Transcript : Making India Wealthier| Atul Shinghal @ Scripbox

Mar 06, 2023

A pioneer in the wealth management space, Scripbox helps people in managing their finances by using a hybrid approach that combines financial planners with digital tools. Atul talks about his journey of building two highly impactful startups in the last decade.

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[00:00:00] Atul: Hi, My name is Atul Shinghal. I am the founder and CEO of Scripbox. The beauty of Standard Chartered, I was in the card division. We were completely like a non-bank, everybody around us was Wipro or Blow Plus or Asian paints. It's very different pedigree. And we were hungry. We were growing.

[00:01:31] We had a phenomenal year in 99, 2000. I have the pride of having launched the first card in India, which could be used globally. This is before your time. You guys are youngster Akshay until 98, 99, you couldn't use your credit card abroad, if you had to use foreign currency to get it endorsed to your passport. So we went to work with the RBI I was in Bombay. We launched the first global card, then opportunity came knocking from a company called Capital One which is just a great company from the US they were doing some great work, had heard good things about them, and they were looking to set up in India.

[00:01:58] So they hired a bunch of us middle managers. This is in 2000. Unfortunately, or fortunately, that decision to stay in India or set up in India was pulled. There is another backstory there, but some other time. And they somehow, because they felt I knew something or didn't know something I was actually posted to South Africa as part of a joint venture capital One had with a group called Old Mutual there. So I ended up in South Africa via the uk. Ironic story was that South Africa with its own economy decided that that you couldn't hire out of India. That what was so special about sort of the work permit rules, why couldn't you hire local talent? Why should you get from India?

[00:02:31] So I had to be shipped to the uk work in the UK for a year where the work code is easier, and then get an internal transfer. Spent seven glorious years in South Africa with a group learned a lot about joint ventures and how they work and how they don't work. The JV broke up very quickly. We had the American young, full of energy, very number driven.

[00:02:48] Had a slightly old world banking set up in, in South Africa. The JV didn't work out, the business did good, did well.

[00:02:54] This was a full-fledged bank, or it was a, like an NBFC, focused on lending.

[00:02:58] The largest bank in Africa. So it is, it's, it is a, it's, yeah, 25,000 employees, highly profitable, called NetBank.

[00:03:04] I ran the Amex card portfolio, so I've done the whole super-prime lending to subprime, moved from American Express cards for micro lending. So this whole noise about buy now pay later, we were doing in 2004, 2005, I was the MD of a, one of the divisions called Consumer Credit, which was point of sale lending, but to the to, to what I would call the underprivileged or low income group. Did that for a year

[00:03:25] Akshay: and this was like a Bajaj Finserve kind of a model, like appliances.

[00:03:30] Atul: Exactly. Same. Same, exactly. You could buy a television, a refrigerator. My claim to fame was to actually grow the company 10 x in a seven month period. Which in lending is not necessarily always the best. though we did it very well. We were Capital One guys, so we did it very well. And I'll tell you the story, it's actually quite a fascinating story. So we used to do all this lending which is for point of sale. So we had partnerships with various furniture chains and the retailers, white goats, etc.

[00:03:55] We also had a product within that for used cars. So you could borrow from a dealer when you were buying a car, used cars. But somehow the rule also said in the credit policy, you couldn't fund a car, which was older than five years. So I said, this makes no logical sense because of used cars, especially in the income bracket, we were, they would, they can't afford.

[00:04:13] And South Africa's got very, hip cars South Africa's very proud of his cars. Most people's cars are more expensive than their homes, so BMWs North is Audi's , et cetera. So for a, literally poor man, though, he was ambitious of getting a good car, he couldn't afford a car. So this was a so badly designed product and purely on credit policy.

[00:04:29] So there's a cut and paste credit policy from a previous regime, so I asked the guys why does five year rule I said, anyway, this is unsecured lending because if the guy goes, if the guy doesn't pay you back, you're not going go and collect the car from a, from one of the townships, you have to do it as unsecured lending, literally. So there's an asset attached to it, but it's largely unsecured lending. So I, I removed the five year as a test. We removed the five year cap and we did an experiment on only 200 dealer. Our volumes went to 10 x. So one of our biggest successes are failures because in lending to handle those volumes was very difficult.

[00:04:58] So we had to cap it very quickly because we hit our numbers. But it was a beautiful business, you were lending a hundred you were getting a 5% discount. So you were getting you were dispersing only 95 to the dealer. Cause the dealer gave you a 5% discount, you added some admin fee. So you are making so much money.

[00:05:11] And yeah, so that is one of those stories that if you just look at policy at a fundamental level as you build businesses, you realize some of those have no logic. They've just got written and no, and people follow them blindly. So those are one of those success stories maybe I did well there. So they kicked me upstairs. Some four levels. So what happened from a career perspective was that I was telling you, you talked about, you asked about NetBank where I joined. So actually the joint venture was with a larger financial services group called Old Mutual. Old Mutual has a presence in India through that Kotak Gold Mutual insurance jv.

[00:05:39] But in it, South Africa, old Mutual is the largest. And the biggest franchise of financial services. They own the largest life insurance and asset management company. They used to own the largest bank called NetBank, and they used to own the largest general insurance company called

[00:05:51] my boss, who was the regional director for Africa who had all these companies reporting into him with 25, 30,000 employees each had built out a business called Smile and Egg. These are the, the UK has a, has a penchant for funny names for their businesses, I don't know if you, if you, there's a business called Nutmeg, which just got sold to JP Morgan in the space so the origin of these internet banks was smile egg, if some random name. So he had built out a business called smile. So he was very keen on internet. And this is 2004, 2005. Actually, this was like really early days. So he said, I told, do you think we can build a, or this, put out a job spec that we want to do this? We wanna build out a direct to consumer business layer, which will be like a customer experience layer on top of these three businesses. I applied for the job. Anyway, there was nothing to do. I, so I, and I got it. And suddenly they had these three CEOs in their ties and suits, and the fourth guy in a T-shirt, and I was all of 35 those days, and in a different world, they had 25,000 employees. I had two employees myself and a program manager. Anyhow, to cut a long story short we started working on it, on the idea learned very quickly that online and digital are different. So online is a channel, digital is a way of life.

