Why CRED is India's Most Overvalued Unicorn?
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- Опубликовано: 30 июл 2024
- In this debate, we take a look at why CRED is India's most overvalued startup.
00:00 Intro
05:31 CRED’s valuation
08:05 Comparison to other Fintech?
09:45 Kunal Shah
10:52 CRED's Original Idea
13:05 What's working for CRED?
19:20 Long-term vision
20:17 Conclusion
CRED was valued at a massive 6.4 billion dollars in June 2022. And their revenue? Just 50 million dollars (Rs 400 crore) in all of FY22. That gives them a 121X valuation multiple on their revenue! Making them the most overvalued unicorn in India.
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Once cred go to public, retails will subscribe and pay investors. Then it will go down 95%. Paytm went 75% down with much much better numbers.
Love these debate style content. Much better than a single opinion.
Thanks Abinav! That's what we were going for 🙂 every topic has two sides, so we're trying to cover both. What should we have a debate about next? -Caleb
@@backstagewithmillionaires upGrad, ease my trip , Raymond
@@backstagewithmillionairesCan you make a video on INDMoney.
Almost no meaningful points in favour of Cred's valuation. Solidifies my hunch that they are essentially surviving on Kunal's halo effect. Nice video!
So true the person talking in favour cred just brushes away the criticism and talks about cred revenue growth all the time.
The nail in the coffin was when cred kept talking about top 1% exclusive club but now it's open to all completely destroying the idea of cred
agreed
Absolutely true... The says I got loan in couple of hours but what about the interest rates?
1) Many top 5% people in India do not have a credit card,
2) Top CEO / HNI use American express which is far more premium than cred.
3) The Businessmen have lot of current accounts who offer them loans and overdraft just with 1 call.
4) it is hassel to calculate credcoins and how to consolidate and use them. many people do not have that much time.
5) Lending and P2P is already saturated , cred do not have any differetiating aspect in that.
6) if ads disaapear, they will be forgotten within 2 years.
I have 21 lakh+ in cred coins and it's literally useless 😢
I used to pay CC bills on cred but once my payment was not successful and took 5 days to get a refund. Although customer care promised to reimburse any extra charges of late payment.
Now I pay all my credit card bills on Paytm because it provides more valuable cashbacks which is worth it, more timely reminder via sms of statements.
And the thing for which I hate cred most is the spin and wins and jackpots, they are just everywhere so annoying and useless.
Exactly man. I am in a same situation. Its feels like cred has cheated eventhough technically not. I recently moved to paytm as well
True, last I used cred was somewhere in the mid 2022, have been using Paytm since then and I think Paytm is the best with respect to cc payments
Excalty bro. 18L coins enjoying dust
What's the benefit of credit bill payment on Paytm?
@@sushantspace atleast cashback and real offers
one thing people dont realize is that cred audience is not actually rich, they are “wanna be rich” and want to feel they are part of some kind of premium club. There is no value add to the users apart from feeding their ego.
Man i agree with this comment so much.
Bingo. Rich people buy what they want and don’t waste time collecting useless coins for the same.
I haven't seen any podcast do a detailed postmortem on cred like these guys. They highlighted every key point. Good job guys
Thanks a lot KPai, so glad you enjoyed the conversation. What should we debate about next? -Caleb
CRED is only for the upper middle class and not the rich. How can you call yourself rich if you are looking at CRED for 50-60k money. 🤦🏽♂️
He was lying.
Bingo. Rich people dont waste time on such platforms.
Exactly, one one side he says that Cred is targeting the premium customers and on the other hand he says 90% revenue comes from lending.
Premium customers don’t need lending. Anyone with 750+ score already has banks and many other sources for money if at all they need it.
Let's get back to basics please. Enough of valuation nonsense. CRED doesn't add any value except that they are creating a dataset of people with good credit score.
They will own the top 1% spending of working class in india. Thats being worth more than flipkart.
I use cred for free credit score info, but that's about it.
I use Cred to buy stuff. I might even buy other stuff on Cred. I also got my scooter insurance. You see, this is the value that they'll add later in your user journey.
@@vinitmahaleyou are definitely not the top 1%😅
Ofcourse I'm not. I don't make that kind of money but atleast I have a great credit score to use their app. I have been using it from the very day they launched the app. For me the value add I can access all my information at one place rather than having multiple apps for it.
This format is so good, yet to the point with the nuances. Learnt a bunch of things in just 26 mins of the content than a 2 hour long podcast.
I know there were many hours had been churned just to output those 26 mins of super high quality content. Kudos to the team BWM.
