A conversation with Misbah Ashraf and Nishchay Ag of Jar
A start-up that both Anmol and I are incredibly bullish about is the fintech Jar, which allows users to start their savings journey for as little as 1 Indian rupee. Misbah and Nishchay are incredibly focused founders, who have given a lot of thought to the problems around building more of a savings culture in India.
The Jar android app, which is only three months old, already has about half a million downloads, with transactions and AUM surging 350% month on month. Earlier this week, Jar announced it has raised $4.5 million from a investors, including Arkam Ventures, Tribe Capital, WEH Ventures, and a number of prominent angels including Kunal Shah (founder of CRED), Vivekananda Hallekere (co-founder of Bounce), Alvin Tse (of Xiaomi) and others.
I sat down with Misbah and Nishchay a couple of weeks ago to talk about their journeys so far and vision for Jar.
Q: For people who don't know anything about you, perhaps you could share a bit about your life story, background and what brought you to entrepreneurship?
Misbah: I come from a small town in Bihar called Bihar Sharif. My dad used to be a government teacher and my mom was a housewife. While growing up, I saw first-hand some pretty bad financial conditions due to bad loans which created financial traps for my family. This was a never-ending financial trap, and it made me decide that I would not take a single penny from my parents for my undergraduate education. I went to Amity University and studied computer science. The first two years of university, I was focused on ensuring I pay my bills on time. And I did everything from selling t-shirts to helping students with assignments, etc. There was no idea to build a billion dollar company that time. After two years, I actually dropped out of college, and with a couple of friends from IIT Delhi started a fintech company. We were pretty early in the market and needed a pre-paid wallet license. There were companies that were really well-funded — including Paytm — that were still waiting for this license at the time. We didn't know how long the regulatory issues would take, and after some time we decided to shut down the company. While my friends went back to university, I started working with some start-ups in the US instead, including companies like Spangle. I worked like this for about two years, mostly focusing on product and growth and learning how to work for global companies. In 2017 I founded a company called Marsplay, which was a social commerce platform where people could come together to share beauty and fashion tips in their local language in the form or videos and images. The idea was that consumers could buy products based on the content that had been shared. We scaled to about 1M MAU user base with 25K+ creators, and eventually ended up selling the company to another social commerce company called Foxy, which is backed by Lightspeed and Sequoia, last year in August.
I know Nishchay because Vivek, the founder of Bounce, invested in us and since then we had been discussing a lot of things we could do together. When I was wrapping up the company I was discussing a couple of ideas with Nishchay and we both felt that personal finance was a topic was very important to us, and that is how Jar happened.
Nishchay: I come from a city called Hassan, which is about three hours from Bangalore. I did my education there and moved to Bangalore for my first job. I got into IT and worked in It for almost nine years. Most of that time I spent with Honeywell Aerospace. I worked in the US at their Phoenix facility for a while, and when I came back to India I joined Accenture . While I was with them my friends were starting a company called Wicked Ride, which eventually became a shared mobility company called Bounce. My friends asked me to help build the tech for the company and that's how I entered the start-up ecosystem about six years back. It's been a hell of a ride. We scaled the business to $100,000 in monthly revenue, launched it in 20+ cities. But ultimately we wanted to expand from luxury motorcycles to mobility, and we worked to build an entire dockless system grounds up at Bounce. I was heading engineering there, later moved from engineering to head supply and set up manufacturing, assembly, plant, and on-field operations. Then I moved from supply to head monetization. The idea was how to diversify our services — something that Gojek and Grab had done very successfully in SE Asia. Financial services was one of the things I was looking at. Within financial services you basically have banking with some 900M bank accounts in India payments with some 450M people using UPI, but then there's a massive drop with only 30M+ people or so actively saving and investing. I sensed a big gap here — why is there such a big gap, why are these services not really being utilized? I really thought about this and wanted to put some strategies in place at Bounce. But that's when Covid hit, and all ancillary projects really came to a stop. The time and effort I had put into this space was too intriguing, and that's when I decided to quit and start-up. I had met Misbah since we were using the Marsplay platform for social commerce — such as selling helmets, etc., and we used to chat and catch-up when he was in Bangalore. He was winding up the company around the same time so in some ways the stars were aligned for us to do this.
Q. For people who don't know about Jar, can you tell us a bit more about the app and the idea behind it?
Nishchay: Just taking a step back, there are a lot of things contributed during the COVID that brought to life why there is a need for a product like Jar in a country like India. As I mentioned, financial services are actually pretty underpenetrated in the country. And the idea of the platform really came from the sense that people are finally understanding the importance of financial wellbeing. When we say financial wellbeing, it is at three levels. One is you need to save and invest in a regular manner. You need to have access to good credit, which is not going burn a hole through your pocket. And finally, you need to have a meaningful insurance. Many times in a country like India people get into a debt trap because they don't have insurance.
