2023 Reflections On Progress of Refrens.com

Satpura Jungle, Madhya Pradesh, India. On an early morning drive to see some lions. 24th Dec 2023.


  1. We grew 3x in terms of Monthly Revenue. 10% MoM compounding. We need 3 times 3x and 2 times 2x to go 100X. But we need a 10X year before that. 
  2. We are an invoicing and accounting app. People love us (and pay) because we handle the complete journey from lead to quotation to invoice to accounting.
  3. We are not a market network, yet, what we originally set out to build. This keeps me mentally occupied. But right now the focus is to grow revenue for what we have.
  4. Consumer product – each customer is not worth enough to call. B2B – Each customer is worth going on a feedback call.
  5. We have paying users from 103 countries. I still don’t know if this is good or not for an early-stage product. We partially designed for this but never optimised for this. Happened to us organically, so yeah, it should be fine. But are we serving them well?
  6. Direction bothers me more than speed, on weekends.
  7. Speed bothers me more on weekdays. I don’t get a clear sight of direction in day-to-day work.
  8. Our target market is large, this helps us make decisions for the long term.
  9. Build essential features first. Add speed. Then fuss over a great design. People don’t notice good design much. Some people notice bad design.
  10. You can only know what is an essential feature if you talk to customers every day. Or live with them. Or you are them.
  11. When you don’t have PMF you tend to go breadth-first and end up having multiple projects that are loosely connected. When you have PMF, you can go depth-first and it is easier to sequence the priority for a PM.


  1. Some problems can be solved only by adding more people. I should have realized this much earlier. I wanted to solve the revenue problem with tech.
  2. Users pay a significantly higher premium if the product is complete for the JTBD.
  3. There is no bigger fear than that of money running out. Specially once you think you have something meaningful built. I have stopped thinking about negative scenarios for the past few months. We will sail through fine.
  4. Time or opportunity cost rarely bothers me. I am told it should bother me.
  5. Passive income to support a founder’s personal expenses takes active energy. If the family is helping you, it takes energy to manage them.
  6. I have stopped looking at marketing charts on Google Analytics and now look at daily revenue charts. Partly because GA4 broke some of my favourite reports. Partly because there is nothing interesting on Twitter.
  7. Having a pulse of cash flow helps keep my anxiety low. I want to get over with tracking cash flow for 6 months. Hopefully soon.


  1. Distributed team across Bangalore and Surat (and some WFH) helps keep the costs low. Branding of Bangalore with the cost of Surat. It was initially done because we (Mohit and me) were already in 2 cities when the product took shape. Sometimes it makes me feel that this is slowing us down.
  2. Having a few canons in the team can do wonders. Helps distribute founders’ workload. Don’t need too many canons though.
  3. Delegate things that don’t directly affect the product. Don’t delegate other stuff until there is a very strong reporting and feedback loop.
  4. Interns bring a different level of energy to the workspace. They are generally the happiest people on the floor. And that is contagious.
  5. People Managers are generally grumpy. We need fewer Managers.
  6. Any freedom that breaks a process for the rest of the team is not freedom. It is a discipline issue that must be addressed immediately. Demand for more Freedom is just less belief in the mission.
  7. Letting people go is fine. They already know that it is coming. Your team knows it earlier. We let go 3 people this year. All in less than 2 months from joining.
  8. One person one job is very difficult in the initial days. Creates too much cost load. In later stages, if one person has multiple meaningful tasks, it is a sign of low skills, either of the worker or the manager.
  9. The larger the vision, the better the people who want to align with you.
  10. Having a dedicated office space improves my communication. We took over the Surat co-working space in November. I can now shout across the corridor or sing to relieve my stress. I cannot think of going back to the older style.
  11. We are 54 people now, including interns. We need to 4X this in the next 12 months.


  1. Community events have been really helpful. People go to any extent to help you if they see that you are passionate.
  2. Stories are good. Numbers are better.
  3. Meeting in person and sharing your problems works best to build relations with investors. Current and new. We have 65 investors on capable and about 100 including the ones through syndicate.
  4. After taking investment you are competing with your investor’s other portfolio companies from very different sectors for their attention. If any of their portfolio companies grow faster than you, you will lose attention.
  5. No one likes slow movers. They stop cheering for you if you don’t keep fuelling their excitement.

Understanding The Economics Of Edtech Startups

I spoke to a few early-stage EdTech startups over the last few weeks. I had multiple questions answered. Here I am looking at the unit economics of such platforms.

The economics is mostly dependent on the student-teacher ratio. And that defines the whole experience as well.