This is the example of Quality >> Quantity. ♥
Yes I always wondered why this is so overhyped? Turns out: Its their cheeky ads. Nowadays they seem to be focusing on consultation on how HNIs can settle on foreign soil. Maybe its an indication..
Great work btw.
This is awesome. Loved the concept. More debates like this please
The comparison of NPAs is not fair between Cred and the Indian Bank, as the Indian bank disburses a large number of loans, whereas Cred does not seem close to 1% of the Indian bank's Loan!
We once needed to take 2L on loan, as we wanted to buy a car from spinny on EMI.
It turned out that for 5 years, it was easier and cheaper to buy HDFC loan, rather than CredCash. It was a surprise to us as well.
Really a great and interactive video, please keep posting.
Superb video and format!
Love it. Keep it up. Great edit and very easy on the ears and eyes
Awesome to read this, thanks Sid! Any thoughts on what we should debate about next? -Caleb
@@backstagewithmillionaires
Some ideas
- startup and overall tech culture in India. How it’s evolving. What’s the current pain point. The new generation - gen z- I hear there is already some cold battles on work place.
- Best city for young entrepreneurs? Is it really Bangalore? How about Mumbai, Hyderabad, or Noida? Where are the good hires? Where do the investors live?
- Indie hacking. There is a big community on Twitter with folks making $50K - $500K MRR. Saw some folks from India. Their story could be inspiring
- some fundamental economics topics for deep deep stuff. Austrian economic vs Keynesian. How India was liberated after 1990 and how the economic thinking changes. People before 90s grew up believing making money is just greed. Stock market is a gamble
- Lifestyle of founders or principle employees in tech. Something that inspires others to focus on health and wellbeing as well.
PS: I moved from Mumbai to Boston. Hired and ran multiple teams in India. Every developer told me they want to work for US companies. Why?
@@backstagewithmillionairesfirst time viewer here. Would love to see debate on zomato vs Swiggy.
Clever format. Loved the information.
One thing people might be missing is that CREDs avg revenue* per customer might increase, but not profits* per customer; as CRED expands more laterally, CAC will increase with every lateral expansion- how long is this going to keep up?
It’s admirable how Kunal shah has built this company so quickly, but I have trust issues when a founders speaks more than he does (sad Wework noises in the bg)
Hey Caleb & Pankaj!
Loved the debate style video!
Thoughts on the debate itself - I felt that the pro side was a little repetitive and might not have done justice to the side. The pro side had a lot of “vision” statements rather than the “reality” today. Apart from that, I agree with a lot of the points made from both sides and it was honestly enjoyable to see a debate on a good topic not being overshadowed by 5 people shouting over each other.
Please keep these coming :)
Coming from a seasoned old-style business person who has also had a profitable bootstrapped startup, watching young, totally clueless people take something as ephemeral as topline growth which is literally BOUGHT (2000 style) by gifting FREE MONEY to attract triers (NOT LOYAL CONSUMERS, BUT BARGAIN HUNTERS WHO ARE IN TILL THE FREE GIFT CONTINUES AND THEN ARE OFF TO THE NEXT SUCKER STARTUP) ... as a basis for valuation ?
These kids REALLY need to get some basic education on the S-curve of growth(you can already see the 100X reduce to 3.5X), moat (of which I see none for CRED), etc. Where are the senior analysts who have not already been bought by big money ???
CRED is headed for a MASSIVE CRASH when a combination of flatlining topline, reducing customer base as freebees taper off and finally, the long awaited market crash sinking valuation over 90% (or even 99% as it still lives off a money spigot ventilator).
Among many REALLY DUMB PONZI SCHEMES CALLE STARTUPS, THIS ONE SURELY TAKES THE CAKE !!! Blame it on the millions of millennials who are too lay to get a proper basic education in business analysis and how investing works and go by the glitz and show !!!
Then please start making videos. Your analysis is great.
Ok i'll be honest - I do not see myself spending ₹33,000 on cred.
I make regular purchases because of the great deals they have.. like perfumes which on amazon would be ₹500-700 are 299 on cred.
So yeah, even though I shop a lot.. I don't think cred has a huge margin for putting the product on their shelves.
It is unsustainable.
And how these insane offers are viable. Clearly someone would be bearing the burnt.
Thats not a good strategy where to make a user spend money, app has to spend more money.
@@dashmeetsingh9679 yeah.. it could be a good strategy for customer acquisition but since only 30-40% of the people who use phones in india have credit cards.. not many can even sign up.. they can't aim for volume, WHATS THE POINT?
