In Gold We Trust: Channeling India’s Gold Obsession

Gaurav Mathur had a life similar to Hrithik Roshan’s life in the movie Zindagi Na Milegi Dobara. Gaurav was on the trading floor of the London Stock Exchange and thought his life was set. He was doing amazing work carrying out trades for large corporations.

Gaurav could not believe that someone like him who roamed around in chappals (Indian for flip flops) was doing that kind of work, rubbing shoulders with amazing people and getting paid such insane amount of money. However, something kept nagging at him. That he was a misfit in a large organization and that he had to do something different bigger and run his own organization.

After trying his hand at running a PE fund, he founded SafeGold. India and Indians are perhaps the largest consumers of Gold on the planet.

India’s Gold Obsession

Over $400 Billion went out of India to purchase gold whereas $600 Billion came in, in the form of foreign direct investment (FDI). Annually, India’s trade deficit, which is the gap between imports and exports hovers around $100 Billion. This year, that jumped to $192 Billion. Gold alone contributes $55 Billion to that trade deficit.

The Spark for SafeGold

Gold is purchased and held as biscuits and bars. If India imported less gold and leveraged its gold reserves and private gold holdings, that would go a long way not only in generating returns to private citizens, it would also reduce India’s dependance on imports. Thinking this, Gaurav hit upon the idea to provide Indians a way to channel their Gold obsession. Today, SafeGold helps millions of Indians invest in Gold safely. Check out this episode for some amazing insights into the Gold Industry and what SafeGold is doing  

Episode Transcript

Automated Transcript – Errors May Exist

SUMMARY KEYWORDS

gold, people, buy, jeweler, india, crypto, money, build, crores, jewelry, business, pay, customer, years, thought, fund, point, big, rupees, imports

SPEAKERS

Rashi Narang, Nithin Kamath, Meghana Agrawal, Gaurav Mathur, Vaitheeswaran, Sonal Verma, Krishna Jonnakadla

Nithin Kamath  00:00

Honestly, if I was a VC funded myself, like it knows how bad the presentation was, you know,

Meghana Agrawal  00:06

to build scale,

Vaitheeswaran  00:07

you have to think scale. Sometimes I think too much of money restricts innovation.

Sonal Verma  00:10

I think that’s a sad part, Destiny finds you on the road that you take to avoid it. Whenever you get a seat on a rocket ship, you don’t ask which we will see. We didn’t really ask ourselves like too many questions in terms of how big can we get it? It was very, very hard to explain what is UGC? He wanted to build something first 30 or 1 million to 10 million it will scale

Rashi Narang  00:31

but again, you know, we had basic teams struggle, struggle, struggle, but every day was this learning, which was just amazing.

Krishna Jonnakadla  00:39

Listen to founders about their stories, and how they build their startups here on Maharajas of scale. With me, your host, Krishna Jonnakadla, co founder of mango, mobile TV and Bob. Everyone, this is Krishna again, your host at Maharajas of scale. This Saturday afternoon, we have an interesting guest. We are recording this podcast, this episode during the times of kgf to the movie that seems to be taking India by storm. And as a person who lives in Bangalore and speaks Canada, that movie, although I haven’t watched it kgf too. It’s becoming close to my heart.

So KGF stands for color Goldfields. And gold. Sona, as we call it in India is a very fascinating object. And today we have with us Goro motto of safe gold, who’s doing something interesting. And I think what Goro is doing is going to help innovate channel or opposition towards gold in the right way. We have a lot of companies that are doing interesting things. But I think I’m very fascinated by what God is doing with gold. Gaurav, welcome to the show.

Gaurav Mathur  01:54

Thank you so much, Krishna, pleasure to be here.

Krishna Jonnakadla  01:56

Awesome. Tell us a little bit about yourself Goro and what you’re working on right now?

Gaurav Mathur  02:00

Sure. So I grew up in Delhi, I studied economics, then did my MBA. And after my MBA, I spent the next six or seven years working in banks. My campus job was with Deutsche Bank in London. And honestly, for the first six, seven months, when I read that I thought this is it, you know, I’d grown up in India never really gone out. That was the first time I’d gone out is to work on a big trading floor. And I thought, you know, what more can one ask for this, or that one can sort of dream off.

And I did that. But what I realized after I think six, six or seven years doing banking was that big organizations and me don’t really work very well together. After the initial after the initial fascination wears off, then you realize all the challenges that come with a big organization. So I did my first startup, which was a private equity fund, where I teamed up with four other people. And we raised about three $50 million. Then, I moved back to India with my partners, and we set it up, this was called India equity partners. And then I was in the fund business for the next seven or eight years, which was a fascinating time.

But as you know, it was coming time to think about my next earnings. I think in the fund business, what I realized is that I enjoyed working at an operational level a little bit more at the fund business, you’re you’re sort of one step removed from the actual action of a company that you’re investing in. And I was keen to sort of go into an operating role in a more entrepreneurial way. And again, big company realized I knew don’t work for me.

So I was bouncing around trying to think what to do. And this is like 2017, when Bitcoin was Bitcoin had already been around where it was getting more prominent, and people like me, were starting to dabble in it, and I go to the hobby, I’m not professionally trained. And there’s also Aetherium. So at that time, what got me fascinated, I’d also invested in the gold business, in my indie Equity Partners day, so I had some exposure to the sector. And I thought that creating a gold backed crypto token is a very fascinating you know, solution because it will be a global currency people. Today, Bitcoin and Aetherium are sort of extremely well accepted. But in 2017 I think the constant discussion that I would hear 2016 17 was you know, Bitcoin could go to zero, why is it worth anything? They should not be they should. This is like a worthless piece of code kind of thing. So I thought that if you backed the crypto token with gold, then you’ve got this you know, global currency, it’s backed by gold, all currencies used to be backed by gold will be a great thing.

And, you know, in theory, this is something that can replace the US Dollar as an as an international currency. So I actually built it as a side hobby. I built this token and it was called Sona coin, and I listed it obviously didn’t, didn’t take off very much. But I think in trying to make it work in India, then I realized that India has got this huge gold industry. And it is 70 80% unorganized. So you’ve got you know, I think 50 $60 billion is the total value of gold consumed in India, that’s 800 tons, which is about $60 billion. And it’s completely unorganized.

So when I started to look at use cases for the token, then I realized that you know, forget about all this crypto token all this like a fan The thing that one can do later Plus, there’s all this regulatory backlash coming in, I said, there’s a bigger opportunity where you don’t need to use the technology. But many of the same elements, if you have digital gold effectively, where physical gold is placed in the vault, and you have a digital representation of the gold to transact in it, there are a number of problems you can solve in India, like the likely the best country in the world to do it.

Because we have after China with the largest gold industry in the world, I don’t think any other country has a higher affinity for gold than us, we have the largest stock of privately held gold reserves. So it’s the ideal country in which to build a gold back solution, you can build something unique. So I think that was the inception. And that’s the sort of very high level view of the opportunity. Then when we dug into it, we said, you know, this is all great how to get people how to build a business, how to make money, how to get fun, the first 1 million customers, 2 million customers. And we did and we said, let’s focus on consumers investing in gold.

So we broke it down, we said every year, we buy about $10 billion as a country of gold coins and bars. And 60 70% of these are bought for less than one or two grams. So it’s like it’s really it’s a mass market product. And gold is probably one of the categories that everyone from the poorest Indian to the wealthiest Indian, they all buy it in some way shape or form. But in terms of numbers, it is mostly bought by the masses. And that’s where we thought that if you digitize it where where you have a digital token representing the physical gold, then you can break it down.

So with a shampoo sachet approach, where if you today, if you go to buy gold from any shop, or you go to Amazon to buy, the smallest piece you can buy is one gram. But if you digitize it, then I can subdivide it like a token, right? I can sell you 10 rupees, one rupee 100 rupees, whatever you want. So why don’t we sort of approach the first product that we have is we’ll do a simple simplified investment solution, where we let people buy it in fractional amounts, and they can accumulate it once they get to one gram, two grams, whatever they can convert into physical in the interim, if they want to sell it or whatever else they want to do, they can also do that.

So we started out as an API suite effectively where we said we’ll build the solution. And we’ll build a bunch of API’s that will let anyone offer gold physical gold as a digital product. And we went to people like phone pay Amazon Flipkart access bank, and we started with phone pay with a first partner. Now we’ve got about 100. And they take our API’s, they plug it into the app, and they get in there, consumers get a price to buy gold, sell gold, they can ask for delivery. And then we went and plugged in lots of jewelers. elektronische can caratlane and parts of Kellyanne and things where whatever gold you’ve bought, you can go to that shop and seamlessly exchange it for physical gold.