There is broadly 3 range of ratio here:
1. 1to1 – WhiteHatJr.
2. 1to Few – Cohort based. GreatLearning.
3. 1to Many – Recorded classes. Byju’s.

The cost of acquiring a user(learner) is the same for everyone. The gross margins are 20% to 92% depending on the student-teacher ratio.

A 20% margin business for a non-branded teacher is impossible to break even. In D2C, 70% gross margin is supposed to be healthy. The same should apply here.

What would work well?
A hybrid model, where pre-recorded classes are followed with a few cohort-based workshops and then 1-1 doubt solving. This is the ultimate package that removes the creators branding requirement also. And gives control to the ed-tech platform.

Problems as compared to offline education
1. A 1-hour recorded video is about 3hrs of live class equivalent. Generally, recorded videos are condensed & edited, which results in poor learning because there is no buffer time to make notes or to think.

2. Chat for doubt solving is flooded with 100s of students. The rate of resolving doubts is poor.

There are 3 types of learning and all 3 are measurable in their own respects. :
1. Certificate-based – Mostly upskilling courses.
Branding of the certifying institute. – GreatLearning has Stanford, IIT etc.

2. Outcome-based – Competitive exams for admission.
The past success of institute – “AIR 1 is our student”.

3. Hobby Learning – ECA.
Branding of the teacher – Check Frontrow – Celebrity teachers.

All the 3 above are socially tangible.

Unlike learning and gaining knowledge. If you are just curious and have the capability to “learn on your own” – Youtube is enough. Alas, most of the millennials haven’t been taught to learn on their own. We need to be guided.

Understanding The Opportunity In Creator Economy

Originally posted as a Twitter Thread.
Interesting how Threads have become easier to write than blog posts.

We are trying to decode the creator economy that we use to guide us at Refrens .

The most important thing before we start. All creators must have their own audience. If your audience is owned by a platform that might go hostile later (a la FB) you are swimming in the wrong sea.

What you monetize is your audience. Your audience trusts you, your face, your voice, your brand. So like a teacher or doctor, your work is not delegatable. You only earn from as many as you can directly reach.

The creator economy falls into 2 brackets with respect to where their money comes from.
1) Those who teach the audience a new skill – and the audience pays. Example – @VaibhavSisinty@LiveFromALounge
2) Those who sell the audience a new product – and a brand pays. Example – @Bhuvan_Bam – also called Influencer

Change in Execution:
A. Some are creating digital products for other creators.
Lack of potential in capturing value, i.e. collecting fees for advice, enforces this. So you create an enabler product/platform instead of advising.

B. Some creators are now starting to own the brand that they promote ( a la Ramdev-Patanjali)
A broken influencer to sales attribution system enforces this.

What happens to other creators – like writers on @TeamPratilipi or @YourQuoteApp? They fall somewhere between 1 & 2. The audience pays, not to learn but to consume the creation. Freelance writers used to get fixed-fee from editors. Now they are micro-publishers themselves. (Read more about micro-entrepreneurs on Platforms)

Products in the creator or freelancer economy can do 3 things:
1. Provide a tool to create – Video editing tools, podcast creation tools etc.
2. Provide a platform to distribute – Reach and manage the audience.
3. Provide a platform to manage the business – payments, leads etc.

A good platform must do 2 of the 3 things above.
1. Youtube does all 3 of the above. But #3 partially only.
2. Spotify does 2 directly and 1 through Anchor.

Doing only 1 of 3 above means you are doing nothing specific to this audience. You would be anyone like Figma/Freshworks, with lower ARPU. You will be a commodity tool.

The challenge is in selecting a target market that is still large enough even when you combine 2 of the 3 above.

MS=10E – Sales Vs. Engineering Ratio in Tech Startups

For every $ spent on Engineering, spend 10 on marketing and sales.   

What should be the ratio of sales to Engineering? As high as possible. 10:1 is plausible. For every $1 of effort in making the product, there should be $10 in selling it. Includes founder’s time, software purchase, and external resources. This is true for SaaS and Consumer companies.

A lot of focus in Tech startups is on getting the product right, hence expanding the product or engineering team is the most intuitive thing to do. Yet, a lot of startups that are successful have a not-so-beautiful product, with not many fancy features. Naukri.com, JustDial, Indiamart, Makemytrip and many such have been sales first company. Their competitors might have “better” products to showcase, but they still won.

Selling is important to make the product. Selling gives a constant feedback loop to your product that engineering can utilise.

