 via mutual funds from that point of view the interesting part is I have few family members slightly on the tier 2 tier three sides and in recent times because the entry the the barriers have been reduced on mobile phone they have started trading but not trading but investing so to say but their Investments are very two wrong channels of information I would say one is of course someone says I know someone who made a lot of money by putting money in this particular area or this particular stock of course they putting money and
• 30:00 - 30:30 this person came to me say sh showing I invested in stock a in one week I have made like double the money now it is good that people are investing but not understanding that it was a small cap and the risk of losing money is as much as that you just made money in two three days is a big problem so I definitely see once that person goes through that cycle he would understand that he would require more support and help to really understand how to balance things and invest right that's one so I completely agree with you on that part as well
• 30:30 - 31:00 there it's a very good point actually because people think it's easy money and and they need to learn it right once in a while you get lucky you get lucky when you go to a casino also once in but that's not a strategy to how to build long-term wealth and what we see at TG guys is uh is something similar because a platform doesn't even let you search for any mutual fund you want to buy you say no you don't know so we we don't see
• 31:00 - 31:30 customers in their 20s we don't see firsttime investors coming to us we typically see the person who's been burnt once like okay now I need help so a typical tg's 30s 40s 50s we definitely not the first platform of choice they might have gone through grow or something or zero and they're like yeah it's not as easy as it looks uh so and and we are fine with that and which is why also so to be very honest our growth is much slower than the other DIY
• 31:30 - 32:00 platforms because people in India have just started this journey they need to go through that first phase of pain and learning before they they say I need expert advice and and that's why we building this for the long term we are like you know you one day you'll come to us now let's get to the million dollar question uh San how does Cube wealth make money uh so we should call it a million rupee question so rupes is not a lot I know the these
• 32:00 - 32:30 are the Dynamics of the Indian fintech ecosystem so you know one of the other triggers for me to push everybody to sell Citrus pay was the it UPI had just launched right right in 2015 I think I was finishing some meetings in Delhi and I was in a cab back to the airport where some reporter we had good terms with called I think from ET and said uh I
• 32:30 - 33:00 just attended this event at npci and upi's launching what do you guys think about it and I had to scramble my thoughts on the Fly and I'm like oh it's excellent for the ecosystem it'll destroy cash Etc but it really left this nagging fear saying all the economics of the business are going to be crushed here and this is I think true of India in many many segments uh in fintech especially that other than with the exception of lending right now there aren't very easy
• 33:00 - 33:30 ways to make money so at Cube wealth when we started and we were plotting our business model we said look we have we are not going to missell it's not a choice right inch 3 is our first principle for the team for customers so we're not going to sell high margin products just because they make money and there are high margin products in the market guys in investing you can easily make 15 20% commissions I'm not even talking about whole life insurance I'm talking about pms's Etc where those
• 33:30 - 34:00 are the deals that you can obtain when you are a distributor you said we are not going to do that we want to build something that is right by the customer because when you pay get a 15% commission that's 15% returns gone from the customer right away right so it's been a tough road to figure out the business model you can make between half a percent to maybe 1 and a half 2% of a product uh what it means is if you want to build high quality advisory you need
• 34:00 - 34:30 to keep your cost low you need to have your C low and you need to play the long game because the moment it's the short-term game you have pressure from the board if youve over capitalized yourself how are you going to show those numbers you're going to have to resort to some sort of Miss selling or something else that's my theory right I'm not saying I know anything about what anybody else is doing I just don't see any other option out there so it's a tough business model to make a lot of money but the hope is the Indian economy
• 34:30 - 35:00 keeps growing and uh you know there are three exponential factors that you can assume one is that our customers the the kind of mass affluent customers will grow in their income so if we build their trust they'll keep giving us more money two is their money grows in the platform it starts earning us more fees because we work on a percentage basis and and so both these are exponential and the third exponential factor is that as we win their trust over the long term
• 35:00 - 35:30 they are going to recommend us to their friends family spouses Etc so these are the three long-term plays we are counting on to have a good business model but it's far from being proven understood and in fact sat your this answer reminded me of the point that I lost there but that good point you brought that up because if you see once the person has gone through that risk the second place people are looking for advice is is the free advice people
• 35:30 - 36:00 like Financial influencer some of them are good but a lot of them are just advising which is free advice and they're hyping things up right what it will lead to is people over a period of time will also understand that when you want good advice you may have to pay a bit for it and the amount that you're paying for good advice is nowhere compared to the amount of benefits that you would get out of it so as customers we start maturing especially the professional side of the the customer that you are serving I'm very sure that this intention of paying for good advice
• 36:00 - 36:30 would also keep on increasing as people go through this cycle of or of cycle of investing Journey you know I I hope more people think as sensibly as you do because you know it's such a simple mathematical uh decision here right when I pay 600 bucks for Netflix a month I have no direct correlation whether it's worth the money right because it's entertainment time versus what I'm paying here it's a very simple
• 36:30 - 37:00 mathematical equation what do you pay am I making more because of what I paid or am I making the same as the market index or am I making less cor so we truly and we tell our customers right so mutual funds on our platform are not direct funds they are regular funds they're like guys our our advisor for mutual funds wealth first manages more than a billion dollars for 20 years they've uh beaten the mutual fund average returns by 50% every year based on their