Also, you can exchange it for jewelry. And that’s what we’ve that’s what we’ve built accessible. Now we started building a stack for jewelers, the general aim being that until physical gold gets made into jewelry, that gold should stay in a vault and all the transactions, whether you use it as collateral for a loan, whether you gift it to someone, whether you you know, buy it for investment, whatever you want to do, you can do that with the with the digital representation of that gold, it’s much efficiently that faster, better, cheaper, more convenient, all of that.

And only when it needs to go into jewelry, do you need to take it out of the vault, and you know, let it be made into jewelry. So I think the aim is to build a platform that covers all transactions in gold, it’s a huge market, just the transaction value is maybe 200 $300 billion. So you know, if you can make a few basis points of that, you will be able to build reasonably interesting business. That’s the That’s the premise on which we’re building the business.

Krishna Jonnakadla  08:20

Fascinating, fascinating. We’ll come to save code in a second. And I am a bunny. So I a sub cast in biennials and within our sub community, there is always a saying that no matter how poor that money is, there is always going to be lemon size gold in that hole. Okay, so that’s sort of like the safe haven if things really went to bust so that you can rely on that lemon of gold.

So which is why and because of its intrinsic value because of why humans attach. It’s got value, right? Gold itself, like Warren Buffett says, doesn’t produce anything, it doesn’t produce any cash flow. But the reason is that because it’s in some sort of scarcity, there is there is this notion of value that is attached to it. And scarcity many times tribes well, and which is also the same principle that has been used in bid for it, right? So you artificially limit limit the circulation of that as a result of which the value starts multiplying. But we’ll come to that in a second. Top so did you go to St. Stephen’s in

Gaurav Mathur  09:36

Delhi? No, I went to Hindu College which is across the road from St. Stephen’s.

Krishna Jonnakadla  09:40

Okay, okay. Okay. And I know you said this, you were on the trading floor and trading floors can only fall into two categories right either too stressful or you drive energy. You derive energy from all of the past that is, that is I’m and when it comes to large companies, it makes it tougher for me I somehow don’t like large companies either. I don’t think they’re great at multiplying talent. They’re mostly good at diluting. relate to that. So, but in the seven years, what were some highs and lows that you saw? And what was the trigger point that made you say, tell her, I was thinking that life been? Yeah, but I think, you know, life has yet to start, I want to do something on my own.

Gaurav Mathur  10:32

So the highs were all sort of early on in the first couple of years. I think, for me, one of the biggest highs was that you would work on something that you’d work on a particular trade for a large corporate client and things like that. And the next day, you read about it in the papers that there’s some big merger. So like Daimler is buying Chrysler and you know, we we did some hedging transaction for them to pay for the merger.

So you say, Well, what I work on is like, actually, like people write about this stuff. It just felt quite cool. And we have as someone who’s not really been outside the country, we used to walk around in college and like rubber choppers and you know, turn t shirt, the classic Indian college education. And suddenly, you’re like, two months later, you have your like, picked up from what you seen as you know, don’t t shirt, Roberta purse most of your life. And you put in these fancy suits in this trading floor in London. It’s like a disorienting thing. You’re like my god, wherever I come kind of experience.

Krishna Jonnakadla  11:24

This Hrithik Roshan in Zindagi Na Milegi Dobara.

Gaurav Mathur  11:28

He was much more glamorous, we didn’t go to Spain on holiday and have all those fancy. I was a junior guy, I didn’t ask some big clients saying that you want to call our gopher getting coffee for the senior. And all that was my life initially. So that was the aspiration in life, but but still, what you worked on was, I mean, used to read about it.

And you felt that I am working on stuff. And it has an impact. I think that was interesting. The other thing I should be honest, is that I think now people get paid a lot. But when you got bonuses there the first couple of years, it was almost shocking how much you get paid, because you didn’t think you did very much. And you are paid.

So that was initially it used to make you feel really good. And my god, this is like, so cool, that I’m getting paid this money. And you know, I didn’t think anyone would get paid this much money kind of thing. So I think that it sounds crass, but it was quite a kick in the in the kind of initial years. And I think the average quality of person that you work with is also very good, what you realize is, and and that I should say the biggest hire actually, that stayed with me throughout, they have a lot of really smart, really hardworking people, and they have a lot of other interests and knowledge outside of the work.

So there’s just so much you can learn from people over there, someone will, you know, someone will write cycles in the Tour de France, someone will, you know, be a athlete, somebody else someone say come rowing. So there’s just so much. And again, you know, 25 years ago, growing up in India, it’s not like you did rowing and you saw someone playing Polo. And there were all these things that was like a completely new world that you didn’t even know people do.

And you just learned a lot. And again, about literature, people just know a lot. And they’re very smart. So I think there’s learning that was the one thing that I missed, actually, because in a big trading floor there lots of really smart, you know, very well read very diverse interests. So there’s just so much to learn. So I think that was the biggest high. And that’s the one thing that I probably miss.

The lows I think was at some point, you realize that this is like a bureaucracy, like any large organization, no matter what you do, there’s a certain parts, you can vary it a little bit, you can do a little bit faster, if you’re very good, will be a little bit slower if you’re not so good.

But it’s broadly one path and you have to fit into that mold. And this very narrow focus that you’ve got that this is what you do. This is what you deliver. And you know, don’t really use your brain too much outside of this. One thing. And I think that that realization internalized in me, I said, Okay, this is not the this is not the great joy. Let us I mean, it’s better to try and do something yourself outside of this.

Krishna Jonnakadla  13:47

Which is why perhaps so many of them have those pursuits outside of their jobs, perhaps, in a way. But I think the scene and I’ll come to that in a second, but I had one question. The money part, a lot of these people. It’s that system, because they’re in that system, you’re moving so much money, and it’s not. And I want to be respectful. They do a lot of good work smart people.

But it’s really that engine that’s driving a lot of that earnings, right, not intrinsic value per se that they are adding if you were to do some sort of a comparison, but besides that, there is this common myth that most of them because of the stress and the lifestyles that they embrace the cars that they purchase, just they don’t end up keeping most of the money that they make. Is that really true? Or is that a cliche?

Gaurav Mathur  14:41

Again, see, I was there a long time ago, my short answer, I think is more of a cliche, because there’s so many people that have retired over there. I think. Also what gets to you is almost 60 70% of the people that you meet over there who’ve worked more than say 510 years. They’re all saying they all have this number discussion which are the ones slightly The sort of sad thing about banking as a profession, that the vast majority of people say, I will make this much money, then I will leave and I will do something else X, Y Zed, it is all about right?

This work is not really something that is meaningful, or something that I think really contributes, but it pays me well. So let me accumulate x, and then I’ll go to something else. And there’s also a pyramid. So I think, now at my vintage, if I look back, maybe like, like, I’d started in a graduate class of maybe, maybe like 120, people joined and, you know, went through the training, and I say, of the 120, then maybe five or seven who still remain in banking.

But I don’t think there is anyone that I know of who’s actually made a lot of money blowing it up and now penniless. Most of them have made reasonable amounts and gone off and doing various. So I think it is today the vast majority elect pretty sensible, and don’t go blow it up.

Krishna Jonnakadla  15:50

Okay, okay. So Talk about your fine journey, though, because it’s people who are in investment banking, or are in trading, usually, there are very few that actually come out of that. And start, there are, there are several examples, but they are not there. They are the exception rather than the rule to that, because they are of a certain type, they will be allowed to stay behind.

Occasionally, you will see a Bill Ackman or a car like, those guys come out and do big kinds of flashy stuff. And maybe, and then in India, we are seeing many of them jump in and then do ventures on their own. But that is still really maybe handful of them, you can count 1015 of them. So what was your fun journey? Like? And I know, this whole crypto fascination that you had really led you to save save gold? But talk about your fun journey?

What did because in 2007, you came back, right? Isn’t that what 2006 72,006, seven, and then seven, eight years in funding? Perhaps you witnessed the low point 2007 Eight was really the low point and you had a financial crisis. And 2014 15 It was a mini.com kind of an era in in India, I think we are living that again, all over. Now. So what what was that, like?

Gaurav Mathur  17:10

I think the fun business is one of the most fascinating businesses against simply because every day you meet, you know, to new people who are looking to raise money in some form. So when someone comes and asks you for money, whether you’re in a bank, or you’re in a venture fund private equity fund doesn’t matter, they effectively bare their soul to you.

It is it is I think, what people like you do, and what people in a fund do are actually very similar at many levels, where you need to talk to someone and learn about the business. And I’m sure you enjoy talking to people and learning about what they do, and the people and all of that. And that’s what you’re gonna find, which is the most fascinating thing for me, that, that you’ve got someone coming and telling you about their, their journey, their company, you learn about the business, you learn about the industry. So it’s it’s a fascinating business to be in.

