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Tencent and Sequoia-backed accounting platform KhataBook is moving to a fintech-first model with new offerings for its micro, small and medium enterprise customers, including lending and neobanking. This extension of services, from being a digital ledger for accounting and reconciliation for small and medium retailers, is natural, given the amount of data the platform has on the businesses, says Gaurav Lahoti, Vice President of Engineering at Khatabook.

“The capital need among Indian businesses is much higher than in the US. In India, most of the data is unstructured and figuring out the risk for underwriting can be hard,” Gaurav tells YS.

His nearly 100-strong team is currently focused on using artificial intelligence and machine learning to develop better underwriting and risk assessment based on Khatabook’s data.

“The tech is as good as data and tech can’t do much in the absence of a digital footprint,” says Gaurav, adding that the adoption of online transactions and UPI-led payments has helped the platform build a digital profile for the businesses that make up its customer base. 

Building out Khatabook

Product pivots, though, can be challenging, and often lead to attrition, says Gaurav. This is why, he says, at Khatabook, hiring is based on an individual’s ability to adapt and move on quickly to the next project. Gaurav and his team are responsible for maintaining the tech infra for the company’s products–Khatabook and BizAnalyst, apart from payments, lending, bookkeeping, and receivables management. 

Prior to Khatabook, Gaurav had co-founder a K10-focused edtech company, Genius Learning Labs, which he established in 2016 with his batchmates from IIT-Bombay. The company went through multiple pivots–selling directly to schools, then to teachers, then moving from a business-to-business-to-consumer model to a business-to-consumer model. 

That, in effect, laid the ground for Gaurav being able to make quick decisions for building a product or suite that worked.

“One thing I learnt from building out Genius Learning is that unless the end-user believes that the product is the right solution to their problem, the product will not go ahead,” he says.

Gaurav adds that all engineering hiring at Khatabook is based on whether an employee understands why the product is built, and why decisions change and pivots happen. “Folks at Khatabook know this is how the real world works,” says Gaurav.

While Gaurav was trying to find the right fit for his edtech startup through multiple pivots in the selling model, he had kept in contact with the founders of Khatabook, who were also his batchmates from IIT-Bombay. Khatabook was a part of Y Combinator, and the discussions centred around structure engineering and building a product. 

“The numbers at Khatabook grew fast and I ended up joining them in 2019. When I initially started consulting with them, it was a five to seven-member team, and by the time I officially joined them, it was a 15-member-plus company,” says Gaurav.

At Khatabook, Gaurav helped build out the product design, and by March 2020, the platform had 10 million monthly active users. The mandate changed as the company grew from an initial team of eight software engineers. 

Education and early career

Gaurav, who grew up in Udaipur, Rajasthan, went on to pursue BTech and MTech in Civil Engineering at IIT Bombay. He was always interested in applying computer science to problem statements in civil engineering. His earliest memory of being interested in coding and how computers work goes back to 2005, when he was in middle school and started taking apart his home computer and checking its processing power. 

“Even my masters thesis was about using AI (Artificial Intelligence) and ML (Machine Learning) to figure out earthquake resistance and risk assessment. All my internships were around simulation and 3D-modelling, and I had audited multiple courses from the Computer Science division, which got me an admission into MS in Computer Science at University of Illinois at Urbana-Champaign,” says Gaurav.

At the university, he received the Siebel Scholars award for excellent academic, research and leadership skills. His interest in entrepreneurship had started with the Society for Innovation and Entrepreneurship (SINE) at IIT Bombay, continuing well into the completion of his masters in the US.

“My university in the US had a course on entrepreneurship, where they would invite the founder of Reddit, one of the founders at Tesla, and others. That made me realise that I did not want to join a multinational company. Instead, I decided to join a startup, C3.ai, where I worked with programmers who had been writing code since before I was born,” he says. 

A bigger suite

Apart from building a platform for lending at Khatabook, Gaurav and his team have introduced features focused on driving efficiencies. 

“We will see some revamp coming to Khatabook’s product with a bigger accounting suite. We are also working on offering financial services to businesses we work with as capital availability is a big bottleneck for small and medium businesses in India,” he says.

His team of ‘generalists’, as he refers to them, understands the problems associated with accounting for small businesses as many of them come from non-metro cities, says Gaurav.  “We have a diverse team and many of them come from Tier II and beyond. They have seen the problem of accounting for MSMEs first-hand,” he says.