Imagine a software product as a research project. Once you have cracked the right work flow, it is easy for anyone to copy it. So even if you find something small, run with it and sell it. Would you want to keep funding a research project forever?

Another way to figure this out is to look at your Key metric. Does it change with 1 more engineer or 1 more marketing/salesperson?

But what about “great product is the best marketing”? Great product drives good retention, repeat and referral. You still need marketing to fill the top of the funnel and sales to nudge the bottom of the funnel.

Why do startups have a hard time doing this?
1. Because they are too shy (introvert) to understand enough about sales.
2. Head count wise it sounds a lot. In an avg. SaaS organisation an engineer is paid 3X of a sales executive.
3. Spending more ads requires orchestration of support and sales team also. Marketing spend cannot be increased without the support of a fast recruitment and training team.

If you still have a tough time justifying this, think of engineering and product as Capex (to set up a factory). Marketing and sales spend is the Opex (for raw material). If the factory is setup, keep adding more raw material.

What is your MS:E ratio?

*I use marketing and sales interchangeably because a lot of low-ticket size DIY SaaS companies only have marketing teams.

Moving The Problem With Money

Scene: A startup in a large market is growing 5-10% week on week. The startup founder wants to grow faster. For this he needs to convince suppliers beyond the organic pull.

Problem: The suppliers don’t trust him because he is relatively new. Hence, they are asking for a minimum revenue guarantee. The founder is good at creating a product but not very good at selling, so he is not able to convince the potential suppliers.

Potential Solution: The founder thinks if he has enough money in the bank, he can offer minimum revenue guarantee to suppliers and that should be enough to convince them. So he ventures out to raise funds.

Solution or New Problem: Now he is working on convincing an investor instead of the vendors. He will now dilute equity to give advance revenue to suppliers. Is the problem solved or moved? 

Moved Scene: What he doesn’t realise is that the business model has now changed from a zero-inventory marketplace to a high-risk trading, where he has already unwritten the supplier. In the previous model the supplier was working to make sure things on the marketplace sell, now they have no interest in helping drive sales.

Changed habits: The suppliers habit haven’t changed, but the founder and his team is now used to buying inventory instead of convincing anyone. More suppliers are interested in selling to him. Supply chain metrics is measuring number of new suppliers added every month. The team goes berserk and buys any and everything to show better numbers in quarterly reviews.

New Problem: A lot of unsold perishable inventory that has already been paid for. Some of it is not sellable.

New Solution: Sell everything at lower price. Any revenue is better than no revenue. Bad inventory gets bad review, so the team now spends in refurbishing that inventory.

New Problem: Additional investment required to maintain and refurbish inventory.

Side Problem: Suppliers are buying their own inventory at lower price. Real buyers are missing.

End Result: Low equity holding. High inventory holding. Unhappy customers. Suppliers still don’t trust you because they can see the gap in your model and are scared of the bubble bursting. 

Moral: Learn to sell and convince the right person. Don’t move the problem with money.

Over simplistic? I know. But you get the point.

The Ultimate Hook – Discounts for Consumers, Tools For Businesses

In India, most consumer internet brands have used discounts as a hook to lure in users. If your service is good, those users will stick. If not, they will go to the next brand that gives discount. Discounts are good to drive consumption, change habits and make people use your app to indulge in the newly formed habit.

For B2B, discounts are not a sustainable way to create new marketplace.

Here are some reasons:

  1. Timing – Businesses do not have a need for a new service/product all the time. You can buy an extra t-shirt if there is a heavy discount but can you buy something extra for your business just because it is cheaper. An extra phone number? No. An extra LMS? No. Over procure commodity for trading – may be yes. Sustainable? Debatable.
  2. Cost – B2B has High ticket size transaction so high absolute amount of discount is required to move the needle.
  3.  No lock-in. If it’s a commodity service/product, it’s easy to come in and easy to leave.

Let’s look at “tools” as a way to create a sustainable B2B hook? 

We are not talking about selling the SaaS tool for profit but using a SaaS tool as a hook to marketplace or network. How does a tool fight the above 3 problems.

1. Timing – There is always a need for the tool, new companies will adopt your tool faster because they haven’t adopted any tool as yet. If a tool itself is powerful, it might give competitive advantage to early adopters and hence drive industry-wide adoption. A popular category tool will always find takers.

2. Cost – Initial development cost is as much as it take to create a SaaS company. Incremental cost of serving a new customer is negligible with SaaS. Giving it out for free or at a lower price will hurt, but not so much if the network it is building is valuable. Read this on when to choose free as a pricing model.