And I think India, then was very different now, I was running a private equity fund, which is, which is not doing venture startup. So it’s working on more established businesses. There’s not so much speculation on you know, Will they succeed with this not succeeded? Just taking a more established business and seeing will it grow? And you try to bet on will it grow? 10%? will it grow 30% A year will the margin stabilize will increase, increase or decrease? So the easier bets to take based on data.

But I think what I found personally was that, as a fund manager, you always go into each business, looking at what is your defensibility? What is your differentiator? What is your competitive advantage? All of those kinds of things, right? What is your moat, but as time went by, what I think is great for the country, but slightly tougher for different businesses, the number of funds is mushrooming, like at a massive rate.

So when you’ve got that many funds, and you think about what can I do different? It is like each fund says the same thing, right, that we add value beyond capital, we are true partners in the business, and we help entrepreneurs. And if you look at 90% of the fund pitches, they can more or less the same. And I think that’s what got to me that like we keep saying what is your moat in this fund business? There’s no moat. And right, so when you read the statistics, the vast majority of actively managed funds don’t outperform the benchmark.

And that is because each fund manager is essentially looking for the same thing, right? Every company looks for good management, good industry Good, good return on capital. No, no fund manager is really looking for something very different from that. So I think that’s why well, it’s a lovely business. Because it’s just the most most interesting business I think you can do as a profession. But when you sort of apply the same filter that you apply to the sort of other companies I couldn’t find any differentiation myself. Also, which started doing buyouts more as a business outside buying control of companies. So in India, there’s no leverage. In India, you just buy control of it.

In the West, they leverage because you don’t make there’s not that much intrinsic growth. So the returns come from the rich, but in India, we’re naturally routes, you don’t need leverage, you can still make the return. But that gives you the ability to change management. And that typically comes in a company that’s not so well run, you think by adding professional management, you can, you know, run it better. So, I started doing that. And I enjoyed the buyout aspects of the control DS a lot more when we used to get involved with the operations. And they dive deep into the companies.

So I think after seven, eight years, we were, you know, raising the second fund and a third fund. And we had various partners, various partners had to evaluate about which direction they wanted to go into some debate within the partners, but which direction each person should go. And I think that’s when I thought that my interest is more in getting more involved with the operations and trying to build something that’s defensible, and all of that, that’s when I decided to go into the operating part of the ecosystem.

Krishna Jonnakadla  20:46

If I were to use a metaphor, you’re painting this picture of a person and you fall in love with the person and you decide to marry them,

Gaurav Mathur  20:53

something like that. I think that’s a fair metaphor.

Krishna Jonnakadla  20:57

It’s something like that. I, I have, because of my reading interests, there are four or five books on fun funding and fun houses that I’ve read. What you largely said in terms of everybody makes those noises, but in the end, they all start looking the same, right? And then there is a saying that you are what you do, not what you say. Correct?

And in terms of what you do, what I find, is that the thesis, everybody has a thesis, like mission statements, vision statements, do you have it for the sake of it? Or do you actually translate that that into action? What I have found not just in font, font, but anything, if you can somehow manage to stay away from noise, right? A lot of people drown themselves in noise. They, they, they are pitching everywhere, they’re talking everywhere, they’re competing everywhere.

And before you know it, all these things are molding you unconsciously you’re you’re because it doesn’t happen overnight. It happens from one one session to another, if you can stay away from that noise. And as much as possible, stay very close to your thesis. If you have one, right, I have found that you can create growth and above all, you need patience, right? A lot of them, a lot of them actually do discover that their actions make you feel like they want growth next year.

But life actually no matter how many unicorns you have, no matter how much how many investments you have, life has a cycle. The world has a cycle, it runs in seven to 10 year cycles, right? Whatever has gone bust in the last seven years, he’s going to come back again, it is cyclical in nature. So anybody if somebody has taken a 4050 year view of the world, and seeing the way barring, let’s say, a once in a century event, like let’s say the Spanish flu or the or COVID, or any of those, if you live in those manmade universe, you will go through that.

So keeping that aside, if you can pick very specific thesis you can be and if you do a really calculated job, right, so two people Kleiner, Perkins, coffins, wives, the reason they’ve had that kind of success is because they have a thesis, they have a checklist, they very, very rarely go outside of the checklist. A lot of companies do have that a lot of venture funds may not have those filters, they profess to have them, but they’ll just get affected by form or they end up today when I see funds. Everybody’s got one token company that does the same kind of stuff, right?

And then you look at them, and then they say nine and a we’re different. And I keep asking how are you different if 10 funds. So for example, if there is a crypto exchange if all the 10 funds have one crypto exchange each, and so very quickly a headache. So it doesn’t make you different because you might say you’re different, but you’re making the same decisions as the rest of them.

So I have found that if you have a thesis, and the biggest kicker there is the patient state not to do not to do anything, once you know you have a position is which is why an active one ends up making the same almost the average return as a market or an index does.

Because you’re over managing you’re not supposed to get that right. It’s sort of counterintuitive, but life is like very tight. So but so let’s come. Let’s talk about the crypto part a little bit. I know you How deep did you get into it? And in a way, I spent a couple of years running, building Global Product Some crypto so I’m quite familiar with that I was a global business head of blockchain prior to this, so I’m quite familiar. And there are multiple. I love the technology, I have a different view of it. I’ll share that moment. But you you talk about what attracted you? And what were some some things that sort of pulled you in, and what made you come out of it? In a little more? Sure.

Gaurav Mathur  25:27

So I think what pulled me in is very simple, actually, the fact that everyone has a unique address, right, every wallet is unique address, anyone in the world can send money from one address to the other address, nothing else is needed. This entire banking system, if you think about it, you don’t need any of that, right? You can just send money from anyone to anywhere, you don’t need visa, you don’t need MasterCard, you don’t need Swift, you don’t need RTGS.

So the fact that some such an insanely large amount of the global financial system is actually not needed. If this were to be adopted in a theoretical sense, I know they have a lot of other all the money laundering and regulatory and all that if you leave that out for a second, just from an RA utility perspective, I think that just blew my mind away.

And I had some friend was in the US, he sent me whatever $5 worth of bitcoin and then I sent it to someone else I like this is amazing that there is nothing in the middle and you can just send money, you can buy something, it’s like this one, currency, just the just that I think that single fact that you can transfer from anyone to anywhere. And then you start thinking about the fact that you’re ultimately all these bank transfer someone updating one database, someone else has to update a database, and how do you securely transmit that message from one database to the other this guy, they’ve just made it like an open source public database and sub capacitor is aapko.

And you can move it around, that one site just blew my brains that this is like the whole global financial system can be made, you know, 99% more efficient? In a theoretical sense, I mean, then, of course, we can add all the layers of layers of reality. But that was the main thing that it really blew my brains. And, you know, I’m not out of crypto intellectually, she asked me, I still think there is just the fact that you can do that, that you can, if you tokenize money and tokenize assets, and then you can, you know, literally 99% of the plumbing of the existing financial system goes away, or you don’t need it and all the costs associated with that not needed.

So I personally still think that now whether it is 10 years later, 20 years later, five years that all I don’t know. But at an intellectual level, that is a deep interest of mine. And I would like to figure out a way to get there, I think living in India, where the government is so clearly hostile, whether whether explicitly or like their, you know, NPCI shut off all the UPI taps, which is just just kind of going behind the scenes. It’s clearly the government being hostile, right, the NPC is not going to shut off UPI, ramps, magically one day.

So I think in India, one obviously said, Okay, India must forget about crypto don’t even think about it until, you know, unless the government comes up with a fear framework or something. Forget about crypto here, because I’m not out of it. I think that is my that is my short, short answer. But in India purely for regulatory reasons, I think there’s no point spending time trying to come up with a solution when the government is out to you know, shut it down.

Krishna Jonnakadla  28:09

Okay, okay. So I have a theory on why these things are allowed to hear it. And it is not a it is my own theory. But what it is a example that I picked up from another place. And then I think this makes sense. Maybe I’ll put out a blog sometime soon about that. What I have found if you see post.com 2000 And I think since we’ve all gone through that fairly adult life, so he can remember many of those, you first had the media, whole convergence era in the early 2000s.