Whatever cred is doing now could be easily replicated by gpay, phonepe etc. Creds users are growing because of unsustainable rewards 1000 rs for refferal, ~3 rs per day for upi transactions etc. are not easy to sustain. Once the rewards stop majority will move to other platforms.
I think Caleb won the debate.
The point that lost the plot was the hope of monetizing an exclusive community as means to fulfill the valuation.
That does not make sense because cred is branching out to "subprime" members. Cred garage might be a move towards it, but it's too nascent to be convincing.
The arguments about cred diluting their value proposition and the points about their CTLV and comparison to similar startups was strong.
Lets see if Kunal Shah and Co will survive the winter ❄️
Very solid assessment, thanks Furquan! Glad that you enjoyed the video 🙂 Which company should we debate about next? -Caleb
That s mah man. A smart founder doesn’t mean a good company
Great discussion - playing the arguments from both sides 👍How much would be Cred's loan book to match the revenue estimated from Financial Services?
Loved this debate format...for more balanced opinion
Ther last point, the conclusion for Cred is just hilarious and delusional
06:55
question - does Pankaj need to spend 33K on CRED or does he need to spend enough for CRED to earn 33K?
33k in revenue/person...so its not about profit
Customer lifetime value indicates the total revenue a business can expect from a single customer account throughout the business relationship. So CRED would need to generate ₹33K in revenue from Pankaj in order for their CLV to justify their valuation. So purely going off of the concept of CLV, it isn't about how much Pankaj is spending, it's about how much CRED is making. However, the nuance here would have made the example overly complicated so I just kept it simple for the purposes of the debate. -Caleb
@@backstagewithmillionaires understood
@@vinaybhat7670 got it
thanks!
I have been regularly using pay apps for more than 15 years .I really love using cred . I open cred at least once a day. It's so aductive. I can say it's most advanced than any other apps in India by my personal experience.
I like this format, this is very interesting
Wonderful make more of this. I will interested for OLA
Thanks for this valuable information.I learn a lot from your videos.🎉🎉🎉
Can do a series of videos on sports startup’s and how sports league business model and there details
The pros argument is very bad. The example of security deposit in Bengaluru rent is pure crap(how will a owner forego security deposit just because someone is on cred)?
He lives in delelu. It’s same as how crypto bois said their monkey NFT will give them access to a premium discord with millionaires turned out that founders made banks and shut down projects 😂 CRED will shut down in next 5 years or next recession. Kunal doesn’t have any MoAT and cred is just all shiny. Their audience is wanna be rich 18-25 yr olds.
Great analysis
The conversation could have been better , had they started bringing at least 5 points those play for the valuation. e.g. Teak wood v/s Rose plant.
Great debate do one video like this about Phonepe
Nice episode…. You need free cash flow till perpetuity to be equal to clv not just revenue
Pankaj,- optimistic approach
The idea behind a tech startup I feel is how unique it is and post disruption how quickly it can create competitive advantages that make entry difficult for others… cred as a product can be replicated, it’s not very difficult to do that… as the growth has been inorganic the brand loyalty I feel is also going to be short lived… good discussion though I guess 🙂
The biggest irony is that you CRED says it has high net worth people yet these are the people who will take loans!!! In my 25 years of job, I have taken loan only for my home and car. No personal loans. Why pay 12-16% interest?
I found the arguments for Cred to be rather dumbfounded
- We are literally glorifying collecting data and calling it something new 😮
- You’re calling it to be exclusive without offering anything that is meant to be exclusive
- It’s pure speculation to say that rich people use credit
It’s more like middle class trying to feel rich by joining an app just because Kunal Shah says so. It’s a house of cards.
I think the only reason he brought up thi se points is because he wants to extend the discussion. Otherwise it would have over within the intro
Nice Ad!
Unique format.. learned a lot.. noted down few points..
Btw nice moustache caleb.. 2more months and all you need is a pagdi to look like a true sikh paaji.. 🧔
Cred also acquire one startup called happay.
They operate on b2b segment
Could have started with what is CRED and their business model
Make more videos like this.
If Cred is spending ₹33k to acquire each user, they should recover that from profits not topline. They are in their current model a marketplace and their margins may be at best 20-30%. So cltv should be atleast 5-10x cac to even breakeven, that's not considering spending on retention and their hefty burn.
CRED is trying to become TATA for rich Indians is an amazing analogy.
Can you do a session on Porter?
I am a CRED user and never found any use of the App besides making payments!
Which you can do on several other apps? So no MOAT for cred
I have Cred installed only to look at their fancy animated app UI.
