Full transcript of “How CRED makes Billions? (without selling anything!) | tbh”. Click a timestamp to open the video at that moment. Need another video? Use the YouTube transcript generator.
0:00 red currently has a $6.4 billion valuation and they achieved this in just 7 years but here's the most interesting part everybody in india has heard of credit but when you ask them do you know what they sell most people think that they're either a credit card company which they're not and a few others think that they are curated e-commerce platform but misho is an e-commerce platform in fact you can find a lot more stuff on misho than on the credit store but misho only has a valuation of $4 billion compared to cred's $6.4 billion valuation and misho was started way back in 2015 whereas cred was started in 2018 now even if you forget about the valuation take a look at their revenue numbers instead they posted a revenue of
0:46 2,400 crores for the year 2024 so how is cred really making so much money and what are they actually selling i'm lauren gunur and you're watching insights by tbh a series where we deep dive into the insights strategies and tactics of successful businesses and how you can implement [Music] them cr unlike most traditional startups in the indian ecosystem operates on a very different model while most startups adapt to the push strategy cred created a new strategy called the pull strategy now what the hell is this pull strategy before we get to that you first need to understand that every business has two sides to becoming successful on one side
1:32 you need to have a product or service and on the other side you need distribution now most traditional startups start with a product or service that can solve the problem of a user they then try to make that product as good as possible then they market the product and get it into the hands of as many people as possible hoping to make a lot of revenue from that sales this is what we like to call the push strategy now let's deep dive into the pull strategy that fred implemented this is going to be a masterclass on building a great business this entire pull strategy needs long-term thinking and the ability to strategize how the company is going to make a revenue in the future even though it might not make any money today so if you're going to implement this
2:18 strategy you need to understand that your company might not make any money in the first few years this entire pull strategy involves building a distribution first and then figuring out what product to sell one single thing it does it does really really well why don't you use it and then once you create distribution you can kind of create engagement on top of that but how can you build a distribution without even having a product now this is kred's mission statement to recognize the trustworthy and to empower them to create financial and lifestyle progress kunal sha understood that although india has a very large population of 1.4 billion people a majority of this population does not have any spending power in fact less than 10% of india's population which is around 140 million
3:03 people actually have any spending ability so every single company in the market today is actually fighting for the same set of people in india this top 10% is what drives the indian economy and this is called india 1 coming back to the mission statement of credit recognize the trustworthy which is the top 10% of the country now to identify and sort this top 10% of india's population you basically need a filtering mechanism in india there are certain behavioral differences between the top 10% and the rest of india for instance only the top 10% of people in india can travel by flights only the top 10% in india can purchase luxury items from a mall and cred found out that only the top 10% of india actually have credit cards and cr used this information as their primary filtering
3:48 mechanism now another very important psychological trait that kunal identified was that this 10% of india is actually the aspiration class of india they want exclusivity they want to be part of clubs that regular people can't enter they want to go to exclusive events and even make purchases that seem exclusive with this classification they launched the credit app an exclusive membership for credit card holders who have a credit score of at least 750 and they called it the credit club they even use power statements like not everyone gets it or for the deserved few to make it feel even more exclusive here's your takeaway number one you need to be able to clearly identify and deeply understand who your potential users are for your business next they leveraged
4:34 incredible design to build loyalty and trust now you might be thinking what does design have anything to do with trust you see great design builds trust and i'm not talking about the user experience design here in fact i'm specifically talking about the user interface design now if you take a look at this example here you would buy from this website because you trusted over this website here right now why is that both of these websites have the same functionality they both use the same payment gateways and yet all of us would prefer to buy from this website over this one what makes us prefer this website over this well it's definitely the design of the website now most people would just quote steve jobs here saying design isn't how things look but it's how things work but in fact steve jobs himself stopped the release of a
5:21 product citing that it needs to have better typography and better design craig today is an inspiration for most designers in fact we run a mobile app development lab called pluton labs and whenever somebody wants to build an app with us the first thing they tell us is the app should look like the crd app kunala onboarded harish to design the cred app and focused on its aesthetics over everything else in fact the cred design team even released their design as a free open-source design system called neop well here's your takeaway number two great design builds trust now that credit had narrowed down their audience to the top 10% of the country they chose credit cards and credit score as the filtering mechanism then they even built a beautiful looking app where