And then from then on, you had high speed internet era and then from high speed internet, one after the other you it started with web and then web two Dotto and then from web two Dotto ones maturity came in then you had smartphones and smartphones to AI to machine learning to deep tech. If you see many of these, we’ll come to crypto in a second. Many of these is driven by this whole need to come up with new industries where new wealth can be created. Right? Especially all the because you come from the fund world you will understand this, the Lord of these large funds, take a normal pension fund, especially that has maybe a trillion dollars under assets under management. You don’t have emerging markets that are really giving you that return. Your Treasury is not yielding you that much. Now you have to chase something and you have to find an asset class that will invest it.

So many of these are born out of a need for that. So it’s in some sense of fat because none of them and each of these go through a cycle. Even before that is mature people put money behind it and then a crash happens and but the maturity comes in three, four or five years later, we are seeing that with AI machine learning deep tech. Today AI is no longer a fad. But it’s much, much more powerful than we ever imagined it when it was a fad those days, right? Crypto I think presents a slightly different scenario. Crypto is what is called as I call it. Old money versus new money problem. Right?

If you’re a millennial, if you’re young, there is only so much land that exists, land is limited. So if you had to become wealthy, there is no way you could buy more land, because in order to buy more land, you need to earn money, and then pay for that land. So a lot of people in those developed economies because the developed economies have reached a developed state, there are all there’s already wealth that has already distributed, you either have to end the government model is such that there is no wealth appropriation that can happen, because there will be a huge hue and cry.

So this so that is why you come up with a concept of something like a Bitcoin or some alternate wealth generated generating mechanism that actually creates that new wealth. Right? So the biggest example I can give you is like a social network. So today, let’s say you you’re there is Instagram. Let’s say you join Instagram today, it has already 1 billion people, there are there are people with 2 million, 3 million 80 million followers, you’re going to think my powder room, I will never be it’ll take me another seven, eight years to build a following or maybe I’ll never be that star.

Now what do you do you go searching for a network where you can build your following overnight. So that is this this, this problem is called the old money problem. So in many ways, crypto in essence, the reason it’s so popular with many of these people, is I believe it gives them a shot at creating that wealth, creating that money. And it challenges pushes the old money trying to push the old money out and create space for the new money.

And in India, I think what’s happening, I personally think it’s an opportunity, the software boom, which we’ve had for the last 2030 odd years. Maybe accident by design, you don’t know has resulted in a great wealth transfer from the west to the east, right? Because till then we will doing very raw materials, you read economics, we will read our economic texts, economic tech texts would say we never sell finished products, we are always selling raw material as a result of which our earning is less. So it’s software, while to a certain extent it’s there.

But we’ve been getting better and better as a result of which a great wealth transfer is now happening. What the Industrial Revolution did, it’s possibly doing a small part of it bringing money back. I think crypto represents that kind of an opportunity right now. Because we are at the forefront of technology, we are at the forefront of this. And with I personally see in the next study in our lifetime, the US dollar not being the reserve currency of the world any longer. Right.

I think there are signs on the horizon. I don’t think it will be the Chinese yuan for sure. But it is either going to be a basket of currencies that are going to be reserve currencies, or it is definitely not going to be the US dollar. So therefore, how do you jockey towards that? And how do you create this corridor to herald another great wealth transfer from the west to the east? The reason much of the government’s hesitation comes today is because it is happening the reverse way. It’s going from here to somewhere else it don’t even know. I don’t know, you know, the Tor project, right?

Gaurav Mathur  33:54

Yeah. Yeah.

Krishna Jonnakadla  33:56

Do you know how its funded? Know that

Gaurav Mathur  33:58

I’m not familiar with?

Krishna Jonnakadla  34:00

At pas it is 80% of the funding comes from the CI

Gaurav Mathur  34:04

O ‘s actual Okay, I did not or is funded by the CIA. I’m gonna Google it right now.

Krishna Jonnakadla  34:11

I’ll actually send you a joke, which actually tells you more about okay after after this. So So for me, I think and I’ve spoken about this even in the interview with Ashish, is that there is a this in economics you have this thing called lasses. Fair, right. So which is free market, you don’t really disturb the market. So the way the Western government works is you let everything work, you let everything run, what do you watch it? Right? Because as soon as you ban something or you try to stifle something, what what happens is, the activity doesn’t go away, the activity goes underground, and you lose your ability to either control it or watch it. So I think that I was thinking that the government here is going to take that step, but I am certain that that is going to happen at some point of time or in the future. There are a few rogue actors, several rogue actors in the system. And I think they want to wait them out, maybe till they figure out how how they can control it. I think that’s where crypto is headed. But I certainly think the technology the blockchain, the distributed ledger has, it can have an amazing impact on India, and India still doesn’t have the old money yet. Money billions is there to be made? I think it will be great. So let’s come to save code. Okay. Have you seen Nithin comments or tweet on gold imports?

Gaurav Mathur  35:38

Not on gold imports? No, I’ve not seen it then come on spirit and gold imports.

Krishna Jonnakadla  35:42

So on January 11, to Jan 11th, this year, meeting tweeted saying $400 billion went out of India to import versus 600 billion that came in through ft SPI FDI and $400 billion is support. And for an end, it literally is $36 billion a month, which can actually make up for the current account deficit that India has. Right, in one stroke. It can change the entire economic dynamic of the operation. So at some point in time, do you think you can orchestrate that through safe code,

Gaurav Mathur  36:27

so that is one of the very same. It’s a big objective that we have, in fact, we have submitted an application we have submitted many applications to the RBI. And I’ll tell you the metadata of monetizing the goal we have India today has 25,000 tonnes of gold have privately owned gold, which is another benchmark, this is equivalent to me. And that’s the money supply, it’s like $650 billion is equivalent to the money supply, a little bit more than the money supply that we have. And it’s the largest in the world like the US has about 70,000 tons, we have 25,000 tons in the USA in the US government reserves. Now coming to your specific question of this 25,000 tons about 1000 tonnes is in bars and coins or or in broken unused jewelry. So that is what is relevant for us, you know, 16,000 tonnes people wear jewelry, they’re not going to part with it and leave that that’s like a consumer durable, I have a house have a car, whatever I have 8000 tonnes, is 100 years of our gold imports, not 100 years, we do 800 tons a year. So sorry, 10 years of our gold imports. If you could more if you tell people I’ll pay you interest on this, you know, give me a gold, I’ll pay you interest, I’ll pay you like a material rate of interest, not this gold monetization scheme that the government of India has, which is you deposit it for 12 years, and I’ll give you 2.75% A year or something, but give people interest, you will, you will be able to mobilize a lot of this gold. We Today as a country people don’t realize it we have a product called gold metal loans, where all the big jewelers and all they borrow gold. And banks today import that gold, or they borrow it from the overseas market, and they lend it to Indian jewelers. And you know, that just adds to the gold imports that we have, what you need to do is create a simple system where you take the existing gold that we have let people deposit it, whether with a bank, whether with startups like us whether with some other kind of specialist organization, whatever it is, ideally, they should be regulated. We’ve I don’t know how many papers you’ve read to Sebby, we’ve written to RBI twice written to the finance ministry, we’ve never really got any response. But if you can let people deposit you can lend it out. Now, if you think about it gold, if you forget jewelry, all this unused gold is the same as money. It’s like just having idle cash in your house. That’s a gold is like real hard currency.

So the good thing about importing gold as opposed to importing, so you import like a Mercedes car, that’s a consumer durables, someone used it for 10 years, and it’s worth zero gold, we’ve imported $400 billion, we’ve that gold is probably worth $600 billion. Today, it’s hard currency in the hands of Indians, which can be used by stuff, monetary stuff and things like that. So they should do two things. One is let people export it, export of gold is banned. When you when you’re going out. If you if you let me build a system where we want to do and that’s where a crypto token becomes really useful, where I can monetize it, if I go out, then I can go spend it and I have a gold card.

That is why it’s like hard currency. So what the government has done because of various policy restrictions, they’ve said that, you know, you can import this, you can sit on this cash, but you can’t use it. So you can import this currency. But you can’t do anything with it. You should build a loan, you should build a monetary system with it, where people can lend it, it should be like a currency, right? I can lend it out, people will pay me interest on it. And I will get it. And you know, I can use that to substitute inputs.

So this is exactly what we really want to do with whether we do it or not. I don’t know. I mean, we need a ton of regulatory approvals. And most most government guys are, you know, very skeptical of the startups. I don’t know what they’ll do. And we said, you know, give us let us do it with you know, five crores of gold. Let us do it in a sandbox, test it look at us what we’re doing then we’ll do it let other people do it build a licensing framework.

So I think This is the true opportunity for India where you build a full monetization framework where you take this 8000 10,000 tonnes of idle gold we have and use it to substitute all the imports, and let people who own that gold earn income, let them use it as a hard currency when they go abroad, there’s just so much you can do with it. The the so I agree today, it is unproductive in the wait, it is set up. But what we really need, and I think we can do if you if we have a conversation after a couple of years, I don’t think we can do anything now.