[00:06:57] Digital is science, math, data, technology online. All of that rolled into one. And I remember going to the home loan department and I I hope this is had in good taste and they were the most efficient. I mean, Net Bank had a phenomenally efficient home loan business, and I think that turnaround time was 15 days, from when you applied to when you got the loan, which was like very efficient.

[00:07:14] India has a, got a civil, if you apply to HDFC or something, and I said, no, I want to approve in 15 minutes. So I said, forget about being on the same page. We're not in the same library. Forget about the same book and same aisle or whatever, because we're talking about different languages. So anyhow, to cut a long story short, I went back to the board and asked for 200 million dollars, and this is in two, 2005, I'm asking for 200 million to build this full stack insurance and insurance, life insurance, full stack bank, a retail bank, and a full stack general insurance company. all rolled into one, including the middleware, including the customer experience layer. Maybe the storytelling was good and they bought into it, and they actually wrote a , $200 million check, which was, which we put into a bank. The other clever thing I did was I actually set up the business in a place called Durban. If you know South Africa, everything is headquartered either in Johannesburg or Cape Town, and that's where the old materials headquartered in Cape Town. The other two business is Johannesburg . These guys are gonna just, I'm too small. So I went away and I've always had this belief that set up places where you can have captive talent. We set up the business in Durban built out something phenomenal. We had two 50 people on the. Built a contact center, which I still think wins all the awards in Africa for the best contact center ever built.

[00:08:16] But unfortunately, by the time we were about 40, 50 days from Go Live the financial crisis was as a thing, this 2007 crisis, because the $200 million was to build the business to lend off our balance sheet and to run the home loan book in the personal loans book. we had to borrow abroad. We had a line of site from a couple of UK banks for $5 billion at libor plus 20 great team youngsters full of energy emerging market, new age technologies. This will be phenomenal, we had chicken hands.

[00:08:40] This is in July, August of 20th, 2007. I remember having the same conversation. November of 2007. Young team unknown, third world country, don't know this technology. God knows what is gonna happen. I went from 5 billion to 500 at libor plus 200. So it became unviable to do the business. So plus 200 is basis points, libor plus basis points. Yeah. So it became unaffordable for the customers.

[00:09:02] Akshay: Yeah, I was wondering. LIBOR plus 20 sounded very high. Okay, got it.

[00:09:05] Atul: Libor plus 200, 20 basis points, labor plus 200 basis points. So it's suddenly our cost of borrowing went up hugely so I said, and we checked around, we looked at the last 50 70 years of back testing of the, of the yield curves. This is not going away in a hurry. At least I analysis said that. I told the board that, see, this is no use. We got such a strong team. There's no, you just twiddling our thumbs for the next one and a half, two years. I would suggest we both all this and we'll come back to it in a few bit of time. One of the hardest decisions in my life standing up in front of two 50 people and telling them it is an open office.

[00:09:33] This the beauty of talking about the contact center. We converted a abandoned casino into a contact center. The beauty of a casino is it doesn't have any pillars, so you can see everything. So we had 70,000 square feet, 70,000 square feet of open space, just a beautiful contact center.

[00:09:48] And yeah, announced, I think everybody, everybody cried that day because they sort of felt they had lost a part of their lives because it was so passionate as to what we were building. Anyhow, so became foot loose and fancy fee.

[00:09:59] Akshay: But the insurance business could have still made money, like why shut it down?

[00:10:03] Atul: Yeah. So we sold that little part to the mutual and federal business. And I had become, obviously I had blown up a hundred million dollars and I had one CD to show for it and, and, and the, and the contact center. So I was sort of personal, non grata? I think so. So I told the company I'd like to move and they were just looking at India, remember 2003 to 2007 was like the runaway days for the Indian markets. So there was a plan to come into India on the asset management side. So I said, okay, I'll do that for you. I understand how to, I understand India. I don't understand asset management and I know I understand how to build businesses.

[00:10:30] So we came to India in mid 2008. It was phenomenal. I was that time overpaid rather than underpaid like I am now. So I was a foreign expat in my own country. Came back to set up the wealth management company, the asset management company, and a PMs. We had appointed CEOs for these three businesses or looking to appoint CEOs, had applied to SEBI for AMC license. I'm a lucky guy,

[00:10:49] Akshay: and what brand name?

[00:10:50] Atul: Old Mutual was the brand name? Old Mutual. Old Mutual Greenfield. Old Mutual. Completely. Yeah. So if you look back in my LinkedIn profile, you'll see old mutual corporate services. We had set that company up. I'm a lucky guy. Lehman Brothers happened after we had set up the company.

[00:11:02] So I said, boss, this is going nowhere and hurry the markets had crashed. So told the company that I I think I'll take a break. They gave me some gardening leave and I took a year's sabbatical. This is 2009, March to late 2009. About nine months. Traveled the country, spent a lot of time with my parents walked my children to the school every day.

[00:11:20] It was like, really good. It was, but then my wife got antsy. You had got married while you were in South Africa? No, I got married much earlier, I got married in 2000- 1995 so I actually, so we got married in 95. We have two lovely daughters. My wife is a designer, so yeah, she's traveled with me everywhere. We had a lovely lifestyle in South Africa. Lifestyle is gorgeous. Actually, if anybody's not been a I'm like a big champion of South Africa tourism. You have to holiday there. You live in these big houses. The house in Durban was on the Gulf Estate, so my my front lawn was 18 yards. And hence I'm a keen golfer. But it came back to India and I think after playing a lot of golf, and in that 2009, traveling, I think back end of 2009, my wife told , boss, what are you up to? Not even 40 years old. The maids are getting worried that nobody will pay their salaries because you, all you do is meet friends and travel or play golf.

[00:12:07] Axel Partners which is I think one of the best venture capital firm in India have some friends there. They were kind enough to allow me to start spending some time with them. And started looking at that ecosystem of entrepreneurship. FlipKart just got funded, started met Sachin Bansal

[00:12:20] a couple of other deals were happening. I just loved the ecosystem and I said, Hey, this locks like something I'd done. In a sense. I had done two startups, I had happened to be corporate money, but I had the independence. So I had the confidence that I could do something. So after about spending four, five months at Axel I got together a dear friend of mine Ravishankar we are together for bachelorsin IIM Bangalore have just been very dear friends from the very beginning. He had a small boutique Equity Research company of his own. called Probe Equity Research, five, six people in the company. And he said, Hey, I told I told him, Hey, this looks scalable. I know how to build stuff.

