What a fantasy you have tried to write. Because I really can't describe this one in any other word. The analysis is good, but then it's a case of having a bias which sort of defeats the purpose of all that analysis.
The number of people who pay credit card fees in India is less than 4% of overall credit card user. Your TAM goes out of the window right there. You want CRED to be AMEX of India - Conveniently forgetting that AMEX has been present in India since years and been nowhere close to where they are in US. I hold a platinum card and have never paid a single penny in fees - the day they ask me, I will simply cancel it.
Compare the CAC of an AMEX or an HDFC bank to provide a similar card to that of CRED and you will realize why it doesn't make sense. Yes, he has the luxury of time ("Burning money"), but that's all. I have 50 L+ points on CRED and all I see is 4-5 useless deals. CRED will die , but not soon because neither the founder has the ethical ability to return investor's money nor he has any business model. As simple as that.
That's true. I started reading the article and as soon as I reached, 1/5th of the article where he mentioned he was obsessed and started romanticising Kunal, I realised this article is glamorising CRED if not a paid article.
I can butcher all the analysis here with facts simply googled from internet but I kind of promised Kunal Shah I would write an article on why CRED is an example of what is wrong with Indian VCs.
As someone who's worked at Amex (product insights), I feel it's a bit much to think that a young company like CRED will even come close let alone beat Amex, in any regard. I've used CRED for a few months but the rewards weren't that exciting. My points are still lying unused. Checked its app reviews and most were not good (close to horrible). I've been using the Amex card for almost a decade now and have had my fee reversed every year. Although, I must admist there's room for improvement in their reward redemption process especially for travel- hotel and flight vouchers but that's also not a big inconvenience. CRED needs to work on better offerings, more like find a niche within this credit card domain.
Cred will eventually become a digital lending platform. As I see thats the business model which will generate some revenue. Amex Platinum CC charges 10000 and not 60000. I cancelled my Platinum Amex , they sent me a Free for Life card . Same goes with SBI Prime card, cancelled it , Why should I pay 3000 a yr, when 2 of the most secured cards Citibank and HDFC are Free .
I was always curious about the business model. Thanks for sharing this.
My 2 cents. In the future, CRED will also have a network of elite people(this can be like Facebook or LinkedIn graph). There can be some business model by connecting people who are in this elite group.
Do we have any data on penetration of personal loans in the segment that CRED is targeting? I would assume given that they are apparently the "richest", they will not need personal loans as much as India2 & India3. So, big questions on demand for personal loans. As far as CRED credit card is concerned, sure the rich millennials (<35) maybe be heavy CRED users, but people who are ready to go for such heavy fee for a premium card are mostly GEN X. Millennials are deal seekers. High reward rate, no fee on cards, universal acceptance and lounge access is what currently drives them. As far as user experience is concerned, Apple Card is not far in getting launched. And a luxury brand is built over ages for people to perceive it as luxury - of course all of this can vary with each generation. Moreover, who knows if Credit Card is even going to be the preferred way of payment - so many markets have moved away from it. Time will tell, but except for data and a possible integration with a larger player, do not see anything of value at CRED.
I think people have too much of confirmation bias with regards to cred. In twitter and YT circles people tend to give a lot of unwarranted attention to small pieces of texts rather than complete truth. People associate cred with apple because with premium user base. Stupid notions like apple phones cost more because they want to appeal to rich more. This might be true but they do it because they are the market leader they will charge a premium.
So, ultimately cred wants to be something like 'I will cred you' of fintech. But it will be I'll phonepe you or gpay you. You can pay credit card bills from there too and get better rewards and but all the things you want.
In the end BNPL will eat up all the cred card business. Apple getting into BNPL, card business and other services will eat up all the transactions. OR cred partners up with apple like one of the banks did for their card business. That's the only way out
Care to spell out how they will start making money. Is this a fanboy page or an actual analysis? Dont waste people's time masquerading as an analyst if you have only BS to offer. Monumental waste of time
I am sorry to say, this reads like a paid article promoting Cred. Dont get me wrong. I have been using Cred since its launch but most of what you have covered in the article is plain baloney. This is a far cry from other well researched articles on your platform.
What a fantasy you have tried to write. Because I really can't describe this one in any other word. The analysis is good, but then it's a case of having a bias which sort of defeats the purpose of all that analysis.
The number of people who pay credit card fees in India is less than 4% of overall credit card user. Your TAM goes out of the window right there. You want CRED to be AMEX of India - Conveniently forgetting that AMEX has been present in India since years and been nowhere close to where they are in US. I hold a platinum card and have never paid a single penny in fees - the day they ask me, I will simply cancel it.