But if we have a conversation in some time, I think we’ll be able to pull it off. Because when you speak to people in the government, they generally like yes, in concept, what you’re saying is great, we should do it. But there are a lot of, you know, hurdles to be crossed. But I think they can be crossed. And I think, you know, whether we do it or someone else does it, I’m not sure. But in the next 510 years, someone will solve this problem.

Krishna Jonnakadla  40:44

Actually, now that you mentioned it, because you unpack that we’ll unpack that a little more, but I want to tell you a real story. I have a friend, I mean, friends friend, they run a I think I don’t know what business they are in, but they generate a lot of cash, a lot of their trade is in cash 4050 lakhs of profit every month is in cash. So because they are not able to declare that what they do is they end up buying gold with that.

So they take that gold, so the bars and the base kits that you talk about, they have lent it to a family member who runs a jewelry store. It’s exactly the use case that you’re talking about, where instead of taking that gold and keeping it in a locker and maybe safeguarding it for the rest of your life. So you really only have one choice, either keep it in, keep it in the locker, or if your money is legitimate, I mean, meaning I mean, the 50 lakhs is definitely legitimate. But if you if it hasn’t come through the banking channels, then what you end up doing is you invest in sovereign called Gold bonds, which is which is a product that you spoke about. Right. So I, in all honesty, whether regulation has caught up to it or not, whether it is enabling it or not. I think informally to a certain extent it is already happening.

Gaurav Mathur  42:04

You’re right. It’s extending formally, the only challenge is that for a company like us or for any company, you cannot address the informal market in a company setup. And it’s not scalable, right? If you start doing that, so you want to so you need regulatory legitimacy, if you want to do it in a clean, all right manner, but it’s just like cash, right? So think of gold just like cash, where, you know, there’s a large cash economy in this country, right, where people lend cash, they get interest in cash.

So they so they do that in, in in cash. But the cash No one keeps it idle as such. Gold is also just like cash, it’s another currency. And in fact, it’s a hard currency. So Indians own, you know, hundreds of billions of dollars of a hard currency, which, right what is illegitimate is used like you described to, you know, lend it out on interest, nor now whether that is 30% of the gold stock 50% of the gold stock, we can debate no one has hard numbers on that.

But I would submit that there is at least 50% of the gold stock, which is legitimate and give people a legitimate avenue to lend it out. And you will stop imports, you will improve you will improve employment in the jewelry sector. It’s one of the sectors where we have the maximum number of skilled artisans in the world as a benchmark. You’ve got about 5 million people employed in the technology industry.

If you include startups, Wipro, Infosys, all of that put together, we have about five or 6 million, you have 6 million guys employed as jewelry artisans at this career record, right? If you give that sector this, you know, a few billion dollars or 10s of billions of dollars of extra capital, look at where the productivity will go.

It is an area where as a country, we have huge competitive advantage, we can export much more to the rest of the world. So there are so many ways to solve this problem. And it’ll have multiple benefits, not just unproductive inputs, you will give a huge boost to 6 million will be 10 million 12 million because they’re not coming out of the formal education system. Their kids today don’t become carriers because they don’t make much.

Don’t make that much money. It’s a tough life. But bring them into the formal sector, let them scale, give them capital and see the boost, you’ll create, you know another 5 million jobs, which is huge and well paying jobs. Yeah, there’s just so much you can do. Yeah, which I think I think we

Krishna Jonnakadla  44:07

can create really amazing juice. Yeah, right. Just like our food has so much variety in it. Our jewelry also changes from region to region according to the cultural correct variety variances of the rich regions from your raw uncut diamond jewelry that comes from the legacy Pakistan scene that that kind of region to your Rajastan e jewels to your Gujarathi and to your Bombay and then the South Indian and there are there are huge num numbers of it.

And the purity of that, right. When you buy gold in the West, most of it is either 18 karat or 14 Karat. And for normal Indians we’re used to much more richer gold ornaments. You’re thinking okay, this is not jewelry at all. It really looks like an ornament should I NC element, it doesn’t look like gold jewelry, because we also start analyzing the intrinsic worth of how many grams of gold is in there. And both from a design and a value perspective, you just turn off. And I think you’re absolutely right. It’s, it can be a phenomenal competitive advantage. And I think it’s just bound to happen, you’re going to have more coal lines come out of it, more cold brands come out of it. And it’s just a matter of time that something’s going to happen.

So let’s jump in and talk about your beginnings. And once you came up with it, how easy or difficult was it? What was the process that you went through? And how was the initial launch like?

Gaurav Mathur  45:41

So? When we started? We started with just the Safeco website, we did we start a website and you can come in, you know, buy gold on our website. And despite whatever we thought of SEO, and Facebook, and this and that, I think we got all four visitors a day or eight visitors a day to come and show up. And obviously people don’t trust you.

Also, they’re like, Who is this guy? How do I know the gold is there, and we have a trustee and we have a custodian. And if you read our terms, you’ll you’ll figure it out, that is totally safe, we can go bust and your gold will be safe. And we don’t get your money from the trustee until the gold is in the vault. And we’ve done all of that. But obviously, no one’s going to read it. I think we were and we knew this was going to be a challenge.

But we didn’t realize how much of a challenge it’s going to be. So at the same time, we were talking to potential partners like phone pay in order to integrate. And then we first integrated with phone pay, who was the first partner we started in 2018. And I think it then took off so fast that we had no idea and I think this is full credit to the scale of what some Unicom has built. And it’s now even bigger than it was then. But I think that’s when we realize the power that you know, phone pays, and after, and over 50 100 million people use each month, and you put one icon over there.

So even if 5% to those people, you know, come and buy gold, and they find it a good experience and convenient. You know, you get very significant volumes. So and I think once we got phone pay, and we worked with them, and we started adding features and things like that, then we then we were able to add quite quickly now in the three years, three, four years since then, we’ve got about 100 110 partners like that. So it was slow in the beginning.

But I think if you look at the last two, three years, we did like 100 crores of sales three years ago, we did 560 crores of sales year last year this year ending March 21. And we did two and a half 1000 crores the sales for the year ended March 22. So, I think once we figured out our API stack, and we said let’s be like a, like a provider of gold API’s. And let’s go out to the ecosystem, whether they’re jewelers, whether they’re, you know, payment apps, whatever, the banks, that’s when we found us, right. And then we’ve been you know, growing fairly rapidly since then.

Krishna Jonnakadla  47:43

How many unique people might you have touch to this 2020,

Gaurav Mathur  47:47

we have about 45 million unique customers registered with us, of which the active effect to be honest, and all of us get registered registrations happen. So to be honest, the active customers would be about 10 to 15 million. But we’ve got about 45 million that have registered with us. And as a benchmark in India has got about 40 50 million dhimanth accounts.

And again, I don’t know how many of those will be active. So I think digital gold 260. So I think digital gold as a whole has about 80 million people registered. So we’re a little more than half of the total, digital gold, digital gold universe. And I would caveat as these are our best estimates, it’s not like there’s a formal third party that is that is, you know, really validated these numbers. But it’s still it’s a very rapidly growing business.

But despite all of this, we are less than 1% of the gold consumption in India today. So it’s growing rapidly. But I think, you know, numerically, you can see that we’ve not even scratched the surface.

Krishna Jonnakadla  48:43

Yeah, no. So in in this in this user base, how many of them actually end up taking delivery of the physical code?

Gaurav Mathur  48:53

So I will answer that giving you cohorts. So within the first year, okay, you know, people accumulation the typical behavior of this, of a customer is, actually so we have three types of customers, we have three cohorts, they’re the third will come experiment, buy go away, never come back again. So that’s a third, there are third who are regular users, which means that they’ll they’ll do a transaction with us at least twice a year.

And there’s a third that somewhere in the middle, they may have bought it kept some gold, they bought 100 rupees of gold and forgotten about it, or they come once every other year or something like that. So let’s take these three, these three rough buckets of the active users that we’ve got, who are you know, transacting with us more than once, twice a year. In the first year, you will find less than five 10% will actually take delivery of the gold. And when you go to by the time you’ve gone to the third year because they’ll keep accumulating right?

Digital gold is not wealthy people buying 100 grams of gold and then going to finish and converting it. It’s a mass market. It’s a very mass market product where people are accumulating small amounts over time. So when you go to buy the third year or the fourth year, I took 40 We don’t really have that much covered but said At the third year, you’ve got almost 35 or 40% have taken delivery, or gone to a partner jeweler and converted that. And now, we’ve got many more use cases, right, we have partners who are using this code.