[00:12:51] You have this boutique business. You're also a fund manager. He also has a PMS of his own. I said, Hey, should we put some money into this and try to grow this? And like those days, BPO had fizzled out. KPO knowledge process outsourcing was just happening. I said, there's something, I, let's go to Axel and tell them that we could scale this business. We put some money into it. We could take the equity research abroad. We had customers that time from this thing We went to Axel they were kind enough to put money behind us. And that's the inside story. So I'm an accidental entrepreneur. Started Probe and yeah, Probe is today, I think the most used information platform in India in all banks. It's called Probe 42. .

[00:13:24] Akshay: what does that mean? Information platform. So you were doing equity research, which means you must have been these multiple page research reports on equities. Yeah.

[00:13:33] Atul: You're a genius, actually. You are the right prompt for this. Yes, we were. So we were doing that for listed companies, which is what everybody will us, so we said, then somehow when I was setting up Old Mutual I figured out that the asset management company, I wanna understand the ecosystem, so I asked Ravi, because he had the equity research company. Hey tell me a little bit more about all the data we were getting from McKinsey. Everybody else was the AMFI data, how much, how big are the companies and how much AUM? But the insights, what are the expense statements? Who was spending, how much, where was the money going? What are the, we couldn't find out.

[00:14:01] But when we dug around that time, and I think Accel also had asked for a couple of information on companies which are private limited companies. We had figured out at Probe that there was data available through the MCA legally, legitimately, you could actually get information on all private companies in India. So we pivoted Probe it was called Probe Equity Research, the name of the company to becoming report writing on private companies. . So we did exactly what we did for public companies, for private companies, and the richness of data surprised us, and we, our customers, all the venture capital firms, all the PE firms we had built up a 40, 45 man team charter accountants, CFAs, they loved it, . They could dig around the company, go deep into it. So say you're in, you're investing in Flipkart. You want to know about Infibeam. You wanted to know about Snapdeal, you wanted to know about Myntra. So basically, if you wanna understand one company, or you say you wanted to invest in Maruti, Volkswagen, and Hyundai, and all of those were private limited company. So we were giving everybody that information and equity research report. So this a 8, 9, 10 page report as we are building this out an interesting use case emerged from the banks. So banks used to actually use the same report. They used to talk to a Chartered Accountant and for giving out before they gave loans or credit to any of these Private Limited Companies. They had a similar MCA check in the reports. So we started giving these reports to the banks and we realized that because we were a manual driven company and I'm not a techie techie, but understand how to use technology, we realized that all our technology investment had gone into making our analysts more efficient, helping them write reports faster, better neater. We pivoted the company to a true digital company to make the information available to our customers. So we went from, I remember our peak volumes in July 2015. We should write about, we should cover about thousand companies a month which is much larger than all of BKC and then we put together, we were still doing large volumes. We pivoted the company to a self-serve platform. We digitized the entire process into small bite size chunks, build deep expertise, and Probe 42 is a result in platform. That's another backstory on the 42. If you read Douglas Adams 42 is is the answer to life universe and everything.

[00:15:55] So we said the same thing. We have the answer. We don't know your question. You can figure out, you can ask any question. We have the answer. That's the story. behind Probe 42.

[00:16:01] Akshay: A comparable site would be say like a Crunchbase which also has data, Crunchbase is more focused on startups and funding news.

[00:16:08] But yeah, so we are about hundred X the size of anybody else from a revenue perspective. We will be So our seminal moment of pride was we saw a couple of cvs of bankers and they said, we are qualified to use probe. So when somebody writes that on their cv, you know, you build something to last, so that gave us goosebumps. I said, I've done my life's mission. I've built something which will sustain the test of time. So that business is highly profitable and does well, and

[00:16:32] I think so you, you built like the Bloomberg terminal of India in a way.

[00:16:36] Atul: Absolutely. Exactly. Exactly. It's got a retail version also of it, so that's done very well. But that comes the skip box story, one question on, on probe first.

[00:16:43] Akshay: What was the the pricing strategy? How did you monetize it? Was it on number of companies that are bank accesses or on, on a customer accesses? Was it access based or was it fixed annual or what was it like?

[00:16:55] Atul: Brilliant, brilliant. So we did the research, right? you could have gone down the license route per seat, you could have gone down fixed fee for the bank. We realize, no, there is all you always negotiating, we said pay as you go for every company you look at, we'll pay you. So it's like a taxi leader.

[00:17:10] If you li if you look at the company, you pay for it. If you don't, so be it. And then there are some rules around how long you can have the asset. It's like a rental, you look at a company, you can use it for the next one year and it's worked out beautifully for us. There's no confusion around how many users, how many licenses. It's open architecture. Anybody can create an idea and use it. And we'll keep collecting fee on it. So yeah, that was a unique pricing strategy we followed where we made it a paper use model.

[00:17:33] Akshay: And you took upfront, like there to load a wallet that was it. Or they would get a bill at the end of the period?

[00:17:39] Atul: Both models. There's a prepaid and a postpaid model. So largely in the bigger banks, it's a postpaid model. If you're a single user is a prepaid model.

[00:17:45] Akshay: And this is like human intelligence here, like this, it is not just a collation of data. There are like real analysts who are preparing reports on each company covered like,

[00:17:55] Atul: There is a little bit of human intelligence. There's a lot of see, the data in India is very dirty, so there are three levels of cleanup. One is balance sheet. Don't balance. You have to balance them. People will write in millions in one year in crores next year, and Lakh in third year. And so there's a deep amount of data, clean, cleansing and so there's a huge value in that. Then there is a name matching, so what happens is that you'll be called probe somewhere. Probe equity research somewhere, probe information somewhere, probe 42 somewhere. Now, how do you link the court case in Nclt versus the court case, in Trivandrum versus your GST filing versus you've taken a loan.

