Akshay Mehrotra, Co-Founder & CEO at EarlySalary, which provides financial assistance to salaried professionals that traditional lending institutions would consider loan-unworthy, was happy to receive a complaint from the risk team of his company during the lockdown. “They said they were overworked. I think it is a good problem to have. The productivity of every team is hyper and high because we need completely new scorecards so the risk teams are on an overdrive function at present. Their productivity is quite good. Similarly, the tech team and product teams are quite good because of the lack of distraction. Usually, they would deliver 22 tasks a month. They have delivered 61 and 63 tasks, respectively in the two months of lockdown. Work from home allows you to rethink on many things and focus on business priorities. Everybody has detailed and clear focus plans,” he says. Excerpts from an Interview:
How has the lockdown impacted your staff welfare?
Some amount of mental normalcy is building up, as the lockdown eases up. At present, we have a 10 per cent attendance. The office is divided into Team A and B that will come in on alternate weeks. We see a large number of customers and employee, 24 per cent, have moved into home cities. When the lockdown happened, collection capability came down dramatically because most collections were outsourced. What we did is that, from our 20 in-house collection callers, we ramped it up to almost 60 people by training existing staff. Now that call centres have started in Delhi and other cities, efficiencies have come into collections. This month, we are 15 per cent lower than normal, which means the performance is mirroring pre-COVID to 85 per cent. Physicality in managing operations which is physical default pick-up which has still not started so that means that is the core struggle in the business.
We, being classical lenders, have to make sure we get money back before we make any fast decisions. We are a frugal company and focused on turning cash positive while we grow. We have conserved our last two rounds of capital. The decision to be frugal paid out quite well during the lockdown.
What is the total tragedy that happened in COVID?
One was that there was a very small team that was outsourced to do sales promotions within the companies we tie up within cafeterias and so on. No employee has been let go yet for accounts of cut backs. On the other hand, we have four new staff members and they were able to join work, remotely, from home.
Did you close deals during the lockdown?
EarlySalary has two business — one is the B2C app and the other is where we work directly with companies to offer salaries to employees. During the lockdown, because we and HR of these companies had time, we tied up with a large number of companies. Our numbers have gone from 400 to 500+. It took us four years to reach 400 and, in two months of lockdown, we have done 100+. Companies also saw that, once the country opens up and the employee needs money, the traditional way is not going to give them money.
What are the changes in client behaviour you have noticed?
Demand for money came down substantially. While we were doing almost Rs 150 crore a month, the demand came down one-fourth as discretionary spends came down. People didn’t have anywhere to spend. This means they have cash in hand and sentiments are low demand comes up. It is a temporary phase and I feel demand will come back across the category.
We noticed something heartening about customer behaviour after the first moratorium was announced. Our company has been in lockdown since March 10. It has almost been three months of full lockdown for us. We have had 100 per cent of capabilities of work from home, which means even the call centres could dial in remotely from remote servers and operate. None of our practices were down even for a day, either customer support or lending. We stopped for eight days to lend because of the first moratorium that came in because we wanted to understand the policy before we get back to repeat loans. From half a million approved customer base, only 15,000 people approx. took moratorium. It was heartening because we started giving repeat loans to repeat customers and started new acquisitions. Of course, the new acquisition parameter is much higher.
Which are the risky segments for loans?
Our benchmark to approver customers is high versus pre-COVID. Early, if we were approving 100 people, now we are approving around half people from the same people coming. A small proportion of customers are temporarily suspended because they work in travel or airlines or business areas or overleverage which are impacted. These riskier customer categories will open up last.
Amit Mishra, CEO and Founder of Interview Mocha, a skills assessment startup, noticed a frightening phenomenon at the beginning of the lockdown— business going down as clients tightened their purse strings. It was another observation — that the business formula was changing — and the decision to act on it that enabled Interview Mocha to rush back on track all within a few weeks. Excerpts from an interview with Mishra:
How did the lockdown impact your business and what were your solutions?