So we have a partner called galaxycard. And we have a number of other people also, where they where you buy gold and they use that as collateral give you a credit card with a credit limit linked to the amount of gold that you’ve got. And this works very well especially because within our customer base, it almost 50 60% of the customers don’t have a high credit limit or they have a you know, low credit score or or a thin file and it’s cold.

So then they now they’ve got 5000 rupees of gold they can get a 3000 rupee credit card and you got to understand for a mass market customer, the concept of this Buy now pay later I mean credit card is also buy now pay later, right that I can keep spending for the for 30 days, and I pay it at the end of 30 days or 45 days is a is a unique concept.

They all keep asking what’s the catch, but then when you go to them, say hey, you’ve got some gold, and you can get this credit limited, maybe 2000 rupees, 5000 rupees or whatever, not a big credit limit, but for the class of customer, it’s a wonderful sort of product to give them and in any case to save in gold naturally, as you said, even Bernier have the saying that every household has a little bit of gold. So for us, everyone has a little bit of gold, it’s just a matter of how you slowly convert them on to transacting digitally.

And then using all the features you know, use it for loans, it’s much cheaper, much faster, much more convenient when you use it as collateral for a loan. When you go exchange it for jewelry, we have so many people you know savings with the jewelers that they have the jewelry savings plan. So a lot of that all those use cases are now moving over to digital gold and people then eventually accumulate and go to a jeweler and exchange for jewelry.

Krishna Jonnakadla  51:37

So the jewelry savings plan was the next one I was going to ask how is that transforming? So instead of the jeweler jeweler still runs the program, but the goal that is backed is with safe code. I guess is that how it was

Gaurav Mathur  51:52

we have it both ways. So the old jewel is still run jewel savings programs and as far as the jewel is concerned that is the principal product that they will sell to a customer of theirs. Because they get the money in the jewel savings plan you’re giving say 5000 rupees a month to a jeweler. And within 11 months you have to go to the jeweler and buy some jewelry with that.

But that is cash that you’re going and they typically give you the fifth or the 12th installment free so after 11 months they will if you save 11,000 rupees they will give you you know 12,000 rupees worth of gold is what you can buy. One big thing is that you’re just saving cash. So in the interest rate if gold price goes up, you’re paying gold price as on that day.

You’re not paying not like you’ve bought gold each day. So that is one thing and the other thing is because of regulatory reasons you jewellers cannot accept these deposits for more than one year so they have to be for less than a year. And then you’re locked into buying buying some jewelry at the jeweler which is typically some making charts and all sorts of debt. But the jeweler gets the money so the jewelers got like free working capital. And that one month extra installment that he’s giving you works up to like eight 9% IRR for the jeweler.

So it’s very good financing for the jeweler. So obviously every jeweler will sell the scheme first. However the customer demand is much stronger for digital gold. Which is why you’ve had well you got many of the jewelers now work with us to offer digital gold because many customers once they figured out the details, they figured out that okay, I get actual gold.

So gold price goes up kind of hedged. I don’t have to convert it for jewelry, I can do it for two years, three years, I can just start my I can buy for three months and then stop and next year I can buy again and after five years, I can then convert into jewelry. And I’m completely flexible, right I don’t need to go to this jeweler I can go anywhere else and I can exchange it for jewelry, get a coin whatever it is. So there is very strong customer demand.

That is switching slowly from the jeweler savings plans into digital gold jewelers, as they see that happening are slowly adding digital gold to the offering. But I bet I should admit that it is a kind of grudging offering because the jeweler is making much less margin, it’s less beneficial for the jeweler, and we want to work with jewelers as partners. So I think we’ll never push it at the expense of a jewelry saving plan is just organic demand slowly comes in it’s been building up into a fairly significant way from the customers that we speak to.

Krishna Jonnakadla  54:02

So these are these, the non delivered goal is all sitting in works across the country. Okay, how end to end 20 words.

Gaurav Mathur  54:14

So we work with one custodian. One principal custodian, which is a firm called brings the largest gold in the world. And currently we’re in about we started about seven vaults, seven eight Brinks vaults that they have across the country.

Krishna Jonnakadla  54:29

Nice, nice, okay, and who pays for all of them?

Gaurav Mathur  54:33

Right now, we don’t charge right now we don’t charge customers. So we pay for that. Okay. But I think our longer term aim is to bring our margin down as low as possible. And then, you know, charge separately for storage into everything, I think right now charging separate fees. It’s still too early in the lifecycle of the product to start charging separate fees. So I think we’re absorbing the cost for that. But at some point in the future, I guess we will start start charging storage fees. And because it’s stored, it’s got full insurance. It’s got a trustee, so so we have some costs, but actually those are at put in the nature of market development costs. So in the foreseeable future, I don’t see us, you know, charging people for that,

Krishna Jonnakadla  55:12

who is your very first customer talk about how you landed the first customer outside of fall pay.

Gaurav Mathur  55:17

Our first customer was a 25 year old guy based in Assam, who was a freelancer, he’s like a content creator, freelancer, Google Marketing. And I managed to do this stuff. And he was, he was kind of just searching Google that he wants to buy gold. He said that he goes to a website, I’m sorry, he goes to a jeweler, and he used to buy gold. In any case, he was the regular buyer of gold. And he figured that, you know, there’s got to be a cheaper online option.

So he literally Googled it. He came to our website, he read everything. And he said, this seems reasonable. And I think his first transaction was five grams of gold or something. So we were all I mean, suddenly, everyone’s like, Oh, someone’s bought five grams, or it just happened, then we thought everyone’s gonna buy five cans of gold. Obviously, that didn’t turn out to be the case. But yeah, it was someone just found on Google and and, you know, showed up and thought it made sense. And, you know, he’s still a customer, he still buys regularly, he’s not taken delivery, he’s accumulated a fairly large balance. So wow, so that he’s still with us.

Krishna Jonnakadla  56:12

So let’s talk about some of the behaviors that you’re seeing, from age groups to order sizes to regions and all of that. It’s fascinating, isn’t it that the first customer came from Assam and not any of the tech forward places that you talk about either Delhi or Bombay, or Bangalore, and you have this obscure place called Assam, at least in the normal parlance. And it’s fascinating to talk about the user base a little bit. What are some interesting behaviors that you’ve seen and what has really surprised you?

Gaurav Mathur  56:47

So I think the most surprising thing I’ll just answer the last question first, the most shocking thing to me, is the proclivity of Indians to trade. Now, the way digital gold is, there is there is a 3% GST because when you buy gold, whether you buy it from us you buy it from a jeweler, you have to pay 3% GST.

And that is because from a regulatory point of view, we are not selling you a security, we’re selling your financial product. So our product is made for made for people who buy physical gold, you accumulate physical gold and ultimately take delivery or convert it into jewelry, or you want to use it as collateral. It’s an outstanding product for that.

In fact, if you compare our price to buying physical gold, we will nearly always be the cheapest place where you can buy it with guaranteed purity and things like that. But there is a Buy Sell spread. And the main reason is there’s a payment gateway costs today you can buy with a credit card also, we pay almost including GST, not we’ll pay almost 2% as a payment gateway fees. When you buy with a credit card, and then we have to pay for all our trusty storage and we are a business we have to make some money. So a markup of gold. If you take a wholesale rate, if you buy in the interbank market, to where we will sell it to you will be about two and a half percent markup. And then there’s a 3% GST cost to it. So it’s not a trading product.

So it’s a five and a half percent markup, including GST for a customer. But if you buy and sell, you lose five and a half percent. So it’s not a product made for buying and selling. But it is shocking to me how many people buy and sell and try to trade the price of gold, I think that is the single most shocking behavior that I’ve seen. And it just goes on. And you tell people and we’ve called many of these customers and ask them that, you know, this is not made for trading, if you want to trade go to the MCX or the other places to trade.

This is it’s a savings accumulation platform. And you know, when you buy gold, you buy physical gold with the best price and we work very hard to try and bring the price down and stuff like that. But it’s not a lot for you to trade. Because the biggest thing is that you lose the GST and all this haha, but I mean, so the number of people that love this fact that something moved up, move down, and they’ll make a little bit of money. So there’s a very significant, very significant more significant than I would have thought, number of people that trade in the short term.

Krishna Jonnakadla  58:54

Day trading, day trading, we’ve

Gaurav Mathur  58:56

also put a two day hold because we don’t want people to trade equivalent on speculate on the price of gold. So that is that is probably the most shocking behavior that we had. At the other end the adoption that I say the mass market level where people they, they buy gold and the shifting from buying offline gold online gold and this is the this is the main customer base that we are going after which they won’t accumulate slowly and then get physical because this is the best product for them.