[00:18:26] So there's something called charges in India, when you borrow from a bank, you create a charge. Now we have a data, we have got something called a bank master where we've cleaned up bank names. I think we got 635 variants for State Bank of India,State Bank of India, Jalpaiguri, and they're all the same thing. Uh, so we are actually able to clean up data. Thirdly, there's some intelligence obviously matching which company does what to what, so we don't classify companies, by what is the official classification that's mentioned, but we actually go and look at the company's website. We look at the aa, we look at what the company does, we digitize that.

[00:19:01] So we have our own call. So, which helps you do a peer matching much, much easily. Bunch of things which we, we do for cleansing. Cause for us, scale is important. I was telling you a thousand companies a month. I think we do today, we do 10,000 a day. Same on the same like for like basis. So part of digitization

[00:19:16] When company report contains like the financial performance over the years that like the financial trends, the legal issues which a company might be facing stuff like that.

[00:19:26] Anything to do with compliance, credit rating, G S T, any court case across 750 courts any, I mean it used to have BIFR data, which is no longer relevant on the compliance set. But that there should be a board of a board of financial reconstruction. This is a pre-concert to the NCLT. any defaulters, which the banks have different. So all of that is digitized. Any credit rating which has happened then shareholding, directors, how much shareholding, any funding, what are the pricing of the funding? Financials, obviously, like you said related party transactions. Then structure the company who's a shareholder, which is the ultimate beneficiary. Website, phone number yeah. And most importantly, cross directorships, so if Akshay a director in three companies you can look at Akshay in company A and if you click on Akshay name, you'll know his other companies. When did he become a director? When did he resign? So is it a male or female? Right. In the director's, uh, thing. So if you wanna figure out who the female directors and all of this has got a search capability. So you can go and search for companies set up in the last 10 years, you can search, search for companies set up in the pin code. So bankers in the retail banker can use it, he goes and types his pin code five, 600 triple eight and says, okay, companies in the pharma space in this area. And he says, okay, these are 20 companies that can target. So it becomes useful for Target. That's why I said Probe 42, you can use it for anti-money laundering. So what happens is that you suddenly get a 10 quarter check in the bank guy's bank account. Okay? Let me go look at the company in Pro 42. His balance sheet is one lack, and he is, he's got a revenue of some 20 lacks. He said, Hey, what happened here? So an anti-money laundering uses it. People use it for targeting people, use it for credit appraisal people, people also use it also for follow ups, so what happens is that I have pitched a loan is a loan. So I say, ICICI Bank is pitched, HDFC bank is picked Axis Bank is picked. Somebody's got the loan, I didn't get it So three, two months later I'll go and figure out, okay, who got the loan? What pricing did you get it at all? So it's how you use a system, it's very intelligent or it's very dumb.

[00:21:13] Akshay: And how many companies in the universe total number of companies it covers.

[00:21:17] Atul: So any company ever registered. So the day the company registers tomorrow morning, it's on the platform, I think 15 15 lakh, or 18 lakh active or whatever. So every company ever registered comes on the platform next morning, including LLPs. So, it's fully digitized.

[00:21:30] Akshay: What is the revenue like for pro? What kind of top line does it do?

[00:21:34] Atul: Probably about 55, 60 crores. 60 crores per year. It's It's a good company. It's it's a well run company.

[00:21:39] Akshay: let's talk about from Probe to Scriptbox like what made you you were already running Probe full-time so what made you want to attempt a second startup?

[00:21:48] Atul: So 2011, 2012 what happened is that so we are three co-founders at script box, Ravi, myself at Probe, and we got Sanjiv who was the tech person uh, Shubroto, who was on the board of Probe. The man of the Midas Touch Shubroto Mitra from Axel. He always a big fan of B2C and Probe was obviously a B2B enterprise business. That too, that time, not very digital. A couple of companies in the US had got funded, Betterment, Wealthfront Motif and he sent the data to us. He said, Atul this looks interesting. You said you were setting up an AMC. You seem to know that you had set up a digital bank in South Africa. So you seem to know that category. well. Ravi, you're a fund manager. Why don't you look at this opportunity? Do you think this has got legs and enterprise business are slow to build, they take some time as we are. And we sort of felt we could do it. So we went back to Shubroto with a proposal. I said, we can do this for India. We can build a, we can build a digital wealth manager in. Sanjiv, who's a senior from us, of mine, from I am Bangalore. He is quite an expert on wealth tech. When I was setting up Old Mutual and I was setting up the wealth business at that time, I'd spoken to him to understand the landscape and I was quite impressed. And I said, Hey. So we reached out and I think he also, he had another startup producing about what next? It was serendipity. We got together in a room and actually I remember that whiteboard we were working on, and the idea was exactly the simple that how do we bring the power of digital to bring, make this thing simple. This is too complex. And we went back to Accel and said, Hey, we can do this. We need some funding. They said, okay, go get started. We'll fund you. Script Box is a genuine Garage startup. It started in the garage of Probe ,Probe was in a office, which was a converted house. And actually the division of Probe. So it was a hundred percent owned by Probe called Probe Wealth Services to begin with. Then it became bigger than any of us, and we spun it out as a separate company. got it funded separately. It was a large, exciting opportunity. We knew the domain, we felt passionate about it, and we thought we could do it. Went to market with only four funds. We did our research and So the logic we had is that youngsters were not getting any good advice. So the 2009, 2010 crisis was still, the hangover was still around. People were talking to were saying no, no, equity is not for me. It's too confusing and this is scary. And the regulations on the financial advisor had changed quite a bit. NFOs had gone away. There was a lot of turmoil in the distribution side. So new fund offerings. So there was a time in 2008, 2009 if you bought an NFO, the upfront commission was 6%, so a lot of NFOs got launched, So the regulator was cleaning up the resultant of that regulator cleanup was that the, there were fewer participants, and there was not enough money for, to serve somebody who's serving five, who's investing 5,000, 10,000 rupees. Who could they go to? They had to go to an uncle who would tell 'em to buy an LIC policy or some neighbor or somebody who fund our stock. I said, no, this has got to be cleaned up, so we set up on the vision to say, how do we clean this up? We try to understand the underlying assets. We looked at 850 schemes at that time, the equity schemes, there were five and a half. There were 8,000 mutual funds that came available from 40 providers. XYZ, long-term advantage growth thematic schematic fund. You don't even know where to start. Or you had a mint top 50. You're investing 10,000 rupees. How do you know which one to pick? . So when we looked at the 850 schemes in equity, so our logic was we are getting started invest in equity and within equity, equity, mutual funds got direct equity. You don't understand if it's equity mutual fund, then come to script box. Cause we know the best funds to invest in. The 850 schemes had 243 stocks under them and 50 concentrations. I said, boss, you can diversify NF by picking four funds. Our analysis, we looked, I come from Capital One Probe understood numbers. We used to have, we used to run indices for the US markets. Then so put it all together and we created a basket of four funds and believe it or not, and they were, I mean there was ICICI direct that time, funds in debt that time. But they were basically converting offline processes to online. They were not digital in their nature. They were not bringing the power of science, metadata and all that to get. And we launched with four funds called the Long-Term Wealth Portfolio for early savers 20,000 rupee first investment, 10,000 rupee SIP did very well. People loved the simplicity, the F chart, forget it, the annual rebalancing . As our customers grew with that,, we added a short term money because you wanted to buy a phone or a car or whatever. Then we added an emergency corpus because you keeps some money, eyes. Then we added tax saving funds. So I kept expanding our basket of offerings for our customers by 2015. Your question earlier, start to haunt us, hey, I told you're the CEO of two companies. What are you really up to when you're killing yourself? And is it best for the businesses? And we were raising funds. So I stepped aside. We brought in a team to lead script box 2016 to 2019. Ashok did a good job. I was busy with probe. We were converting probe from a report writing company to a platform, going from a thousand to 10,000 a day. A thousand a month to what now? 20,000 a day. So that journey had begun and I was very busy decided to stay on with Probe. And yeah, but unfortunately what happened at Scriptbox also in parallel was that the market moved very quickly. It's phenomenally good. So the whole premise of simplicity is transparency, which we had brought to the category. Got also we got the e-commerce mindset coming into it. And the e-commerce was all about cash back free discounting, which is not really true for wealth management, wealth management is a long term, pristine purity business. It'll take a long term view, but for whatever reasons and this is not sour grapes, but they did a great job. They democratized the entire category of investments and fast followers, great competitors. Brought in at that time, direct funds had become their regular funds in direct funds. Regular funds is a commission to the distributor. Their direct funds there is obviously a slightly lower price for the end user, but you're supposed to pay a fee to the advisor. So they brought a zero fee model with a direct fund, which we didn't understand. We couldn't, for our life of ourselves, get around a zero revenue model business, we felt you have to have a revenue model, otherwise how you build a business. But people did what they had to do. And some of our growth mojo didn't happen as fast as you would've wanted. So good, bad, or ugly? I don't know which one. I am ugly. I am definitely, but good, bad, I'm not sure about. So I came back in 2020, said, Hey, this requires doubling down to get our strategies sorted out. God has been kind, we have grown five x in the last two years. Strategies played out well.