Celeb, revenue is different from GMV. Its intertwined in this video
The USP of CRED of having millions of high credit rated customers is compelling. So far it has not been able to get these people to buy stuff on the platform. Its basically new D2C consumer brands giving deep discounted promotional offers on unnecessarily pricey products. There is really not any differentiated product mix considering exclusive user group they have.
I wonder how it adds any value other than having a credit card user base at the end of the day they can only offer until investor pours money once benefits drys up most of them gonna leave that app and it's not that hard to add value by other companies we should see how it will turns out
See it like this :
Fb has your social profile
LinkedIn has your work profile
Cred will have your finance profile
And to keep benefits going, there would be targetted ads and customized promos.
@@dashmeetsingh9679,
Yeah, the big plan of cred is to get bought by phonepe (walmart), amazon, fb, google or some other giant and give everyone an exit.
@@dashmeetsingh9679the thing is
most people who use CRED definitely have Phonepe/Paytm already on their phone
So the customer base of CRED is a subset of that of paytm, not a different set
I first start selling Mangoes, after getting my customer hooked to the mangoes i say them i also sell oranges and some vegetables. After some time I tell them I also sell groceries to them. After selling groceries I say i do sell bags to carry your purchased goods from my store. This is what many startups are doing. Initialy it's one products later they wanna get into finance, e-commerce, real estate n what not
Caleb for the win- I an licensed banker- he's right!
badass moustache sir!
Almost done with the video, yet the arguments for Cred seem very paper thin. The crux of the pro-Cred arguments- Relying basically on the faith of Kunal Shah's past ventures or VCs putting money in this company, these do not hold up well when we see many of the new age internet startups struggle to build a sustainable business model and the world getting tighter with the money (after years of low interest enabling easy money for startups). Cred has a lot to do to prove itself as a reliable and sustainable enterprise (that is, if it doesn't run out of the money given in faith by the VCs).
This sounds more like an “AD” for Cred. They even added the marketing music by Cred. Super sus
I only use cred for CC to UPI Transaction (rent pay via CC) otherwise I never use Cred.
I think you can do that with Paytm as well. I might be wrong
750 + credit score = premium customers? 😮
high credit score people get instant loans from banks like hdfc , icici, etc. with much cheaper rates and higher deomination. and again their NPA on higher credit score guys is lower, the other guy is compring NPA of whole population NPA with a sample size.
Paytm is worth 7 billion dollars. An investor needs to be very high to pay 6.4 billion to invest in Cred given Paytm and is so much bigger and the fact that it is publicly traded provides near instant liquidity.
But, Paytm is trully worth 7 billion. as it is a public listed company, (even though for short time).
But, cred is all VC valuation
really!! house owner will not take security money and rely on cred score. hope I could see change in my life time. is it not too much optimism
How tf cred is targeting 1% and running ads on TV?!!!?!!
They're definitely about the long game. I used the app for 2 years just to pay credit card bills. But then I took a loan of 4.4 Lacs which I'm paying them interest for in the past year (roughly 65K). And I'm just one user. All they need is 1 in 10 users like me to take a loan, or subscribe to a holiday or garage package, or buy a few gadgets, and their valuation somewhat adds up.
PS - According to the tweet in the video their loan book is a huge 2415 crores. Imagine the interest in that, and this is just 2021.
Their interest will be difficult to estimate. Coz they would be taking a cut from it, not the whole interest rate.
And that cut would be very low, to keep platform competitive enough.
@@dashmeetsingh9679 Oh yeah, that's true. Forgot that they have a partner bank actually giving out the loan. But I would think the cut could be more than average as they have a unique platform with credit worthy members who might take up bigger loans than usual with a low NPA.
Lol, on one side cred says that it has the top credit worthy, high spenders while on the other it is offering them products worth 99 😂😂
I mean where is the value addition? You have top 1% population of the country registered on cred and if you see their “market place” in app. Its full of low priced generic items. Had there been exclusive deals which are nowhere else to be found then may be cred had an advantage.
Cred pro person is also on cred for free stuff, he bought earphones for 99. If it would have been at same price he would’ve bought from Amazon i bet😂
Exactly, funny thing is that he expects himself to spend 30k ok cred 😂😂.
Cred seem to be at a pivotal point in their journey which is going to make or break the company in the next 5 years
Very true! Hard to predict what they're going to do next. -Caleb
Pankaj had only 1 point. 1400 crores.
The thing is, that growth at the cost is crazy!
DEBATES > PODCAST
ANY. FFKN. DAY.
The for conclusion was “Tata for Rich People”.
Well Caleb you wouldn’t fomo even if you miss that existing today.
As tata isn’t gonna sit when someone enters their territory, and it will happen for all offerings of cred if they do X exclusive for a segment by burning an established legacy business can do that by burning more.