6:07 this top 10% can pay their credit card bills the next step was to bring this audience onto the platform and to do this kren brought in the genius of tamni butt and the aib team to create one of the most memorable ads of the decade each time you use the bread app you earn red points we know it's ridiculous so let me distract you with a celebrity doing something quirky no no not that ad this one saying rahul dravid has anger issues hey that doesn't mean you can overtake come man come you come man the first ad you saw there was an ad by magic pin you see in the early days of cred nobody really understood what cred was really doing and companies like magic pill who were a restaurant listing and rewards company thought that gre was
6:53 going to eat up their market so they even made a spoof ad to attack gre but gre had entirely different plans runai and the aib team were given the brief for the ad and since gred was primarily targeting to onboard users with the credit card they realized that people who had credit cards were ideally in their late 20s 30s and their 40s and one of the best ways to trigger an emotional response from somebody is to use nostalgia or make them remember the good old days so tanmay and the aib team roped in the superstars of the 1990s and the 2000s like rahul ravit govinda bihiri capil dv and so many more another key aspect of successful ads are they need to be memorable in marketing psychology there's the concept called the pattern interrupt where most of the
7:40 viewers are used to something and when you flip it over they tend to pay attention to it so tanmay and the aib team came up with this brilliant idea of pulling these superstars in an opposite scenario a scenario that we would never expect like the cool rahul ravid losing his temper and ravi shastri as a party animal making for some of the most hilarious ads ever this brings us to your takeaway number three you need to make your ads memorable finally all of this brings us to the pull strategy of craig now that they have a powerful distribution of the top 10% of india in their hands they could sell them literally anything every single brand in the country wanted to collaborate with craig everybody from b to sugar cosmetics to nika to even some underwear brands now here comes a very important
8:26 metric called the mau or the monthly active users see for us consumers with so many apps on our mobile devices it's very easy for us to download an app today register on it and completely forget about it a month later sure thread may have captured the top 10% of the country but if this top 10% is using the app only on the first week of every month to pay their credit card bills and not use it for the rest of the month then it doesn't really make any sense so grit added multiple features with a beautifully gamified experience to incentivize the users to come and use the app every day they created a daily spin the wheel challenge where users could pay and win iphones and even introduce quizzes and daily jackpots once you open the app and you started playing these games you just couldn't stop and the best part most of these games straight up led to a product
9:13 advertised by other brands on the cred platform cred has over 13 million monthly active users on their platform well there's your takeaway number four focus on your company metics now that cred became a distribution factory depending on just the commissions and ad fees from brands could only take them so far cred launched cred mint a p2p lending service cred escapes an end-to-end luxury resort booking and cr garage an end-to-end vehicle solution now if you notice all three of the products they've launched aligns with their user base really well only the top 10% of india own cars and can afford luxury travel in the resort they also noticed a very high default rate among other p2p lenders especially when the ticket size is smaller like 20,000 or 50,000 but when it came to higher ticket sizes between 1 lakh to 20 lakh the default rates were amazingly low so with
10:00 credit mint instead of focusing on small lending they primarily focused on higher ticket amounts now if we take a look at all the revenue streams of credit this is what it looks like they make over 50% of their revenue which is almost 1,100 crores from just two of their products credit cash and cred pay revenue from loans this is the biggest contributor to the revenue cred charges a 1% to 2% fee on loans facilitated and distributed by credit cash and cred flash convenience fees cred earns a convenience fee for facilitating rental transactions educational fees and other bill payments this is usually around 1 to 2.5% of the monetary value of transactions processed advertisement fees if you open cred you're more likely to see ads for need
10:47 to see brands travel plans and more cred claims to offer 10% higher order and transaction value from its users and 15% higher retention rate to its brand partners which is part of its pitch for the ad services service fees from merchants the company charges a percentage of the transaction value from service providers other income cred also earns income from technical infrastructure fees which merchants typically pay for for using its services over the years cred has added various pieces to this above list the insurance commission from kinder and kuera being two examples and as cred super app strategy gets fleshed out more and more revenue pieces will be used to plug any gaps now that they have both distribution and your trust they're
11:33 going to continue building and shipping more financial and lifestyle products to become the next tata or the reliance if you enjoyed this video smash that like button and don't forget to subscribe until next time bye-bye [Music]
