The Meta–Cred–Kunal Shah deal, stripped to its fewest assumptions

In the last two days, you probably read a dozen if not more very confident explanations of what the meta-cred Kunal Shah deal really means. Now don't get me wrong, I think most of them are wrong because they're essentially putting the cart before the horse. Everyone is trying to sell the narrative and it's not because the people writing them aren't smart. But it's because no one really knows. I don't think Kunal is talking to people telling them what happened. I don't think Mark Zuckerberg or Chris Cox or Facebook is. So therefore no one really knows and either do we. So we are not going to add a 13th or a 25th narrative. Instead, we're going to do something that's the exact opposite of that. In this episode, we are not going to have a very strong opinion, at least in the beginning, we're not going to have a very strong and structured narrative. We are not going to come in with a very strong clear explanation that this is why things happened and this is how they happened. Instead, we are going to come in with a little bit of an open mind and we're going to ask a lot of questions. We're going to remove all the press release language and we're going to start and ask what is the simplest explanation that has the fewest number of assumptions. And then obviously because it will be a cop out to just ask questions and leave and the end of the episode will force ourselves to put our cards on the table and tell you what we actually think. Welcome to the Okan's razor analysis of the Metacred Kunal Shardin. Welcome to a special episode of 2x2, it's special and there are many reasons why it's special. First is the timing of it. We are recording this just 48 hours after the announcement dropped and the announcement was this. Meta is investing about 900 million dollars into CRED and Kunal Shard, whose CRED's founder and CEO is leaving CRED to run WhatsApp for Meta globally. We've never really done an episode this quickly from when an event has happened. 2x2 is usually a fairly slower, considered, you sort of like take your time and get to an explanation and try to figure out what's going on. But sometimes something happens that's so interesting, so confusing and quite frankly very badly explained everywhere else that we just figured that maybe the best thing to do is just get into a room while we are still trying to figure out what's going on and try to figure out together what's happening. So that's what we did, we've just cramble this together very deliberately. And second, Rohin is back. For all those who are new, Rohin used to co-host this show with me for the first almost 80 episodes or so before he decided to step back to focus on the Ken and another podcast, Intermission. Now he's been doing his own reporting on this deal as MI, we have called investors, we have called operators, we have called X people at CRED and at Meta. And we are trying to figure out what's really going on. And so I thought I'll just invite Rohin back and there's nobody else I would have back on the show. So welcome back Rohin. It's good to be back PGK, just don't get too used to it. Sure. And the other thing that I'll tell all our listeners is there are no other guests on this episode and that's because we did ask people, we reached out. But the thing is that this is one of those situations where nobody is going to speak about this on the record right now because investors have their own liquidation preferences and repetitions that are writing on this and operators who have relationships with both Meta and with CRED also have don't have an incentive to come on and talk about this and people who are there inside CRED have NDAs or just are a little bit nervous about the whole thing. When everybody who knows something about this is not talking then the discourse that comes out is usually the one that is the least informed because that's what fills the vacuum. So rather than put a half informed guest we thought that we'll do this reporting privately which we did and we thought that we'll figure this out together carefully in public. Which brings me to what this episode really is and there's only one ground rule. We're not going to have any opinion, we're not going to have any narrative, we're not going to have a new point of view. We're going to start with an open mind, we're going to start with questions, we're going to end with an opinion though and our tool is OCam's Razor which means that when you're faced with many competing explanations you start with the one that requires the fewest new assumptions. So you pair this with First Principles, something that my co-host for today Rohit knows really well. We are stripping a claim down to what we can actually established and we're going to build it from there. So here's what we're going to do, we're going to put out the method, we're going to state the facts, only the facts, we're going to remove all the press release language and we're going to work through four questions one at a time and here are the four questions, question number one. What is meta actually paying for? Is this about Indian payments? What happens to Kred and why would Kunal Shah take this job? We're going to take each of these questions, we're going to try to figure out all the answers, we're going to stress this to them, we're going to be skeptical and then at the end of this. After we spend an hour not jumping to conclusions, we'll break our rule and we'll give you our actual opinion and these conclusions that we get hopefully will be a little bit earned and something that we derived through our conversation. And finally, every time we are speculating, we'll sort of tell you that we are speculating. Rohit, shall we begin? Before we touch the deal, we're using your cams razors. So let's just take a quick two minute detour about Okam's razor. Now most people assume and no Okam's razor as if there are competing explanations for something. The simplest explanation is usually the one that is right or that is the one that you should trust. Yes, that's