[00:27:19] okay, be before, before we talk about the 2020 return I wanna talk about the initial, I had some questions around the launch. were there those payment gateway rails in place when you started that people could pay through a payment gateway to you? For the investing?

[00:27:33] no, you had to set up a e-mandate, you had to set up SIP mandate, etc.. So there was convenience. There was definitely was not, as good as now Build desk existed, and CC Avenue existed. So Build Desk did a good job, tech process, did a good job of setting up our payment gateway. So that was a big con, big convenience for our customers. yeah.

[00:27:50] Akshay: How did the SIP work? What did the customer have to do? Ive read so, and it, it's done automatically.

[00:27:55] Atul: So they had to set up a recurring investment. It was called a e-mandate that you could debit x amount from their account. So I suppose you were said investing 10,000 and you were four funds. So two and a half thousand rupees would go into each a AMCs directly from your bank account to the EMC. So when you signed up, you set up those mandates with us and those, we implemented the bank end, and then it worked like a chart. Obviously it's got much better now. There's e-match,, there is, and I'm not an expert on payment, so I have to get somebody to talk about it. We've got UPI, you've got today the customer can choose any payment mechanism can switch between mechanisms. Plus customers do either SIP or onetime investment. And you get two types of onetime investment. Some is lumpy. I got a bonus, I put money aside. I get something from my in inheritance, I put money aside, or suddenly I've saved up money I put aside. Then there are people who do not do a SIP on a monthly investment, but will invest monthly on their own. So they'll watch the market and then they'll put in the, so we get all kinds of behavior. So that's the story.

[00:28:43] Akshay: And payment gateways charged anywhere from 0% to 2%.

[00:28:47] Atul: No, we got a fixed fee. We got a ten five rupee 10 rupee and anywhere the mutual fund companies are very supportive of, of some of those charges.

[00:28:52] Akshay: And how did the auto rebalancing happen? Did the customer need to click something or was it done automatically?

[00:28:58] Atul: Yeah, so you can't do auto rebalancing, the see our entire premises that we will recommend to you what you should buy and on an annual basis.

[00:29:06] We'll now on a quarterly basis, we'll tell you what to get in and get out of. It's like a jam jar. So in first year you had four funds. Our then our scorecard sellers that in the next one year we think this is gonna happen. And typically one fund will follow out, a new fund will come in. So your sip on the fourth fund will stop, and sip on the fifth fund will start. So now you're doing an AB CE in from month 13. And at some point in time said, remember those days there was no long-term capital gains so you could get out of D and get into a new fund after a year. So some of those rules have to be changed. And you keep balancing depending on the asset allocation. So now suppose the customers got only equity portfolio, different answer. We've got equity plus data. It's a different answer. but all of this is algorithm driven. There's no human intervention. But we'll prompt the customer to say, we are now recommending this action and we'll send them a nudge. We'll send them a , we'll send them a email reminder to make sure customers follow the recommendation. But the customer has to take the press, the button.

[00:29:55] Akshay: And you were doing it through the regular plan, not the direct plan, because your source revenue was at 2% commission,

[00:30:00] Atul: not 2%. I wish it was 2%, which is closer to about 85 bps, in a blended basis. So slightly higher on the, we have never negotiated because our funds are selected algorithmically, they're completely unbiased. So it irrespective to the commission, they come onto the platform, but we do we do tell our friends in the mutual fund industry that be kind to us give us best in class. We are big enough to demand that,

[00:30:21] Akshay: okay by 2020 when you came, what was the size of Scriptbox? Like how many investors were using it? What were the assets under management?