As a benchmark, I said you know, we mark it up two and a half percent, the average jeweler marks it up anywhere from five to 8%. So when you’re buying physicals is the best place you can buy physical, but the end that you know people will use a use an app like Paytm or phone pay or you know one of those payment apps to recharge the mobile phone.

That’s the most frequent use case it has and and surprisingly large number of sort of number of them are using it to buy gold and then get delivery or go to a jeweler and things like that. So I think that is also that is heartening for us and that’s what’s driving our growth that at the mass market level. We see adoption, the ticket size is still small. So the average ticket size that we have across our whole platform is maybe 800 to 900 rupees for by transaction.

So that’s the average ticket size that we have. So literally, one 1/5 to 1/5 of a gram, or little less than that. And it started off. So if you three years ago, this was 400 500 rupees. So it’s been inching up slowly. And I think that’s also a matter of confidence.

People will always be skeptical that you know, I don’t know if this gold is there is the actual gold kept in the world. Who are these guys? So all of those valid questions, right, I would ask the same questions. But once I’ve got delivery once, once the seen it’s actually worked, it’s sold it so they start with smaller amounts of money. And then as they get more confidence is slowly inching up to slightly higher ticket sizes as well.

Krishna Jonnakadla  1:00:43

Interesting, interesting. And are their behaviors. north south east west, are there some different behaviors,

Gaurav Mathur  1:00:50

surprisingly, not, there’s not that much difference like if I look at a top five markets, it will be Maharashtra AP, Telangana, Gujarat, Karnataka and, and the National Capital Region, NCR. And in the east, I think West Bengal, also the pockets of West Bengal. So it’s all over, there is no dominance of the South in the physical gold market, the south of the five, six southern states will buy 40% of the total gold consumed in the country.

And I would think it’s a more educated, more technologically savvy demographic in the south. So I would have thought that our market share would be more dominant in the South as well, or sort of the South would be more dominant in our business as well. But it’s there, it’s certainly there. But you know, Maharashtra, Gujarat, so NCR, they’re all very significant markets for us as well.

Krishna Jonnakadla  1:01:38

So when you start it, it feels like a no brainer kind of thing to do. What what you’ve done today, right? When I talk to a lot of the other entrepreneurs, you go through a lot of time identifying niches this, this, this is one of those opportunities, which is one at one point, huge. Second, almost hiding in plain sight, right, it may not even be hiding, it is actually there for the taking. And what you’ve done is really giving given its shape and form. Do you feel that way? Or do you feel differently?

Gaurav Mathur  1:02:19

So yes, and no. So when I started, even I always started I said, What’s the catch? Today, I think what I asked myself is what are we doing that we’re not able to capture more of the market? So there’s obviously something if you think about it, there’s, there’s like 800 tons sold in the country, we sold five times last right? So that’s one would be a 1% would be eight. And we’ve been about a year right?

Today, I read all the startup stories in one year, two years, they’re $5 billion companies, $10 billion companies. I’m like, Okay, we’ve been around for three, four years. It’s a huge market, we’re all buying it, why can’t we get more people to buy online? So to me, I’m scratching my head is what are we missing?

What are we doing wrong that we’re buying such a small rather than addressing such a small percentage of the market right? It’s a better price like guaranteed purity and we say you know, like when you go to the average jeweler and you buy a gold coin, he will tell you you know, tolerance or weight and purity of plus minus half percent 1% all of that.

We said look, we guarantee zero negative tolerance because when you think about it 99.99 And, and the weight also is one gram it won’t even be one milligram Yes, we guarantee it will change your coil will will compensate if it’s less and we go to a and you know, there’s a manufacturing tick rate for five milligrams any manufacturing equipment will have that tolerance rate you cannot build manufacturing.

So we tell our manufacturer, that you put five milligrams of gold extra in each coin that will take care of the dollars if you think about it five milligrams good is only 25 rupees in a 5000 rupee coin just spent that 25 rupees external why put that disclaimer, I will have some tolerance just tell them look, there is no way you will have less because I will always put extra and and I paid the guy extra 2.1 point 05 milligrams for a one gram coin.

And I think they’re all the little little things that are no brainers to do as the organized sector. But no one else does it. And so it is a very compelling offering. So to use your point I say what are we doing wrong that we’re not a 10,000 crores 20,000 crores we clearly, you know, less than 1% of the market, we should be 5% of the market. I agree 50% to the strength but we should be five 8% of the market. So I think that is the that is the thought that we constantly ask ourselves that look, we need to do something much better than what we’re doing to because we’re not capturing enough of the market.

Krishna Jonnakadla  1:04:27

limb. So on that count, let me ask you how much of your volume comes direct without the platforms

Gaurav Mathur  1:04:33

or that’s, that’s about 1010 to 15% of our volume is direct. But our strategy is to build with platforms. See ultimately this is a trust business, right? When right when people are buying something and they have to trust that you know you have that value kept for them. If I need to build that trust that you know Safeco is a brand that has your gold and trust it all of that. It needs a lot of money and a lot of time.

The more money you have, the less time it’ll take but it’s in the you Do you need to spend hundreds of crores in a year on marketing, brand building stuff like that the nature of the gold business in the margins are so small that you don’t have like, hundreds of crores a year to invest. Okay, so if you want to build trust you need and you want to build reach, you need to go to all the platforms.

So I think our strategy is definitely to go to all the platforms, we are a platform first business, and we want to build the ecosystem. So I think as a strategy, we’re very ecosystem focused, because this works. If it’s an ecosystem, where one is wherever you want to buy gold, you buy safe gold. So whichever app you open, whether it’s your bank app, whether it’s your payment app, whether it’s a wealth management app, whatever it should be, you should get safe gold.

And on the other side, whichever jeweler you want to go to you can exchange it for Safeco, whichever bank you want a loan from, they’ll give you a loan against safe good. So this works when it’s an ecosystem. Just saying Come by my goal from my website is not really going to build the ecosystem. It’s not an either or strategy.

So so we are very much ecosystem focused, you get the trust when you partner with the bank, whether your own access bank app or DBS bank, or you’re on a phone pay, or Amazon or Flipkart. These are all very trusted brands with huge reach. So we are very much ecosystem focused our own website is to build innovation, all the new products that we’ve got this group gifting product, we’re going to add, you know, a bunch of loan products, all of that. So we do the innovation on our website and what works, then we take it out to the ecosystem and see, you know, you know, who can benefit from it.

Krishna Jonnakadla  1:06:18

Interesting. And I’m sure the platform’s take a cut in some of that margin that you build.

Gaurav Mathur  1:06:24

Yes, yes. In fact, the Yeah, a significant cut.

Krishna Jonnakadla  1:06:27

significant, significant, significant cut. Interesting. So the next obvious thing is growth. And in fact, I would say, how, what’s your funding? Like? How much are you? How much funds have you raised? How much of it is Bootstrap?

Gaurav Mathur  1:06:45

So in today’s day and age, we would be almost classified as Bootstrap. We’ve raised some funding, we’ve raised about 1617 crores of funding, we’ve got three investors, we’ve got the World Gold Council, we’ve got pro Vega ventures and be next so these are two VC firms and one you know, gold industry as a strategic investor, but it’s a tiny amount of money.

That being said, we are a profitable company. So as of March and the numbers will be released sometime but we made like a one crore profit after tax so little like no, we made have to take all the charges, maybe 60 lakhs 70 lakhs something like that. So we’re not highly profitable. In fact, the way we run it, we say we reinvest all of our profits into growth and marketing and product development and stuff like that.

But we are not going down the path of letters, raise lots of money and market and you know, try and build this up. As yet, we may, we may go down that path in the future. But I think right now, we’re quite happy that we’re able to grow at a reasonable rate, and get some scale without really using a lot of cash. And we’ve been very, very frugal with the cash that we’ve got. So

Krishna Jonnakadla  1:07:44

I think that’s going to happen. You’re working on an opportunity, you’re working on a sector, which every Indian is aware of even the illiterate person who has an app, and a smartphone is aware of gold. I think that blue collar workforce hasn’t been touched yet. I think it would be interesting just throwing out an idea here simply is an is an app

Gaurav Mathur  1:08:10

will surely

Krishna Jonnakadla  1:08:12

help. So I think for the likes of Siply. If they’re able to offer something like safe coal as an option for the blue collar workers who are saving money on their platform, I think is going to be humongous. I don’t like Like you’ve said, I don’t think you’ve even scratched the surface scratched the surface of the scratch yet. So there’s a long ways to go. And in my opinion, I don’t think there is an analog product anywhere else in the world is

Gaurav Mathur  1:08:41

directly comparable, we haven’t found one they have, like I said what a website is we can go to a website and buy gold, which is kept in the vault. You have a few companies in the UK and Canada that offer that. But the overall ecosystem where you build it through distribution partners, Bill, redemption, loans, all of that, that I’ve not found anywhere else in the world.

