As part of the FinTales Interview Series, we speak to a fintech entrepreneur or executive every month. For the March 2022 edition of FinTales, we spoke to Vardhan Koshal, the Co-Founder of Tortoise, a savings product for high-value purchases.
We recently spoke to Vardhan Koshal, Co-Founder of Tortoise. Tortoise helps users save for aspirational purchases (like an iPad) and earn rewards. In an industry awash with credit products, Tortoise stands out. We spoke to Vardhan about his product idea and how he plans to tap the unserved market of savers. You can watch the full interview here. And read on for highlights from our conversation.
Origin of the idea
Pre-paid savings plans are common in the jewellery industry. These plans let you pre-pay for jewellery in multiple instalments. As a reward for the pre-payment, the jeweller waives a few instalments. It was this business model which inspired Vardhan to create Tortoise. He explains that not so long ago, jewellery was the main big-ticket item that Indians spent money on. But today, we spend large sums on travel, luxury goods and gadgets. So, he felt there was a need to extend this savings-based purchase model beyond the jewellery industry. He clarifies that he didn't consciously seek green-spaces in the overcrowded fintech market. Instead, he wanted to solve a pain-point: "It didn't begin as an anti-credit start-up. I just thought this should exist in the world and I should do it". Traditional savings products, he insists, don't make sense for short-term purchases and a different solution is needed. "Even a 5% cashback is better than 20% p.a. interest if your SIP is just for 6 months" he elaborates.
Solving the platform problem
Building a platform is challenging, you must build both sides of the network – merchants and consumers. But what comes first – the chicken or egg? Vardhan believes that while building a platform, entrepreneurs should focus on the supply side first. Like Amazon and Flipkart, which started out by focusing on books – a non-perishable, easily transportable and affordable category. Once they cracked this market, they were able to diversify into other product categories. This is the strategy he hopes to follow too.
Capturing the consumer
According to Vardhan, tech products can draw out behaviour that would otherwise not be apparent. "When Apple launched iPad, people thought why do I need this if I already have a laptop and mobile phone, but it has been a phenomenal success," he remarks. He believes there's a huge segment of consumers who would prefer to save for these high-value guilty-pleasure purchases. He suggests that merchants are currently only able to capture consumers who are wealthy or feel comfortable availing credit for aspirational purchases. But the merchant loses out on a large chunk of consumers who want to buy the product but want to save for it first. Through Tortoise, he wants to help merchants capture these cautious consumers and put them back in the transaction funnel. "This will give a higher probability of sale for merchants than just loyalty points," he argues. But he admits that not all consumers can be captured this way. "Aspiration can be graded on a scale of 0-10, with 0 being no desire for the product and 10 being you'll sell your kidney to buy the product. You can only get people to start saving for a product between level 4-8 of this scale," he explains.
Competing with credit
While building Tortoise, Vardhan surveyed many consumers to understand the size of his target audience. And contrary to popular belief, he found that most Indians were reluctant to avail credit for anything which isn't a home or an automobile. "Instant gratification isn't ubiquitous among the Indian youth. Credit access has increased drastically and this creates a false perception that the youth is looking for instant gratification. But many youngsters understand the impact of loans," he adds. Vardhan acknowledges that his target demographic is similar to buy-now-pay-later (BNPL) players i.e. consumers who don't have enough discretionary income to make instant high-value purchases. But he clarifies that the mindset of his consumers is likely to be very different. He wants to go after consumers who like to save. He's not targeting consumers who are comfortable availing credit for non-essential purchases. Credit expansion, he insists, is good for the Indian society and economy. But he also believes there should be an alternative available for consumers who want to avoid debt.
Gazing into the crystal ball
When asked about two start-ups that he's bullish on, Vardhan shares an interesting perspective. He's betting on industry insiders who have worked in larger organisations and possess a deep understanding of the market and its gaps. "Cred Avenue is a product built by an industry veteran who understood the problems very well. It makes money, is logical and doesn't require heavy expenditure on retaining customers," Vardhan suggests. The second set of companies that he's long on are fintech companies that are creating tools for other businesses (like M2P and Hyperface). He believes this is a relatively low-risk, high-return business where Indian companies can build for the world.
We thoroughly enjoyed our conversation with Vardhan and listening to his unique perspective. And we hope that with more savings-oriented products like Tortoise, fintech innovation will soon benefit savers just as much as borrowers.
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