[00:30:30] Atul: So assets under the management about 1150 crores about 1250. Then it corrected to about 1150 crores. We are at about five and a half thousand now, probably 12,000. 15,000 by, by June. The number of customers, that time must been about 62, to 65,000. We are about 75 to 80,000 now.

[00:30:44] Akshay: I want to understand what you did. This is what you inherited when you came back. So what did you do? What was the game plan?

[00:30:49] Atul: So game plan was a good, hard look at where we were in our journey, and we said, Hey what are our customers telling us? Customers have been we have to thank our Scriptbox customers. They've loved what we do. They're hugely loyal. Our retention rates are close to 95%. Which in this category industry average 60, 65%. And this includes offline online. So I don't even know what the numbers are now we spoke to our customers, did a lot of research. There's a busy bees, guys who are really good, and we spoke to guru and those guys, they spoke to our customers and the constant reframe was okay guys, you've done a great job of these four, you've got these four funds these four baskets, but I've grown up I've got children. Think about more holistic. Have you really understood? So we realized I share a wallet while was interesting. We were not really deep in our customers minds. So we said, okay, let's double down. Let's do more with our existing customers. So what is wealth management? Wealth management is spending time understanding your customer's requirements, creating a portfolio, executing and reviewing it. We were doing the, creating a portfolio, but it is generic. We were executing it obviously very well and reviewing it on an annual basis. So we now said, no, let's do this more deeply. Let's spend more time understanding our customers. So we launched a portfolio audit where you can bring your existing investment. Anybody will ingest your ECA statement, digitize it, visualize it and analyze it and tell you what to do with So what happens is that if you're an investor, you cams or whatever will give you a, your holding statement every month, but it's a PDF with lots of numbers. You can understand nothing of it. It could be or it could be. So we said, Hey, customer don't understand what to do with it, I've got the standard question anybody asks you, is Atul this is good what you do, but what do I do with the money I already have? They want a second opinion. . So we said, okay, second opinion, give customers second opinion. Give customers consolidation of their holdings across multiple providers. So basically built deeper rails into the customer to understand them better. We expanded our portfolios earlier. We were saying four funds in in in, say, equity. We expanded our to 16 depending on the customer needs. Added small cap added more where it added international equity to our portfolios, added gold to our portfolio, so expanded the depth of what we were offering and start quarterly reviewing it. So we said, because a customer's money had become more serious, you had to do more with them.

[00:32:46] Had we launched something called the Global Education Fund for people who wanted to send the kids abroad. We added international equity as a, as an asset class where he could, through, through stock aisle, you could use LRS money to invest in stocks abroad.

[00:32:58] Akshay: Sorry, what is LRS?

[00:32:59] Atul: LRS is Liberalized Remittance S cheme. So if you want to invest in dollars abroad directly you wanna buy Apple or Amazon or whatever, Facebook or whatever the various alphabet or whatever it is, you need access to that, so you need to build the rails for that. So we helped we partnered with somebody called Stack Stockhouse to build those rails. We launched insurance life insurance. We able to launch health insurance. So basically did a lot more with existing customers. And that's paid out very well, on a like, for like basis that has grown three x whereas, you know, the market has done all over the place. Secondly, ,

[00:33:30] Akshay: the average amount of customers investing through ScriptBook has tripled, basically.

[00:33:34] Atul: Yes. Yes.

[00:33:35] Akshay: Wow. Amazing. Okay.

[00:33:37] Atul: The second strategy we played out, which is in the making, is that we went off we started targeting customers for of a higher ticket size. So earlier we used to target early savers. So we used to, nearly 70% of our customers did their K Y C with us. That means they were first time investors in the market because they came through us.

[00:33:52] Now 80, 85% of our customers are existing investors. they have now experienced the category and are looking for a better outcome, so our average ticket size in the first month is nearly a Lakh and in the industry category is 2000 rupees, so just a very different profile of customers coming to Scriptbox, word of mouth brand positioning. So as a brand, we stand for your, what should I say, "Maaji" as, as I call it in Hindi, I'm your boatman. I will take you across troubled waters, across calm waters, across a pond or a river or a lake, depending on where you want to go. I will tell you this thing to do and I'll be with your site, so that's my role. I'm your. coach. We've done that. We'll help you understand what you should do with your money. We'll help you invest it, we'll help you review it, and we'll do it at a family level. So that's essentially, and that's attracted a certain profile of customers. The third strategy, which has worked out very well, is that, see what's also happened is that you know, many industries digitize. So financialization of assets has happened. People are moved from real estate and gold to financial assets. Digitization has happened. People, especially covid drove people to digitization and consolidation is happening, people are saying smaller players get together and build a bigger business. So we've taken advantage of all three. So on the consolidation side, we've found some like-minded people who believe that there's a better outcome for everybody if we get together. So we've done nine transactions now, and probably a few more. It's a great win for all three parties. Customers get a better upgraded experience because it's digital, it's backed by a 10 man research team rather than a one-man research team. It's more holistic. There is a bunch of products. There's, it's 24 7 availability. You don't have to call anybody. You can if you choose to. So a combination of an omnichannel model where you get a better outcome, you've got access to a relationship manager when you want it. So there's a, and there's succession planning, right? you're now attached to the brand, which has got a hundred year life than a single person. , there's a win-win for the customer. There's a win for the onboarding partner. Rather than buy a backend system, some crm, some mobile app, you're getting a full stacked digital which is test to the test of time. You're becoming part of a bigger brand. Your customers have succession planning because a lot of people who built businesses are getting slightly older. Their children don't wanna do this, they wanna do something else. So what happens to the business? What happens to the customers? So script box is a great outcome for those, for those people

[00:35:51] Akshay: These transactions. you are talking about acquiring wealth advisors, like the more traditional offline wealth advisors?

[00:35:59] Atul: Yes. Yes. Yes. Okay. Okay. Like a smaller version of, say Anand Rathee Anand Rathee of course, is very big, but like the smaller players in that similar space you have built.

[00:36:09] So they've built out great businesses. These guys are really good at what they do. They've got their customer interest in mind. Obviously we do a huge filter on values, ethics, alignment, and yeah, in a curated manner. We were able to talk to the right partners and make them part of the Scriptbox family..