My dad ran a business, and as a kid, when I was free I would support him at the store. Our shop was right in front of a hospital. Back in those days we used to have coin operated phone booths, where people would call back home., And the calls were only about one thing — I need more money for the treatment. What was common is that money would be taken from a loan shark and now that the debt trap has created now, they keep paying that repaying that debt for the next 8 months, 12 months and whatever money would have been kept for buying fertilizers, seeds etc. would go in repaying the loan.
That was my entry level education about how things are. But when you keep moving up the ladder, right, it is no different. For example, if i take myself as an example, I started making money when I was 20, but my first meaningful investment happened when I was 28. There was a clear eight to nine year gap, even though I had no specific reasons why I didn't do it.
When we picked up this this whole area of financial services, we went out and pretended to be some research institute folks to ask about people's saving habits. What was interesting was people would come up with very colourful answers about why they couldn't save. We observed a pattern though. The first and foremost reason was that people are not financially literate. People don't understand a mutual funds, index funds, stock market, or even insurance. I know so many with LIC insurance, but hardly anyone understands the details. The second challenge was everything requires some sort of a monthly commitment, be it an index fund or a mutual fund. Once you sign up, you need to pay every month. Add to that, if you want to exit, it's a painful process. There are systematic discouragements to do so and on top of that there's kind of a psychological barrier around it. For example, if you are breaking your Fixed Deposit it is as good as you have broken down in life. And the third challenge was that everything is in English. People speak English, but they are not fluent enough in the language to take financial decisions in English. All the products are full of jargon. You open any platform and it talks about SIP, NAV, IPO, portfolio diversification, blue chip, large cap, small cap. People don't understand any of them. That's the reason people keep pushing the whole decision of getting into the savings and investments. They actually start doing it when it becomes absolutely necessary. For me, my necessity in my life was that I got married at 28 and I was like, okay, I need to get my act together. I need to start saving. The idea of Jar is to help as many people as possible to get into the journey of savings and investments, get access to the right products and services at the right time of their life.
Q: How does Jar work currently?
A: The platform is very simple. We aim to solve for most of the psychological barriers and the cognitive load that you will have during signing up or starting the investment journey. You start by signing up with phone number. You give access to your read your SMS, and you set up an auto pay mandate via UPA. We are the first platform to go live on UPI autopay for savings and investments. And from there, everything is automated. We have three offerings on the platform. The first one is roundups, where every transaction will result in an SMS. No matter what sort of spend you do — UPI, net banking, credit card, debit card — it results in an SMS. We read that SMS, we understand that you'll just now spent money and we round it off to the nearest 10 and we debit the amount from your bank account using UPI autopay and invest it in digital gold. Gold is the only instrument that we offer at this moment because gold is something people don't have any adverse opinions about. They are aligned to the value of gold.
Then the second option is daily savings where you can simply come and set a mandate that, for example, save a hundred rupees for me everyday. So, we debit a hundred rupees from your account on a day-to-day basis.
And the third option that we have is one time investments. That is whenever you have some extra cash on you, you can come and deploy it. These are the three offerings we currently have and you have the absolute flexibility to withdraw at any time, you have the absolute flexibility to stop your investment anytime you want. Our product is very non pretentious. Simplicity is at the core of the product.
Q: You mentioned UPI Autopay and Jar being one of the first to leverage this. Do you think its also a moment in India where the infrastructure was ready for a company like Jar to be envisaged?
A: The stars are truly aligned for it to happen. UPI auto pay did play a crucial role for sure. But we were the first platform. So we were at the wrong side of receiving all the challenges that come with the new platform. The banks are not ready. The platforms were not ready. There were too many teething issues. When we launched the product, there were only 12 banks which were supporting UPI auto pay because UPI autopay requires the UPI 2.0 framework an only 12 banks were on UPI 2.0 framework. Right now we have about 30 banks on the framework with more and more banks have coming in. And apart from that only PayTM and BHIM supporting UPI autopay. PhonePe and GooglePay still have to get on board. So there were a lot of such limiting factors but we kept finding workarounds, learning from the market, and evolving with time. UPI autopay will play a crucial role in the future for sue, but right now we are continuously working with NPCI to improve its performance.
Q: Given you are a start-up and have a lean team, what were the interactions with NPCI and other banks like?
A: It's all about knocking the right doors, right? So we kept knocking till we were heard. Being persistent was what solved for a couple of issues we had. We are still very far from having a platform which is as stable as UPI 1.0. But the teams are very responsive. NPCI is continuously working and pushing banks to resolve issues. The banks all have their own archaic structures, their own timelines, etc. But being that nagging presence everyday, can push them to fix issues.