Krishna Jonnakadla  1:09:01

Right, right, right. No, I think fascinating, fascinating. Girl, I think you’ve built a phenomenal business. And like I said, roti copra makan and Sona. You know, in that equation, you have sonar as well, it is every Akshaya Tritiya. And any of those other modes that happen across North India, you have 1000s of people that come out, and then buy it and accumulate it.

And I think anything interesting that you do around Akshaya Tritiya. If you haven’t already thought about it, I think is going to be because for me, although I come from a pioneer family, and there is definitely a propensity to like code. I hate jewelry. I’ll tell you that because it is the only thing that you buy that immediately loses value on purchase. Right?

It’s like buying a 60 rupee item and paying 100 rupees. And the only reason you will make up is because of the appreciation of God in the future and not because of any Other reasons and look at the behavior now. And most women, just like clothes, they don’t want to repeat jewelry. Right? So you cannot go through 20 30% wastage every time you’re going to go to a function.

And with gold prices being what they are, if an average piece of jewelry cost three to four lakhs, you are losing 60 70,000 In just one shot, right? I’m seeing people that I know that doing that kind of stuff, every every new function or an every new ceremony, they they go out buy gold. And the thing is, I don’t want to repeat what I just write.

So I suspect given your own ability, you’re going to come up with some more use cases, and some more enablers. I think what you’ve done is covered the basics first. And now we are going to go after some of these behaviors. And I think that is going to give a run and create growth for you. This is been an amazing conversation. I’m glad we had it. Looking back at your journey, what are some high points and low points?

Gaurav Mathur  1:11:12

Are you referring to safeguard specifically or, or overall both

Krishna Jonnakadla  1:11:15

your own personal journey and safe gold?

Gaurav Mathur  1:11:20

I think the high points are, I think with safe goal was when we saw the initial burst of traction on these various digital platforms on the high volume, right and Amazon beautiful and based off like that, I think that was real high point because suddenly, like overnight, you you can add like 40,000 transactions a day and things like that. I think that’s been like a real high point. And that those are few and far between. It’s not like you add the large platform partners every day.

But I think the few times that’s happened and and the depth of demand or you go out, or real high point is when you go you know, I was out in Delhi, and some of the domestic help in my parents house, they had heard about safecoat I think that was real hyper, sort of quite, quite apart from, you know, anything that we had done not because anything my parents had told them that they’d heard about it themselves. I think that’s that’s real high point when you see it penetrating deep into society, that’s like a, that’s like a real thrill.

I think low points are often there’s there’s a bunch of regulatory volatility that comes about the various regulatory announcements that come which are on digital assets, and you get swept up in that and it kind of impact whatever business you lose a bunch of partners and things like that, I think are sometimes you know, one of the interactions with a with a massive surge in volumes and, and despite the fact that you provision stuff and all your servers crash.

So it’s happened once or nakshatra. And you know, there’s going to be a surge and you provision it, and it’s a high class problem that the surge is still double what you’ve done, and you crash. But that’s a complete low point, you say, you know, the best day when everyone looking about it, and you go and crash at like four o’clock in the afternoon. So you’ve lost the next, you know, four hours of some of the low points, which is which one is seen through the safe gold journey,

Krishna Jonnakadla  1:13:00

so five years from today, other than the fact that you will be a unicorn. What do you what do you foresee,

Gaurav Mathur  1:13:07

I think if we can make a dent in the golden ports five years from today, that’s our that’s the true thing that we’re working towards. So you said that we work on use cases. I think that’s the one thing that we really work hard at. And we think that the solution, but there’s no quick solution. But I think if we’ve if we’ve, you know, increased India’s consumption of gold, reduced imports, and monetize what people have, that’s what that’s that’s the Northstar that we’re working towards five years from now.

Krishna Jonnakadla  1:13:31

Some Something tells me you will do much more than that. You talked about exporting. And I think the lot of interesting stuff. I think what you’ve done is you’ve laid the framework and the groundwork for a lot of other things to be lots of interesting cases to be built on built on top of it. One of them is the loaning the gold and avoiding all but that is just one part of it.

And channeling some of the I think the market will always find a way to solution the incentives around eating today a gold Savings Loan. I don’t know if you’ve heard of the IMA scandal that happened in Bangalore. No, I’ve not. So so the it’s a it’s a chain, a chain of cold stores run by a Muslim and a Muslim community. So a lot of them had saved saved 100 1000s of crores in this gold savings plan. And overnight, I am actually shut shop. Okay.

The estimate is that apparently they decamped with 11,000 crores worth of gold. Okay. A lot of the biggies, you know, are supposed to be involved. So there has been barely any investigation. No justice has been done yet. Right. So that is only one instance. And in fact, the funny thing is, in my previous startup, I had a I had a The one of our associates was a girl who was a Muslim. And two years before this bust happened, and she was a very normal office manager.

She told me, I’m hearing rumors that ima is going bust. Okay, either 18 months or 12 months prior to that, if someone like God, were to sense that. So today, for a traditional jewel, Kellyanne, and all of these guys are listed. So they cannot do that much harder to write. So, but these kinds of entities are not listed. So I think as more people come out into the open, and as the economy formalizes, you will start having newer models that get built on top of this, these cold savings plans. These are just some examples. I think I see a lot of interesting innovation coming out of it. I think we are for evading for an amazing, right, and you will have the front seat of that looks like

Gaurav Mathur  1:16:05

thank you so much. Thank you, Krishna, I will be working on a lot of things. Hopefully we can we can realize at least half of them. Right, right. And we also have an experiment in Thailand, we have a subsidiary in Thailand, where we’ve actually got a gold token, it’s a pilot that we launched, it’s experimental thing.

So we have actually, there’s a gold back token that is actually listed, and we’re doing stuff over there. Because the regulatory environment is good. And it’s a it’s another community that’s got a high affinity for gold. Right? There’s a bunch of things, you know, hopefully next five years, a few of them work out, and we can scale up much more than where we are today.

Krishna Jonnakadla  1:16:36

Got up. This has been fabulous. I mean, I, I’ve been energized all over again, from this conversation. And I think it will leave me on a high for the next day or so thinking about all the things that we’ve discussed today. In closing, you know, if there are anything, if there’s anything else that you’d like to add to what you’ve already shared, what would it be?

Gaurav Mathur  1:16:59

Actually, I would use this to be shameless and ask for your help. I think I’ve enjoyed the conversation, you You clearly have a very fertile, very well read mind, I think there are 100 ideas that you would have that we haven’t thought of. So I would shamelessly in closing, ask for your help that if you think of any ideas, any suggestions that you have, as you think of, you know, use cases that one could come up with problems that we can solve. I would really love to get your views and inputs and suggestions. And I certainly appreciate that.

Krishna Jonnakadla  1:17:27

Certainly, it’s very well aligned with what I think. In fact, when you spoke about the margins, I if I buy gold, it is only rockin that’s because I want I don’t want that 40% Last two happens. So went to this jeweler friend who I normally know. And he gave me two five grand points. And he said 3% making, I said you should be nuts for her to charge me 3% Making charge on a product that you’ve not made.

And then I was thinking at that point in time that you know, safe gold is actually no making charge go right? Correct. So and and there were two coins. One was a Indian coin. It was issued by Indian overseas bank. The other one was a UK based mint. And he said I’m giving you a UK basement AI and which is more superior. I said there is nothing called Superior Court and inferior code. True. It’s either 99 99.9 and pure or it is correct.

So tell me if it is not I will not. I think with tech, you’re able to give a lot of those assurances I would love to discuss, especially prevent a lot of youngsters from losing value from going after many of these purchases, and the jewelers will find their own way to make up for the losses that will suffer. They’ll change their models and go do something else. I am certain. So wishing you the very best. I know there is going to be a new peak that you will scale soon. And we’ll come back and talk to you what that vantage point looks like and what that milestone looks like.

Gaurav Mathur  1:19:06

Thank you so much. Krishna, thank you so much for having me. It’s been an absolute pleasure speaking with you. And I look forward to potentially chatting with you at some other point and getting the benefit of all your ideas in the future.

Krishna Jonnakadla  1:19:18

Absolutely. Okay.

Gaurav Mathur  1:19:20

Great. Thanks a lot. Bye bye.

Krishna Jonnakadla  1:19:24

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