3. Lock-in – SaaS Tools are great for business lock-in, here’s why:

  1. Workflow and adoption – Each tool has its own workflow, if you have adopted one, it is very difficult to leave unless the incentive to move out is too high.
  2. Data – Moving existing data to a new system is cumbersome, if possible at all. Doing it across an organisation is like moving a mountain.
  3. Network effect is a true lock-in and a SaaS tool can do a strong seeding before the network effect kicks in. It’s like supporting each other  for sustainability.

Why do tools not work to seed a network/marketplace?

  1. Bad tool – The tool itself is of low value or bad. In this model, you still have to make a good SaaS product. Future network effect is not an excuse to make a bad tool today.
  2. Unrealted tool and network utility – There is little to no relation between the tool and the network. This will end up being 2 products in the same org competing for resources and that do not add value to each other.
  3. The network is not valuable– The utility of network is of low value. You have a working and sticky SaaS tool but the value unlock is not valuable enough for businesses using it.

The tool, the network and the relation between the 2 must be analysed for this to work. It’s tricky, but when it does work, it is great.

Some companies doing SaaS enabled marketplace in US

  1. Stripe – Payment tech is really a SaaS tool. A lending company unlocks major marketplace level value. If a lending company has to be built otherwise, what seeding or lock-in do you have?
  2. Wave – Free book keeping software. Upsell accounting services.
  3. Zenefits – Low cost HR software, capture employee data, upsell insurance.
  4. Invoice.2go.com – SaaS for book keeping. Upsell invoice discounting.

All of them have used SaaS for seeding the demand side of marketplace. None of this has used a network effect. FrieghtOS has seeded the supply side. Network effect is still minimal.

Examples in India:

  1. Wishbook – Funded by Naukri. A SaaS tool for apparel manufacturers. Building a B2B marketplace on top.
  2. IconScout – Won grants from Adobe. SaaS tool, delivered as plugins for popular design tools, to manage your design assets. Building design assets marketplace on top – icons, illustrations, stock images.
  3. Refrens – Yours truly’s startup. We made an invoice and payments system for freelancers and SMEs (SOHO), and seeding sales referral network on top.

Ecosystem will take time to embrace this as a model because this is literally like making 2 products at once, with 3 chances of going wrong.

Will marketplace enable tools? Or tools enable marketplace or is it a case of “it depends”?

Related reading: 1, 2, 3.

Why Do People Consume Content? How to Distribute and Monetize Effectively?

There is a lot of debate lately about the right business model for news content. Ad supported models are failing for various reasons and some publications are seeing success with paid subscriptions. Here I have categorised various forms of content based on why it is consumed and how best it can be distributed and monetized. Please see the chart below. The rest of the article only tries to advocate the chart.

How to monetize content effectively
Click to expand

Here’s a look at different reasons why people consume content online. See details in the chart above.

  1. Utility – You already know a specific question. You are looking for an answer. To save time and/or money.
  2. Hope – You don’t know the question but you will know when you find a good answer. Gives you hope of being smarter, instills long term pride. Most non-fiction books and business tycoon blogs fall in this space. There is some shareability in such content.
  3. Porn – There are no questions. There are no answers. It generally has no takeaway but it instills some emotion like envy, nostalgia or anger, which is short lived. Quantity rather than quality should be the focus here. It has to be new for the consumer, irrespective of when it was produced. This is just like real porn that instills momentary lust but has no value after you have (s)wiped off. Such content has high shareability due to the emotion it triggers.
  4. Professional Utility – This is a mix of Utility and Hope. It revolves around consuming content around your specific profession. This content is partially actionable for the consumer but is not an answer to any specific question. Industry journals fall in this category.

Same content could be packaged in different ways for different audience.

  • Reading about the price of a newly launched iPhone is porn.
  • When you are looking to buy it, is utility.
  • An iPhone seller would need to subscribe to price change alerts, serving professional utility.
  • A consumer brand owner might read about the price change pattern in the hope of understanding the strategy.

Some Examples to Understand the Context of the chart above:

  1. One would subscribe to Scoopwhoop or Buzzfeed on Facebook but would you subscribe to it over email? May be not. How often would their article land on a search engine result page when you are searching something? Not enough to make them survive.
  2. A price action movement in stock price for a stock trader needs to be reported instantly (Professional Utility). But if you are just drooling over a 40% price jump news for a tech stock IPO, you are most likely just reading for orgasm, hence it’s a porn content. You were never really searching for that content.
  3. Inside.com does a great job of category specific news digest emails. Most of the content they serve has low shelf life hence they do not write but just curate the content.   
  4. Skift.com for travel industry is a great professional utility content. Similar to Medianama for digital media in India. Most of their content has short shelf life but is important for their specific industry.
  5. Subscribing to the-ken.com is hoping to become smarter. It doesn’t serve a particular industry but their articles cover some nuances of doing business in general. Subscribing to Naval Ravikant on twitter serves a similar purpose, hence we might even buy his quotes packaged as a book.
  6. A how-to site wikihow.com would serve limited purpose to subscribe on twitter or FB but do great if it shows up on Google’s result page.