Our business went down initially, mid-March to mid-April, but, in May, it picked up. In the initial 45 days, people were very cautious and their budgets went down. We focus on medium-rung enterprises in the US. They stopped hiring for a while and our recruitment use cases went down. Recruitment was our core bread and butter. Then, I noticed that a digital transformation was taking place. Businesses were upscaling, up-skilling and reskilling more than before. There is a sudden rush of automation, and digitisation of existing businesses as most were working from home. Previously, if there were 100 units of recruitment that was happening, that has gone down to 40 only but all 40 is automated. So we, as an organisation, aligned our website, literature and so on to up-skilling more than recruitment. Use cases started to come up so we are back to normal business. In March, in terms of new sales, we were impacted close to 30 per cent. In April, it was worse, close to 60 per cent. In May, we actually grew a bit
How did you take care of your operational expenses during the lockdown?
In our case, we raised a small seed round. We were profitable so we decided to not let go of anybody for the first three months. In management — we have a second layer of management apart from us founders — 10 of us have taken some salary cuts. There are target-related incentives. We let go of the 10-15 lines of internet because, for the last three months, nobody has been going to the office. We were spending a lot on snacks, juices and meals, used to do our quarterly meetings in a five-star hotel and those have stopped. We got our expenses down by 15 per cent overall.
What’s your bird-eye view of the employment scenario?
We have two major segments—one is IT consulting and services. Tech companies, where our customers are India’s big guns, come from airlines and hospitality. These businesses have gone down momentarily, and they have frozen hiring. In the IT sector, they are still evaluating the market and trying to understand how things will recover for them. There is a freeze there as well, except for niche areas of AI, data science and so on. I expect that more businesses will become digital—they will use video interviews and assessments — so, for us, the business will grow but from the larger, market point-of-view, it will shrink. And that is something we must account for.
Abhishek Ballabh, Co-Founder of ExtraaEdge, a data-science powered marketing-tech startup for the education industry has started visiting the office every alternate day. An internal survey of the 40-member staff has revealed that 80 per cent want to come in but not in the current circumstances. It is a shape of things to come. “COVID-19 is not only a disease but a symbol of other black swan events that may strike in the future. We, like any other teams in the world, should embrace this as a reality and prepare ourselves One myth that has been busted during the lockdown is that work from home leads to lesser productivity. We need to adjust to a new way of working,” he says. Excerpts from an interview:
How has the lockdown impacted your staff welfare?
We have not had any salary cuts as of now. In fact, we issued the confirmations and incentives we had promised three or four months ago. Any kind of new salary hikes and yearly appraisals, however, we have put on hold for the next few months. We have made sure every week we have regular discussions not only on their performance but also on their health, family and emotional well-being. Coaching them is supercritical and we founders have been regularly taken the responsibility on our shoulders What this also means is that anybody working in a startup needs to work three or four times harder than they were doing under normal circumstances. They have to keep skilling and up-skilling because it is unlikely many startups will want to hire new people so the existing people will have to take more responsibility. A person who does sales might need to learn digital marketing. A techie might need to do a bit of quality assessment and a quality assessment person might need to do a bit of product management.
What were the challenges your business faced?
One of our initial challenges was the collection of money from the customer. It was not that the customer would not want to pay. It was that the customer would like to delay the payment for us. We work with educational institutes, providing software that helps them get more admissions. Most institutes were either shut down or closed and their collection departments were not working so they were facing cash flow issues. By April and May, we saw an improvement in that and 15-20 per cent of the collections are back to normal.
How has the business of your clients changed?
Education institutes are trying to do two things — they are going online in terms of delivering their curriculum and courses or in acquiring new students. This means they are spending. In the last two-and-a-half months, we have acquired new 18-20 odd customers. A lot of people who were fence-sitters and had an offline strategy for their admissions now have an online strategy. Our software is an admission, sales, and marketing tool for the industry. Remote tools adoption is increasing substantially. We have released several features in our product such as Video Counseling, Call Automation, Conversational Bots and Deep Drip Marketing Automations. We have seen that a lot of people are comfortably working from home using these features esp on smartphones using our mobile-driven CRM’s
What is the investment mood?
Investor and venture capitalists were very apprehensive in the first month as their LPs in public markets are severely exposed. There is a wait-and-watch kind of strategy but, in May, they have started to warm up to looking at deals. There seem to be four sectors — education, healthcare, gaming, and remote collaboration productivity tools— that are seeing a lot of interest from the investment community. I feel these sectors will see more aggressive investments in the next few months. We are on track as far as fundraising is concerned. people are still apprehensive, they are not making quick decisions but they are warming up to having new conversations. At the end of the day as an entrepreneur who is raising money, you need to keep having these conversations with VC’s as good business with high growth potential end up getting growth capital.
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