 | Good Morning edwardlorilla1986.paxforex@blogger.com! Thank God for Sundays, right? Speaking of God, many of us would've heard the following quote: "In God we trust. All others bring data." It comes from the late American statistician, professor, author, and all-round management guru, W Edwards Deming. Deming was born in 1900, so much of his considerable (and still relevant) insights around management and work came from an era where data and technology were expensive and hard to access. Thus, much of Deming's formidable body of work, and quotes, comes from an era where businesses did not place much emphasis on data. The world we live in today isn't short of data. In fact, we have too much of it. Whether you're a small business that sells tchotchkes online, a restaurant, or a factory, you're generating anywhere from thousands to millions of data points every few weeks. Gather enough of it, and it will always throw up insights that look tempting to act upon. To invert Deming's quote into a question: if everyone brings data, who do you trust? No, I'm not looping back to God. This isn't one of those newsletters. Instead, I want to switch to a call I made last week to Harshil Mathur, co-founder and CEO of Razorpay, the Indian payments and fintech giant last valued at over US$7.5 billion. I did not ask Harshil about data, but about his most reliable mental model or First Principles when it came to major decisions at Razorpay. As it turns out, Harshil ended up sharing something along similar lines. "I talk to customers. It's a simple First Principle, but a lot of times, companies forget about it. The idea isn't to understand the how, but the what or why. As organisations get larger, they start to have large teams of in-house experts. They give you a filtered view, based often on market research. Internal expertise, in many ways, becomes a bottleneck," he said. "Which is why I constantly seek out customers to talk to, usually one per week, to give myself a frame of reference. We all know the difference between a data-driven versus heuristics-driven approach. I believe that anecdotes matter. I use anecdotes to validate. And when data clashes with anecdotes, I always trust anecdotes," he continued. I remember a point he made last year about how Razorpay's customer satisfaction scores (NPS) fell in the wake of Covid even as its business was growing dramatically. | (During) Covid, we suddenly had a massive scale-up as a company. A lot of new customers came on board suddenly, and in some ways, our NPS suffered a lot. So our traditional way of tracking and measuring NPS just failed and it went downhill significantly. We were still doing well in terms of numbers. […] We went from a positive 50 range to minus 12. We fixed it a lot and we went to, let's say, 10, I think. Early this year, we went to 30. So still not back to, let's say, pre-Covid levels, but it's in a decent shape for a B2B company. […] All our metrics that we would track were showing green, but I would know this because of anecdotal data that some founder would ping me, saying, "Hey, I am trying to do this and nobody's listening to me." I think my connectivity directly with founders and customers helped a lot because I would get those signals anecdotally, and when data and inputs don't match, it's typically the data which is wrong. | | | Razorpay CEO Harshil Mathur talks about deliberate culture, building to a need, and the principles of product development| 20th Oct, 2022 |  | I asked Harshil if he could share examples of things Razorpay has done that happened because of anecdotal customer conversations, and not market research. Instead, he told me about things Razorpay hasn't done. "A lot of B2B (fintechs) have gone on to do B2C too. We've been asked by our investors why we're not launching B2C features like a UPI app or wallet. I think we have avoided that because we constantly speak to customers. And when I speak to them, they tell me they will be worried if we end up competing with them by cross-selling our products to consumers directly. That fear creeps in. Which is why we have a 'brand promise' that we won't get into B2C," he said. If you haven't heard my conversation with Harshil yet, I'd urge you to. There's a lot of counterintuitive, First Principles-based insights in there. For instance, the fact that transparency is so important a cultural value for Razorpay that it actively discourages employees from direct messages and private channels. | For example, one of the core tenets of our culture is transparency. That we focus a lot on creating a transparent environment where people inside the company have a very clear view of what's happening and where we're going, and it comes out in various ways. Most of our discussions will happen on Slack public channels and not on private channels. We have a strong discouragement of DMs policy. Don't do direct messages, use public channels as much as possible. To something as simple as, there'll be no cabins in the office. So there are no cabins in the office. Even more interesting, there are no curtains in the office. So, like, if you look at the Razorpay office, no room has frosting, all glasses are transparent, and stuff like that. These are small things, but it adds up together to create a culture of transparency. And the reason we have transparency as a core focus value is that we believe that a lot of innovation happens from the ground up. Innovation happens bottom up, and innovation cannot happen till you have information asymmetry. If people don't have visibility, if my sales guy doesn't have visibility on how my product is developed, he can't come up with an idea on… "Okay, can we build a product this way and will it sell better?" Right, so, information symmetry is important to have ground-up innovation, and that is the reason we created a lot of focus on having a transparent culture. So, that is one aspect of the culture. There's a lot more, but it's one of the things that we were very focused on, that we were very deliberate with our culture. We still are. | | | Another conversation with a high density of original insight is the one I had with Amit Agarwal, the co-founder and CEO of NoBroker. Amit, too, talks about the invaluable insights provided through direct customer conversations. | In 2014, we told these small customers that if there was a website in which you could contact owners directly without any broker in between, and if there was no physical person to show you the houses, would you buy that service at Rs 2,000 or Rs 1,000 or Rs 3,000? And the same question, that if he was the owner, would they like to post a property and meet directly with the tenant, and would they be okay getting phone calls directly? In both of those cases, 90% of customers said yes. But there was one more thing which we discovered, which we never thought before we went to ask them. Their second question was, who will do the rental agreement? We were like, "Hey, rental agreement, that everybody goes to Google (and) takes a printout of a format and you sign it." Because so few people go to the government office anyway to do it. We thought this was a no brainer. Why are people worried about it? But they were right. In their mind, this was some work, which was in their mind, half technical, and a broker used to arrange it for them. So, they were like, "Hey this piece will be missing." And so our first action was: okay, when we start NoBroker, we need to build a rental-agreement team, which will help you do the rental agreement, and you sit at home and do it digitally. We'll send you the courier, you sign it, and in case you want to do it yourself, then we will give you the pro forma and you can do it yourself. | | | Amit Agarwal of NoBroker talks about his single-minded mission to disrupt brokerage, building a cockroach company, and why his office address is a secret | 8th December, 2022 | We started with an Edwards Deming quote, and we'll end with one too. "The most important things cannot be measured." — W Edwards Demings See you next Sunday! Regards, Rohin Dharmakumar fp@the-ken.com | | | | |
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