[00:36:23] you don't need offline presence, these would be offline businesses with a physical office and a lot of people doing account management. you don't need people on the ground to talk to people, see, anytime your money becomes beyond 50 lakhs, a crore you need that comfort of a human being, and, but as long as a human being is using digital processes to deliver greater value to you, you're not designing a portfolio there. You have a portfolio already designed and your role is more "chai pe charcha", your role is more empathy. Your role is more being available to the customer for assurances. Then you can do a great job of combining a human touch with a digital platform. So we say we are a wealth manager with a digital d n a, so at the hardware, digital, we believe in automation. We believe in standardization. We believe in scale. We believe in processes. But people are important, so it's like an Uber driver versus a Meru, right? so Uber still, you need driver drive the car. He got to be clean, he's got to be neat. He's got to be polite. He's gotta drive the car very well. But the entire other process is digital. Where are you going? How much will it cost you? How long will it take ordering it when you need it. So all that convenience combined with the human touch is what script box is all about.

[00:37:24] Akshay: Okay. Give me examples of the kind of players you've acquired.

[00:37:28] Atul: So there are a couple of people in in Madras Mr. Aiken and Ryan has joined us. There's a company called Size Securities, just joined us. There's a company called Brutus from Gurgoan who's joined us. There's a company called Money.

[00:37:38] Akshay: What kind of size would these companies be? Like how many investors or 300 to 500 corals is a sweet spot.

[00:37:45] Atul: About 300, 500 families is the say about 400,000 families. Localized very strong. So somebody in Chandigarh, somebody in Gurgoan, somebody in North Delhi. So these would be like essentially HNI focused yeah, 25 to 25 lakh plus. See, but you get that whole 80 20 rule yaar Akshay that you get a long tail. And our beauty is that we are actually able to revive the long tail and do a lot more with them. So their investors get transferred to script box books in a way like, yeah. So it's a four stage process. we onboard the customers onto the script box platform, tell them how to use it, but obviously the IFA is there. We do a transition of trust of the IFA. So the IFA will be partners, but it takes the independent financial advisor the wealth advisor. So that's what their technical name is. They could be a mu, they're largely mutual fund distributors, but they're actually an advisor. This is something odd about the Indian regulation that advisors are called distributors and distributors distributors, we have like advisors and so-called RIAs become free distributors. Bizarreness of the Indian ecosystem. So we need to transition their trust. They need to believe in us, our processes, our customer outcomes, our reporting methodologies, etc.. The most important leg is a transition of trust of the customer. They need to believe in the brand. They need to believe in the methodology they need to, while the account is alive. Is it the right portfolio or how often do we review it? So that transition of trust, we've got a very strong team on, they talk to customers, they understand their concerns. I do a webinar, I'm available all the time to talk to people. So basically do a lot there. And we are hopeful that once all of this happens, they grow, as we've shown in about yeah, the books which are matured. Some of them are doubled there and double faster than crypto cause they were unleashed So much potential suddenly

[00:39:16] Is cash acquisitions or cash and stock. bit of both. It's a cash plus stock, cash plus stocks. Akshay they have to believe in the future of Scriptbox. Otherwise we're not interested, so they have to believe there's a longer term option.

[00:39:25] And our model, Akshay our model are also maturing, it's not that we knew what we had a cookie cutter plan as partners come on. We've also learned over the last six quarters what works, what's best for both parties. So long, see, these are, we are building a hundred year institution, I'm not building a business which is around, around Atul or Sanjiv. We clearly always say we are building a hundred institution, which stands beyond us. Here we are just, we're the custodians currently, but hopefully they'll be bigger and better people than us who will who will do a better job than us.

[00:39:52] Akshay: So this is the reason for that. You raised 21 million recently?

[00:39:57] Atul: Yeah. For the consolidation play largely.

[00:39:58] Akshay: Okay. Very interesting. I think this is like that extremely under the radar. a strategy that you've picked up. I am sure there are a lot of opportunities to consolidate these offline players and create a large consolidated wealth management business. Okay. That's amazing.

[00:40:14] Atul: As I always say, without signing our boots, I think the country, we owe it to the country, because we do a very ethical, very good job of long-term wealth creation. We believe that the more people we can serve It's good for the country. I, And I genuinely mean it, when my father, God bless his soul when I looked at some of the portfolio he had it, it hurt me. It used to hurt me. He, and when he was a good meaning man and I'm sure the people who are serving him were well meaning, but it just didn't stand a test of time. So I feel that if he can bring our practices to a larger audience it's good for everybody.

[00:40:42] Akshay: What is how do you do customer acquisition? Is it through performance marketing or is it through these offline acquisitions are obviously one big channel but overall, I wanna understand what is your, and you also mentioned how you've changed your target to look at higher income. How does that happen?

[00:40:58] Atul: so this though, it's an i a consolidation or it's actually customer acquisition, because we are getting customers with existing wealth and, and it's a word of mouth industry. Remember that if you are happy with us, you'll tell five friends. And it's it's like I always say my dream dinner party test is that if I'm in a party and people don't know who I am, and then somebody tells me you should invest through script box that, that day, I know I've built a great business. Unfortunately because I'm on television.

[00:41:19] Like for probe for you too. You were Exactly, yeah. Same. Something similar happens in a, in, in, in a event. No, but there's word of mouth. So we get, we do performance marketing, Shravani and her team, the whole marketing team is very active in terms of creating a brand persona which builds confidence in our customers that we are doing the right by their money. So we use, obviously digital marketing channels. We use we use performance marketing. Word of mouth continues to be strong. We don't have an offline sales capability, so we don't go out knocking on doors. We don't make outbound calls.

[00:41:46] Akshay: the cost will be prohibitive to use that channel

[00:41:49] Atul: also against our brand yeah. We have a brand cred that we never irritate you. So we will never ask you the same information twice. We'll not make an outbound call for sales. So we are quite clear on that. So we sponsored a couple of golf tournaments because we are here and we made a commitment that will not call you. You tell us what time to reach out, we'll meet you, otherwise we'll not take a list and start. So that's just not part of our strategy or our personality. Let's see. We are also learning, actually, a, it's a, the journey is is we've reinvented ourselves in the last two years. Hopefully the next three to five we can build something of meaningful size for our customers.