Caleb won for me. 🙌🏻
45 million mature user in india responsible for 50% of spending 😮
4.5 crore?
@@millennialmind9507yeah
India is poort country still
I'm pretty sure people will still take deposits for rent even after knowing the credit score of the person.
Ask them make app more usable, it is difficult to use😏
What problem is CRED trying to solve ?
Kunal Shah Has Don't Cares about cred He Silently doing angel investing 😶😶
There nothing special in cred. Even paytm a create services based on people credit score. Just simple filter. Most of the fintech alee6have users credit score
For my credit card payment, i am using paytm for that
Who is this guy who thinks every average cred is going to spend 30k on the app? Dude you are the first person I heard of who spent any money in Cred 🤷♂️
Cred is another Byjus in the making. Its a databank of smart and credit worthy individuals. These people will not add any value in future. Cred product and service proposition is totally missing.
One point for retailer investors stay away from cred IPO
just these rich people are makin the retail investors scapegoats.
I see cred is useful paying your bills and utilities but it does not bring any absolute benefit to customers..at the same time 70% of prpducts cred sells on their platform are mostly new/least popular brands which mostly people try to avoid. If they want to sustain into the business it requires them to introduce absolute benefits than the cred coins.. otherwise there are no rewards which cred claims as reward to the users. Getting 1 of 2 rs cashback on 30k or 40k credit card bill pay is not at all a reward. And cred coins are as good as playing games on their app simlply so what is avg. Benefit one would get is something they should focus on.
I rather started using UPI over rupay cc card to get cc points as well as i can enjoy the benefits of credit card..
I would go with the optimistic way of Pankaj. The average Indian now is starting to earn more and with enough financial knowledge, if people start getting credit cards and want to manage their money well, CRED will be a viable option if they bring new features to the platform and try and attract customers to get onboard with CRED to keep their CIBIL scores above 700 or 730. CRED has to come out with innovative ideas very soon because a shift will happen in India politically as well as financially and CRED will have to play their cards then.
Folks who've worked in the financial industry know Cred is a bubble, surviving purely on smart marketing tactics.
There are only few avenues to make money in this industry.
You confused GMV with CLV. When you bought that earphone for 99, cred made no money. Rather lost money over it. So it is a far island when people will give ₹34k to cred.
Tell the definition of value, first, what is it, is it something people believe it tp be
There are many ways to value startup companies like CRED, but these valuations tend to get distorted by hype and investor FOMO, so there's no easy math or calculation we can do to understand the justification for CRED's valuation. We'd need to talk to the bank or investors who valued the company directly, to understand how they arrived at that number. -Caleb
I bought one product because of discount, it turned out a bad product, did not work long. I don't find it comfortable buying anything on cred. It still feels shady.
Very true. They randomly cancel deliveries and the customer care is a pain to deal with.
Dekho bhai... revenue multiple par high valuation investment banker de dega aur apne ipo se hamare paise le jaega... to isme retail investor kahin na kahin paisa gaweaga, wo bhi bada wala... inka kya hai, aaj cred kal pred
CRED will eventually get into easy lending business
The old CRED app had best user experience. The latest update is trash and the CRED coins are useless.
These days startups in india are no different than call center scams, lol, god bless that so called angel investors!😂
HNI have private bankers and they have better instruments for financial needs and the other gentleman in favour of CRED seems to be confused and his points just don’t seem to be connected.. paying rent and coliving space… this person is confused in the process of defending!
for the algo
The guy arguing for Cred makes me like it less and less. It actually sucks. Tata for rich people is a misnomer. Tata is huge on philanthropy and all about access, not exclusivity. So stupid
idk but i still fell a loss making company is still a loss making company until and unless its for the welfare of the society. Inorganice growth cant go long way long
I think, Back stage Millioner would have spoken to Kunal Shah for a kind of Statics, or valuation why Cread has, someone from outside, not much prepared, seems not an strong opinioned ruthless debate master ..😂😂😂
For people don't know how to utilised cred coins, hope Kunal will will come up youtube video, how to use and where to use cred coins.
At least I log in daily, and use it daily, so do I maximize use of cred coin.
I have 25 lakh cred coins. If I could I would give it to you. So at least someone could use it😂
Paytm is just more practical and offers cash back and offers. Cred doesn’t have any value addition
What is Cred?
Kunal Shah, a self-proclaimed visionary and in reality a bigot shitting with his posts of unasked opinions all over social media and a wannabe influencer who wanted to appear cool with minimal graphics in marketing materials. So he made yet another failed startup on idea that doesn't hold any use in real world.
Just awful.