Building for New User vs. Power User

When we built version 1 of Freecharge, it was targeted at first time online transacting users. The transaction flow had more explanations regarding “Why” a certain info was required and “How To”. We even had to explain things like we are safe to transact. The media coverage helped. We did succeed but the flow was slow for repeat users.

In 2011-12 when Paytm was becoming popular they were particularly attracting the power users. Faster flows, coupon screen could be skipped, maintain wallet, recharge over IVR. The users who only wanted a clean and fast recharge moved to Paytm.

Had Freecharge started with a power user flow, we may have never succeeded. It would have been impossible to explain things with minimalist UI. Had Paytm launched with the first time user UI, there would be no reason to move to Paytm.

I recently moved all my family’s MF to Kuvera. While there are many apps trying to get users to buy Mutual Fund through them, Kuvera has 2 features that gets the power user i.e. single sign-in for family accounts and ability to import old transaction. MF is a complicated product for first time user to figure out on their own online. Once the power users are captured through these features, these users can influence the laggards as well.

Depending on what you are building and when, it is important to note if you are building for first time users or a more valuable product for a power user.

What “Women at Home” Want? How Can They Make Money?

Hotstar was the first and fastest 100MN download app from India. Indian women were a major contributor to this. They are the bread buyers of the family so it make perfect sense for media companies as well.

Stay at home women in Indian households are major consumers but they are also considered a major reason for low growth of Indian economy. The social structure does not allow enough freedom to go out of home for standard work hours.

I am particularly talking about educated women in urban Indian family. Typically a women’s income in such family is “additional income” and not mandatory to run the household income.

Here are few traits that I have been noticing. It will help you understand what they want.

  1. Age 25 to 60. Married.
  2. Can use popular apps on smartphone. Not necessarily tech savvy. More browse, less search.
  3. They are influential but not necessarily on Instagram.
  4. Everything goes Viral. Word of mouth is fast. Comparable to college kids.
  5. Have free time from early noon to early evening. Not necessarily on all days. Not at the same time everyday. About 30-50 hours a week.
  6. Do not appreciate physically intensive work like data entry. Creative works helps.
  7. Need Social recognition for work. They need “colleagues” to work.
  8. Not pressed for money. Not looking to meet a need or target to achieve.
  9. “Sales” and “Creation” are most suited. Operational work is difficult remotely. Any work that requires time adherence is difficult.

There are few companies that are trying to tap this workforce. Let’s see what they are doing right.

  • Foodybuddy – The startup enables home chefs to sell online. This domain has been explored by startups earlier. Shef just graduated from YC to address the same domain. Amongst other things the one thing they are doing right is that they are selling long shelf life items. Along with immediate consumption item like dosa, they are also selling dosa batter. They are selling pickles and Ladoo. These need to be less predictable in terms of time of service. It’s difficult to beat a restaurant’s time adherence for immediate consumption food. Fast and convenient will always over take taste. For other stuff it is has a strong story, as powerful as that of Lizzat Papad’s self help group. Women do creative work, app handles sales and delivery.
  • Meesho / Glowroad / Shop101 / Wooplr– These are decently funded apps. All in the dropship category. Mostly selling non-branded women clothing. Apparently they are doing good in tier-2/3 towns. The local store may not have as much curation and catalog size so these apps work. Meesho sellers are like ecommerce assistants. Curating on Meesho is a creative skill. Same audience as Amway or Tupperware. Women do the selling work, app handles supply.
  • Flyrobe’s Trunk ShowFlyrobe is into rental of premium clothing. They are trying their hands becoming the suppliers for women who want to setup kiosks at local Flea Markets. They deliver the goods before the orders are placed by the consumer and allow of a more physical viewing. The unsold inventory can be returned. App handles supply.
  • Makemytrip has had work from home holiday consultants for sometime now. Sales centric again. But makemytrip gives leads to their holiday consultants. Users aren’t really selling to their own network. Time adherence will be higher in this case.

At my new startup, Refrens, we are looking at bring more work to this audience. Creative people who are good at what they do but may not be able to go out and sell.