Q: From a go-to market perspective, how did you get your first customers? How have you grown that customer base since?
A: We worked on community building from day one. Initially all your family and friends are there to support and there's nothing they can do about it. Other than that, with both me and Misbah being active in the startup world for the last six years, we knew people, and we knew people who had built communities. So we took all the help we could and where it was required. We built a good community of early adopters. We have closely worked with college students, new job starters, working women organizations, etc. We have built micro-communities and nurtured them. We made them use the product from there on a lot of word of mouth picked up. We launched a referral feature on the platform and that helped. We also did a lot of influencer marketing. The early adoption was all from the community that we built.
Q: And going forward is that largely the approach you're going to continue with?
A: The idea is that we have to do everything. You never know what is the one thing that will work for you at scale. Something which works for you at small scale looks very shiny, but when you try to replicate that model over and over, and again, try to get 1 - 2 million active users, that's where you'll run into a lot of issues. We'll come up with a lot of content and hope that something becomes viral!
Q: Could you share a bit more about the user metrics and growth metrics of the platform? You have said Jar is like a product that serves everyone's needs. In terms of where you're seeing the users come from is it still primarily urban centers given that you started with the startup community or are you seeing usage proliferate more broadly?
A: We have a broad user base for sure. We have ~35% of the users from Tier 1 cities, ~30% from Tier 2 and rest are from Tier 3 and rest of the country. We even have users in Andaman and Nicobar! We have users across the country. Growth-wise we are doing well, but we want to continue to keeping a low profile and build out our product.
Q. As you build out the product, what are the other investments that are top of mind that you're hoping to offer?
A: The idea is to help people diversify their investments, for sure. We will soon bring in other instruments. From a technical standpoint, it's a no-brainer to bring in Mutual Funds or other instruments, but we want to time it right.
Q: How do you think Jar is different from some of these other platforms that allow users to invest in mutual funds or gold, et cetera.?
A: Jar is not a transactional platform. We are trying to solve for your psychological barriers. We want to help you build a habit, a better version of yourself. That's what we are solving for. How do I nudge or nurture a user? How do I make them save more often? Everything in the world is prompting us towards a model of Western consumerism. There are a number of transactional platforms, as you note, that cater to high intent users. We are working on a habit building platform.
Q: What were some of the challenges you faced in building the company, scaling the team, hiring, etc.?
A: Being in the space for the last six years, we have gone through many challenges! Both of us are absolutely shameless. We ask everyone for help. It's easy for us to take decisions because we have taken many of those hard decisions in the past. We come with that experience. We did face the typical challenges — tech challenges, hiring challenges, being fast, being agile, being very nimble in reacting to the user's feedback, and continuously adopting and releasing features after features and updates after updates. It's been just a hundred days and we already have done seven releases so far, and every release at least has moved the metric the way we wanted it to move. If we had done the same thing probably five years back we would have been stuck a hundred times by now. We were stuck at a hundred times, but with the past experience, we were able to work around it.
One of the most important things that we focus on are things inside the company — what not to build, what kind of people do we bring. We've focused a lot of brining in the right kind of people. That is a big unlock if you can build a more async culture where you don't have to be on calls all day. And we keep doing meet-ups, as the Covid rules relaxed. We are a lean team right now, but I think we'll see more of these issues as we scale the team. Right now we are focused on solving for today.
Q: As you think forward to the next six months what are the top priorities for you in terms of hiring or areas that you want to focus on in terms of building strength within the organization?
A: From a business standpoint, the vision is to get to a place where we can confidently tell people, see million plus people are using Jar. We want this to be the go-to platform for savings and investments for every middle class, every gen Z, every millennial. In the next one year we want to have at least 2 and a half to 3 million users on the platform. That's the vision that we are working with right now from a business standpoint.
For the team, we are trying to hire a senior products analysts, senior UX writers, and an android engineer.
We at Keeping Up With India also worked on a referral plan with the folks at Jar and if you join the company in one of these roles or refer someone who does, you will get ₹50,000 in your Jar account.
Thinking ahead, its important that product is vernacular so that it talks the language that people understand. This is important so that people make decisions not from a point of doubt, but from a point of confidence that they know what they're doing. We want to, game-ify the entire journey. We want to bring in people who believe in this vision and want to be part of the journey. This is an impactful product. If we can enable a million people to save say hundred bucks every month, even that small amount can create some sort of a safety net. If they start saving at 22, 23 by 26 they will have enough of a corpus so that they can take a more informed decision about their life choices. That's what we want to do. That's what we want to build as a company. And we are deeply committed towards that.