a common explanation of Okam's razor. But there's a fundamentally better one which is, it's not just about simplest but pick the one which has the fewest assumptions. There are two competing explanations. Pick the one that requires you to make fewer assumptions. For example, if your bike or car won't start, the simplest explanation is there's no fuel. It's not that your pesky neighbor sabotaged it overnight because you had parked in his spot some days back. Now in first principles, of course, in some senses the cousin or the partner move which is essentially when you're trying to build up, you build up using the simplest possible explanations. So cams razors is when you're trying to answer something and first principles when you try to build something. Now the thing is we're going to analyze this deal. We want to look at what people are saying officially, unofficially, etc. And most of the times they are flattering. So we're going to try and strip it away to realities that we really know. So what we're going to do for the next r is quite straightforward. So we're going to take every clip which is rs, the companies and the internet and you're going to put one test to it which is what is the fewest assumptions explanation that fits the facts. If this is like a grand story that needs five things to be true and a simple story and a plain story needs one, we'll start with the simple one and then we'll make the really complex grand one on its place. All right, so let's actually start with what is the topic? Let's get the unglamorous objective factual part out of the way. What do we know actually happened and here's what actually happened, right? Meta is investing roughly 8,550 crore which is approximately US $900 million into cred for a minority stake reported to be around the 20% mark. It values cred and reportedly $4 billion. Now importantly, this is said, cred says the deal does not give meta access to cred's customer data and this is important. We'll come back to it. Second, Kunal Shah, cred's founder will join meta as WhatsApp's global leader and will cut the current leader who's been running WhatsApp from not necessarily for seven years. He's going to step down as head of WhatsApp and move to a new role at meta looking at some kind of AI initiatives. Cred's prior funding round from May 2025 value it at $3.5 billion which means that this round at approximately 4 billion is an up-round but then you ought to remember that the last round, the 3.5 billion down, was it down-round? It was roughly a 45% cut from its peak value of $6.4 billion in 2022. So cred's valuation was $6.4 billion in 2022 fell to $3.5 billion in 2025 and now has gone up to $4 billion. Couple of other things that have been said publicly by Kunal, Kunal said, the delta between WhatsApp today and its full potential is massive. I look forward to the next step in WhatsApp journey. There's a over time quote. We obviously can take it at face value. Second, Mark Zuckerberg. Kunal built Kred into one of India's most important technology companies. I take that with a little pinch of salt. It's an important technology company. I'm not sure it's one of India's most important technology companies, but I get it's he's talking about. And he brings build-up mentality and global perspective to the world's biggest messaging app. So even if you read those two quotes, both from Kunal and from Mark Zuckerberg, what they-- there's a lot of things that they say, which we can contest. But there are also things that they don't say. For instance, they do not say what meta is specifically by it does not say why a messaging app that is globally prominent, needs an Indian frintech founder. It also does not say what happens to Kred. That's the corporate ease. And everything interesting is what is not said between the announcement and the answers. So we are just going to go into that in between liminal space and try to find out what's going on. You use the word liminal space, such a gen Z phrase, and this. But anyway, it's in-- Yes. Everything is isn't back rooms liminal spaces. Sorry for my detour. There's going to be people who will pop up right now and say, the Ken C.U. and founder needs to make stop making unimportant detours in podcasts. So I shall remember that feedback and come back to the point, which is really-- let me ask you PGK, why on earth did meta spend $900 million here? Of course, the headline we know what it says is, it's an investment in Kred. But what exactly are they getting in return? I'll lay out what I see are three competing explanations on the table. And you can take a pick or add a new one if you want it. A, it is a strategic investment in Kred. Meta absolutely wants to get in on one of India's most important technology companies and a fast growing Indian FinTech. B, this is really an act we hire of Konal Shah wrapped as an investment. The job that the $900 million is really doing is to give Kred's investors employees, et cetera, a graceful exit and allow Konal to move to WhatsApp. And see, this is just the first step. This is a down payment for a future full acquisition. So meta comes in as a minority on an around 20%. At some time in the future, it decides to fold Kred in and make it a full time subsidy. So, Roin, between these three explanations, the one that has the fewest assumptions is actually the, and this is also what I put when the news broke on Slack, wherever it was like, this is on the Ken's Slack channel, where I said, this is essentially an act we hire of Konal Shah, which looks like an investment. And I'm going to basically say, and I know that you and I spoke to a few people, and you should also jump in and talk about the people that you spoke to. But here is how I think and here is how I see it. The reason why it's a fewest assumptions is because first, I spoke to a former Kred leader who essentially says that and thinks that look, the decision to put money into Kred in his words was probably like a 20 minute discussion at Meta. It's nothing for them. $900 million is just a rounding error. And this