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In 2017, IIT Kanpur alumni Aditya Prasad, Gaurav Kumar, and Harsh Pokharna wanted to start up but were not sure about the idea or how to go about it. While doing research online, they came across a course from Y-Combinator – How to start a startup? It taught them how to solve some of the problems they faced in their day-to-day life. 

One of the problems they personally faced was settling their monthly credit with the neighbourhood grocery store. The shopkeeper would go through scraps of paper and registers to sum up the outstanding, and very often they found a mismatch in the bill. Looking to solve this problem, they started OkCredit, an app that helps small merchants on three fronts — productivity, cashflows, and relationships. 

The app helps small businesses keep track of credit transactions, enables merchants to record transactions digitally, and sends timely reminders to customers, thereby solving problems of mismatch between the accounts of the merchant and the customer. 

“Small merchants usually record credit on registers, which is a time-consuming exercise. It is also prone to errors. With the OkCredit app, it is easy to record credit, thus saving time and hassle for merchants,” explains Gaurav, Co-founder and CPO, OkCredit. 

As of 2020, OkCredit saw over 800 million transactions. More than 2.4 crore users are registered on the platform and it has over 5.5 lakh daily transacting users. Close to 15 percent of the active users on the platform are suppliers.

Solving problem for small businesses

Gaurav explains, for merchants lending on credit, another big issue has been stuck cashflows. The customer may or may not pay on time, leading to reduced cash flow at the end of the month. 

He says, through our timely reminder feature, credit collection is not so much of a worry for merchants. Payments come on time, freeing up the cashflows of merchants and improving their business margins. Also, small merchants have often complained of spoilt relationships with customers when they sell goods on credit. 

“Our app brings in transparency and trust, wherein the credit due is clear for both merchants and customers. OkCredit essentially makes lending on credit a smooth experience,” says Gaurav. 

From pushing calls to managing credit transactions 

The journey to build OkCredit didn’t happen overnight. It was built over a series of trials. After seeing the video on Y-Combinator, Harsh, Gaurav, and Aditya first made a list of things that needed to be solved. One was how everyone missed talking to their family due to lack of time. They created an app that would push a call whenever you’re free.

“However, it didn’t seem like a large enough problem and we got bored in a few days. Among other things, we also considered making an app for splitting bills. But none of these were big enough problems to excite us,” recollects Gaurav. 

It was then they thought of solving a problem they faced at the neighbourhood grocery store, which led them to launch OkCredit app. 

Gaurav says, “We started working on the app where credit could be recorded digitally. We went to the store to ask the store owner to try it out, and he obviously did not agree. There was a lack of trust from his side – what if all the entries disappeared or if there was a miscalculation. We somehow convinced him to start out by at least recording our credit on the app. Once he got slightly comfortable, we requested him to migrate one set of customer entries to the app.” 

Adding more features

The team then added a camera feature to help the store owner migrate the old ‘Udhar Khata’ to OkCredit. “It took us two to three hours to help shift all his old accounts. Once he was convinced, he referred us to three of his relatives. We then decided to visit markets to talk to potential customers, understanding what they wanted, and recruiting our first few hundred users ourselves,” says Gaurav. 

Initially, there was no account opening system. Gaurav would call Aditya to create an account. Later, instead of in-person registrations, they made videos that would help people with the registration process and posted them in WhatsApp groups. Soon, OkCredit started getting a lot of inbound organic requests.

In the first phase, to take the product beyond the first customer, the team went exploring several markets in Bengaluru. They were mostly targeting Kirana stores. 

Improving the tech stack

“Soon, we learned that it’s not only a Kirana problem. It’s as much an issue for a mobile recharge merchant or a pharmacy. As we started onboarding other merchants, we had to make the app more user-friendly,” says Gaurav. 

The very first or second version of the app had three options – credit, payments, and return. While return happens in Kirana, it doesn’t happen in other categories. So, to make the app simpler and scalable across categories, they had to remove the return option. However, the team added another option to edit or cancel.

“Apart from recording each transaction, we saw that by the end of the day, merchants also wanted to know the total outstanding amount from all their transactions. For this, we added an account statement feature,” says Gaurav.

While the platform had a call option, the founders thought it would make more sense to send SMS or WhatsApp alerts to customers. To solve for payments, they added a payment link within SMS as well. Thus, one feature got built on top of another. The team also realised that the problem was not just about selling on credit. Buying on credit was also an issue as they needed to keep track of their purchases on credit with the suppliers.

“Initially, the app was only available in Hindi and English. But we felt that we were missing out on Indian language users and hence the app was made available in 11 languages. There are many more problems to be solved. We continue to work on user feedback and wherever necessary incorporate it into the product,” says Gaurav. 

He adds that talking to the users and observing them while they used the product gave the team better insights into customer expectations. 

In the early stages, one of the users had asked for the payment functionality, but they couldn’t add it due to finite resources. “We waited for more scale and our enhanced capability to build this feature. We also realised that we had to make the app simpler for older users to come in,” says Gaurav. 

The team realised that with Flipkart and Amazon coming in, there was an aspirational change happening among people. They understood the power of digital and ecommerce, and now wanted to offer similar services to their customers by leveraging the power of mobile and internet technology.

Learning to code 

Gaurav says: “When we decided to focus on the next billion users, we also realised that we needed to upskill ourselves. Aditya has been a coder, but Harsh and I had to learn new skills. Initially, we built the product with whatever we knew and learning on the fly. One of our college friends, Vishesh joined us by December 2017. We started hiring after getting the seed funding, somewhere around February 2018,” says Gaurav. 

When they started building OkCredit, they had built the system keeping one user (their grocer) in mind. Though several users came in later, the hyper-growth phase started in 2018 when the team touched over a million users. The team had to re-architect the entire system. 

“We shifted from call-based support to chat-first support. Later, we moved to WhatsApp-based support and then recently to in-app support. There has been umpteen learnings about users, diversity, and the way they use products for different use-cases,” says Gaurav.

The entire backend tech stack used by OkCredit – the Golang-based system, is quite scalable. On the front-end, they have been using Kotlin and RxJava. Gaurav says they also use the latest tools from AWS and Google Cloud to manage their data and backend infrastructure. Kubernetes and Docker have helped us automate a lot of development operations, he adds. 

Focus on the consumer 

“Enabling our users to keep using OkCredit even in areas with patchy internet connectivity, while still providing a reliable cloud back-up, has been one of the biggest problems we have had to solve,” says Gaurav.

“We have been early adopters of WhatsApp business APIs. We are keen on using other tools and technologies, which help us streamline our product design and development cycles. We use Mixpanel and Bigquery for our product analytics and data operations. Adobe XD, Miro, and Productboard are part of our design and product tool stack,” he adds. 

The SME segment is fast growing. A study by Google-KPMG showed that digitally-empowered SMEs have about twice the revenue growth projections compared to offline SMEs. 

As of now, the segment has several startups – Khatabook, Pagarbook, Lendingkart, Five Star Finance, and several others. However, Khatabook is in direct competition with OkCredit. So far, OkCredit has raised $84.2 million funding, and some of its key investors include Y Combinator, LightSpeed India Partners, and Tiger Global. 

“As a company working to empower small businesses, we want to help them at every stage of their business cycle by helping them grow their profits, by going online and integrating with the growing digital economy. We have already taken some steps by launching OkShop and OkStaff by solving another set of pain points for some other businesses. Our intent is to empower the underserved SMBs by democratising access to technology and capital for them,” says Gaurav.