• 37:00 - 37:30 recommendations and their expertise why do you think they're going to do this for free for you right it's it just nobody's doing charity and even Cube the little bit we make we are small team but we need to keep the lights on we need to pay our team you're enjoying the Simplicity of the app it doesn't come for free so net net if you're making more using us than what the average Market person is making what do you care about the fees you're winning anyway so people are getting
• 37:30 - 38:00 there people are getting there but not everybody's there and then people have hacks around it I know for a fact some of uh some of the simple hacks right look at the Fun recommendations we have and go byy it on a direct platform and you're like well if you have that much time to manage your money Aid go for it and and and because you know I I like to live my life it's not this is not the main thing and second is we are building some smart hooks there where we are like you know you should all nobody tells you
• 38:00 - 38:30 when to sell a mutual fund correct and our policy is our advisor uh tells us when to get out of a mutual fund they made a few calls over the last few years that have been very preent uh just in time before some crisis like for example when some mutual funds were heavy on yes bank and they told us 6 months before get out right and we pass that to our clients and so that's the advice we only give clients who've bought that new mutual fund on our platform it's not available for free so buying you can
• 38:30 - 39:00 come in and browse for free but nobody's going to tell you to sell if you're not on the cube platform and this is going back to one of the most important rules of investing which is preserve your core Capital if your principle should not go down right and and that's what we emphasize and this is one of the many benefits of what we do with this partner so looking ahead to 202 before I know the year is just started so what's on the road map for you at Cube wealth in
• 39:00 - 39:30 this year so we are very boring uh Elroy we we've tried a lot of experiments in the last six years and we are again uh we kill features in the app all the time in fact we are just going to a whole cleanup exercise to remove a lot of things in the app right now that complicated for no good reason so we've done two major things last year that we are very excited about one is our integration with small case that I mentioned so we can rotate very quickly
• 39:30 - 40:00 through different advisors and showcase them on our platform and the other big integration we did was with grip which is the alternative asset Marketplace so same thing there we can rotate through different offerings different categories of alt assets very quickly without lots of months of integration and testing so we want to capitalize on that in 2024 to show a much faster velocity of Interest in high quality products on the app second is clean up the app what we do
• 40:00 - 40:30 keep a lookout for is things such as the account aggregation system uh as it matures how we can use it to give our users better analysis of their portfolio but you know as of now it's it's maybe too early it would complicate the LI our users life too much another thing we've looked at is if customers are interested in getting loans from based on their portfolio and again it's it's an
• 40:30 - 41:00 interesting concept coming up but we haven't seen a huge demand for that but you know these are typically what we like to do we just like to take slow steps keep building the ship by the way we have six quarters of being profitable so we are very excited about that so it's a sturdy simple business and we keep taking experimental risk but nothing that can affect the quality of our service congratulations on that s it's very very rare to for fintech to be profitable
• 41:00 - 41:30 let's say thank you and trust me I'm the most relieved one fundraising by far is my least favorite activity as an entrepreneur and two for for till we found this kind of profitable path I was uh funding the company after we ran out of a VC money of 2016 I was self-funding it and I was like guys can we can we see a path where I stop cutting a check every month for a large
• 41:30 - 42:00 amount and full credit to the team they've delivered they've delivered and you're absolutely right it's very rare but but you know that is the irony of it right when did we say that it's rare for a business to make money make profits I know yeah it's become the norm right that you say Tech so oh you don't need to make money and no no no no there are some businesses sure need to do hyper growth not all people look at you suspiciously if you're making money I'm telling you you know one of
• 42:00 - 42:30 you you say this jokingly but one of the side effects is future funders say oh if you're profitable we'll do a multiplier on your earnings like why you never did it for C when you were loss making why are you holding absolutely we not making that much money that you can apply on multiplier so joys of figuring it out but we are going to build it for the next 20 years so we about it in those 20 year in the 20- year Journey that's very
• 42:30 - 43:00 very heartening to you thanks the T for joining us and speaking with us today saan if our listeners want to learn more about Cube wealth and get in touch with you what's the best way to do that uh the best way is absolutely our website Bank on Cube or just download the app Cube wealth it's it's no no cost to you you can play around if you're on iOS with the perfect portfolio Builder on Android we have lots of recommendations you can also ask to speak to a wealth coach I would say step one is just download the app uh you'll enjoy the
• 43:00 - 43:30 experience of how simple it is whether you invest or no having said that you know there's a famous I think Chinese proverb saying the best time to plant a tree was 10 years ago the second best time is today so I recommend to everybody this is we are entering into this mega mega growth era for India it's going to be an amazing time and it's silly if you have money that you don't invest it to take Advantage being Indians and and build up your future for
• 43:30 - 44:00 10 20 years from now uh I mean it's just irresponsible if you don't do this so please start whether you want to try it yourself on some platform whether you want to use cube of course but I recommend to everybody please start putting some money to investing in monthly sips don't get greedy don't go on a stock tip put a monthly amount so you balance average out the ups and downs of the market and and just build it for the long term to we'll all be happier and richer 20 10 20 years from
• 44:00 - 44:30 now if we do it today absolutely and to help people start that journey we'll include the links to the Android app and to the IOS app in our show notes thanks thanks once again for joining us today something thank you hmon thank you Elroy so much I really enjoyed the conversation that's it from India fintech diaries for this week do log on to our website indiach diaries.com for show notes and other exclusive content until next time stay safe [Music]