[00:42:19] Akshay: Are you planning like top of the line spent, say celebrity endorsements, sponsoring I P L, stuff like that? Because trust building is like challenge to solve here, so that, that could be a way to

[00:42:29] Atul: So we will do about the line, we will do the line, but in a very systematic manner. In the press announcement, we've tied up with Vector and Tilt as our as our marketing team. I Joe and his team are phenomenally good, Joe George. So we're working with them to figure out the right strategy for ourselves in terms of the brand build out. Whether we do above the line, whether we do a lot more digital is something Manu and his team will decide. I'm not the expert. All I can say is that at least the work we are doing now in terms of our Twitter, in terms of our money shorts, in terms of the positioning of ourselves as old age, wisdom new age, wealth management for somebody who's here by your side, I think we're doing a good job. And also size, big size here, if you have about 20,000 crows of AUM, the next 20 thousands become that much easier.

[00:43:08] Akshay: And what is the headcount now?

[00:43:10] Atul: ScriptBook, like 250 260 people on the payroll.

[00:43:14] Akshay: And what is the split like how many people in which

[00:43:16] Atul: A third for pure engineering product design. A third would be customer facing, so people in the contact center. So we always had a contact center, even from day one and with no IVR. So when you call us, we will pick up the phone. And we've added obviously relationship managers for customers. Higher ticket size customers will come from the IFA channels. Have a relationship manager. We have, so that's about a third of our people. And that includes fund operations bank account changes, any of that stuff. And about a third is obviously overheads like so marketing and finance and HR and corporate development. So yeah, that would be a good split. A third, a third, a third.

[00:43:49] Akshay: Tell me about the competitive landscape. Who are the other players in this and like you said, you are at five and a half thousand assets under management. So what are their AUMs like in this space of digital wealth management? I know ET Money is one, but I think they do direct plans. They don't,

[00:44:06] Atul: so it's very difficult to direct share. So we are looking for the information, but it's very difficult to find because everybody else is in a direct place. So the proxy of hunting signaling this out is how much amfi commission you made, but if you don't have a b, if you don't have a revenue model, you can claim your so a lot of people, what they do is they will, I told you about this E-Caf statement, I've taken an E-Caf statement, I've digitized it. A lot of people will say that, oh, that customer, he's invested a thousand with me, but actually he's got a crore but that crore is mine. So what people are reporting, what numbers are, we really don't know, and I'm not being facetious, but if I looked at funds India at about 7,000 crores IFL Securities at about six, 7,000 crores. Anybody who's built customers is regular with their customers. And we would be in the, in the largest players in that space, and see there are transaction players like grow and et money and AT money who are also doing stock discount broking, who are also doing mutual fund access, etc.. Difficult to tell what the numbers are in a credible.

[00:44:57] Akshay: They're not exactly like in that wealth space.

[00:45:00] Atul: Not at all. They're in the, I would say investment / access to investment space. And that's their positioning, of India Invest, which is basically saying that everybody, which is a fine thing, but it's empirically proven that 95% of traders lose money, so that's the that's just the reality of those businesses. The other pieces around, see who's gonna lose if you're gonna win? It's the banks, they're clunky systems. So our customers are gonna come from either offline players or gonna come from banks yeah, they're good at what they do, but for somebody. But see, who do we target? We are targeting between people between say 15 lack 25 lacks to two crows fis above fros. The big boys, like a ESK and Anand Rathee are active. But below 15 Lakhs. You're not serious about wealth. You're still figuring out, you're doing crypto, you're doing some trading See, our sense is if you about one x your annual salary is when you start thinking, okay, I'm now serious about money, and that's when the money becomes slightly meaningful and that's when we kick in, and then we are systematic long term with you by your side. And I'm not gonna call you on 28th and tell you, sir, there is one lakh rupee lying in your account. Buy an FD or sensex is at a discount, or depending on whatever my target is from my product manager I'll get that pressure. We don't do that. So our our relationship managers don't carry targets, so they're not incentivized.

[00:46:10] Akshay: Is that that tax saving investment, is that like a big contributor? Like I know a lot of people early investors especially younger people invest.

[00:46:18] Atul: It used to be, it used to be about, it used to be about three, four years ago. No longer. Yeah. I don't know if we, so it used to be a big push. We used to do a lot of work in that space. I remember running a campaign then realize that for our target audience people this is just one more option. You have so many other options for tax saving. So we offer it to our customer. There are customers, but I don't think it's a meat, it's material to our strategy.

[00:00:00] Atul: Hi, My name is Atul Shingle. I am the founder and c e o of script box. The beauty of Standard Chartered, I was in the card division. We were completely like a non-bank, everybody around us was Wipro or Blow Plus or Asian paints. It's very different pedigree. And we were hungry. We were growing.

[00:02:48] Had a slightly old world banking set up in, in South Africa. The JV didn't work out, the business did good, did well.

[00:02:54] This was a full-fledged bank, or it was a, like an NBFC, focused on lending.

[00:02:58] The largest bank in Africa. So it is, it's, it is a, it's, yeah, 25,000 employees, highly profitable, called NetBank.

[00:03:25] Akshay: and this was like a Bajaj Finserve kind of a model, like appliances.

[00:09:02] Akshay: Yeah, I was wondering. LIBOR plus 20 sounded very high. Okay, got it.

[00:09:59] Akshay: But the insurance business could have still made money, like why shut it down?

[00:10:49] Akshay: and what brand name?

[00:11:20] It was like, really good. It was, but then my wife got antsy. You had got married while you were in South Africa? No, I got married much earlier, I got married in 2000- 1995 so I actually, so we got married in 95. We have two lovely daughters. My wife is a designer, so yeah, she's traveled with me everywhere. We had a lovely lifestyle in South Africa. Lifestyle is gorgeous. Actually, if anybody's not been a I'm like a big champion of South Africa tourism. You have to holiday there. You live in these big houses. The house in Durban was on the Gulf Estate, so my my front lawn was 18th. And hence I'm a keen golfer. But it came back to India and I think after playing a lot of golf, and in that 2009, traveling, I think back end of 2009, my wife told , boss, what are you up to? Not even 40 years old. The maids are getting worried that nobody will pay their salaries because you, all you do is meet friends and travel or play golf.