Compare the CAC of an AMEX or an HDFC bank to provide a similar card to that of CRED and you will realize why it doesn't make sense. Yes, he has the luxury of time ("Burning money"), but that's all. I have 50 L+ points on CRED and all I see is 4-5 useless deals. CRED will die , but not soon because neither the founder has the ethical ability to return investor's money nor he has any business model. As simple as that.
That's true. I started reading the article and as soon as I reached, 1/5th of the article where he mentioned he was obsessed and started romanticising Kunal, I realised this article is glamorising CRED if not a paid article.
Yes, most likely a paid one. If not, I feel for the “analyst” in the author.
Lol you went full savage with that response.
But I agree, paid for sure.
I can butcher all the analysis here with facts simply googled from internet but I kind of promised Kunal Shah I would write an article on why CRED is an example of what is wrong with Indian VCs.
As someone who's worked at Amex (product insights), I feel it's a bit much to think that a young company like CRED will even come close let alone beat Amex, in any regard. I've used CRED for a few months but the rewards weren't that exciting. My points are still lying unused. Checked its app reviews and most were not good (close to horrible). I've been using the Amex card for almost a decade now and have had my fee reversed every year. Although, I must admist there's room for improvement in their reward redemption process especially for travel- hotel and flight vouchers but that's also not a big inconvenience. CRED needs to work on better offerings, more like find a niche within this credit card domain.
Cred will eventually become a digital lending platform. As I see thats the business model which will generate some revenue. Amex Platinum CC charges 10000 and not 60000. I cancelled my Platinum Amex , they sent me a Free for Life card . Same goes with SBI Prime card, cancelled it , Why should I pay 3000 a yr, when 2 of the most secured cards Citibank and HDFC are Free .
SHow me the money in the business model.
Excellent analysis and explanation. Looking forward for more such articles. Please share the link of other articles in your series. Just subscribed!
The point regarding making "Pay with CRED"(credit + rewards) as ubiquitous as digital payments (primarily debit) was fantastic!
I would not call it as "biased" or "Paid" analysis. I am sure, Cred or Kunal does not need any positive press, in Substack to turn any winds.
We could agree that, the analysis optimistic on Cred and gives the benefit of the doubts.
Good Read. Subscribed. Will recommend it to Friends too.
Thanks for sharing this.
I was always curious about the business model. Thanks for sharing this.
My 2 cents. In the future, CRED will also have a network of elite people(this can be like Facebook or LinkedIn graph). There can be some business model by connecting people who are in this elite group.
Do we have any data on penetration of personal loans in the segment that CRED is targeting? I would assume given that they are apparently the "richest", they will not need personal loans as much as India2 & India3. So, big questions on demand for personal loans. As far as CRED credit card is concerned, sure the rich millennials (<35) maybe be heavy CRED users, but people who are ready to go for such heavy fee for a premium card are mostly GEN X. Millennials are deal seekers. High reward rate, no fee on cards, universal acceptance and lounge access is what currently drives them. As far as user experience is concerned, Apple Card is not far in getting launched. And a luxury brand is built over ages for people to perceive it as luxury - of course all of this can vary with each generation. Moreover, who knows if Credit Card is even going to be the preferred way of payment - so many markets have moved away from it. Time will tell, but except for data and a possible integration with a larger player, do not see anything of value at CRED.
To borrow a recent tweet I read - Credit Card in India is predominantly used by people who do not need credit.
+1
Sorry couldn't find anything but already known to CRED users.
*not already known
I think people have too much of confirmation bias with regards to cred. In twitter and YT circles people tend to give a lot of unwarranted attention to small pieces of texts rather than complete truth. People associate cred with apple because with premium user base. Stupid notions like apple phones cost more because they want to appeal to rich more. This might be true but they do it because they are the market leader they will charge a premium.
So, ultimately cred wants to be something like 'I will cred you' of fintech. But it will be I'll phonepe you or gpay you. You can pay credit card bills from there too and get better rewards and but all the things you want.
In the end BNPL will eat up all the cred card business. Apple getting into BNPL, card business and other services will eat up all the transactions. OR cred partners up with apple like one of the banks did for their card business. That's the only way out
Care to spell out how they will start making money. Is this a fanboy page or an actual analysis? Dont waste people's time masquerading as an analyst if you have only BS to offer. Monumental waste of time
I am sorry to say, this reads like a paid article promoting Cred. Dont get me wrong. I have been using Cred since its launch but most of what you have covered in the article is plain baloney. This is a far cry from other well researched articles on your platform.
An alternative take I came across: https://medium.com/@manishsharma_58084/is-cred-the-poster-boy-of-sequoia-and-friends-privilege-old-boys-club-based-investment-culture-c1ae9708af4b