isn't a Kred thesis at all. It has nothing to do with Kred. Meta wants to do something really big with WhatsApp. And one could argue that Meta, and one could argue that for Meta WhatsApp has sort of under-delevant over the years. So the only way they could do it is they had to get Konal Shah. So they said, okay, we'll get Konal Shah and Kred sort of like was the price that they had to do. So they had to put that money in there. I also like spoke to another AI company founder who also said that look, the other reason why this kind of makes sense is because existing investors of Kred got there out in the deal, which includes investors like peak 15, etc. Because it's a $900 million that goes in is a mix of both primary and secondary capital, which means that some of it is also going to investors to get an exit. And so it looks like a managed exit more than like a real hardcore investment to do an up-round. And so both of them essentially sort of like hint that this has been, you know, mostly something that has been done to get Konal. So I say its explanation, B seems like the most simplest one. B just to recap is this is an aqua hire of Konal Shah, Rab doesn't investment. So this is the price that meta is being to get Konal to move to the US and work with WhatsApp. And to be clear, this 900 million investment contains two components. There is a secondary component, which means a bunch of employees, I'm not sure, and existing investors get to sell their shares as part of it. And I think that components were $500 million and were $400 million comes into the company as a primary round, which means it provides credit with capital to invest and grow. And credits released it talk about the fact that they remain committed to doing an IPO. So there's two parts to it. What about these people that you spoke to? I spoke to actually four people and I agree with this classification. In fact, one of them actually said that look, this has got to be absolutely the most perfect and well-occurstrated exit announcements that Konal could have done. And it's had soft to Konal because these are, he's got a bunch of investors. By the way, let's remember that credit valuation had come down from like, you know, six, close to six and a half to three and a half, etc. He's existing in investors and employees have been supporting him for a long while. We didn't know the reason why Konal is leaving separately, but I think it bears mention this person said that it's Kudos to Konal that he ensured that those who've been supporting him got some sort of validation and exit for their support. So he's not leaving his investors and employees high and dry. In fact, he said it's probably the best engineered and communicated such deal that I've seen in Hawaii. He talks about there is a secondary for employees and investors. Money is coming into the company. The company remains committed to the market. It wants to go for an IPO. Konal continues to remain a shareholder. So he's done everything that he possibly could before moving on. So yes, this is an act we hire of Konal, Shahrab does an investment. Yeah, I will just also stress that there was most of the evidence points towards this and it's also that it is a simplest explanation. But there was one other aspect which you have to just consider, which is that why should meta take this minority structure? Because meta has no need to really be a minority investor in the five to ten billion dollar company in India. We just answered that question. Remember, imagine if meta doesn't take, if it only provides a secondary, the reality is that credit still needs capital to continue down the path. They're saying that they finally in this quarter become profitable, but the fact remains that they've raised a bunch of money, what, over a billion dollars, like before this round itself, right? Yeah. And then of course this round. So they need money. And if meta didn't invest that money in a primary round, it's only solving half of the problem for credit, which is okay. You've given some exit to investors and employees over the company. So now that puts credit into a situation where it's got to figure out who's going to invest into my new round, which means given that this is a Kunal's company, Kunal is not going to be able to switch off from credit and move his full attention to WhatsApp. So again, he gets drawn in into, okay, now I got a figure in figure out how do I raise a primary round for credit so that credit has money. So you again, I'll quote you, use it's a rounding error. So 500 million dollars is a rounding error for meta shows another 400 million dollars. And it's a fairly safe investment. If you really look at it from meta's point of view, it's not investing in some kind of a nosebleed valuation into the company. It's a fairly realistic valuation. It's fallen from close to six and a half to now four. You can absolutely see this company, I mean, you're not continuing to exist and grow. Maybe someone will acquire it, maybe it'll do an IPO, even if it does an IPO at a number which is lower than this meta will still get its money back because of liquidation preferences, etc. Right. So it's investment in this company is a safe investment. In fact, it will probably give it better returns than what meta's CFO may have found investing in other places. Their internal herd rate must be 15 to 17%. So this is a safe investment. It's not a bad investment. Right. Just that they're probably not thinking that like a venture capital is thinking, oh, I got a 5x this or 10x this. They find if they get like reasonable returns from this and the money doesn't disappear. And that's fine. That allows them to get that's your optionality that allows them to get Konala on board. Yeah. I think I'll just very quickly just talk about credit numbers because we'll get to that later. But right now, I'll just say this. Credits operating revenue in FI23 was close to like 1400 crores. It was had an EBITDA loss of almost 1000 crores back then. In FI24, its revenue went up to 2400 crores. So that's like, went up by 66% and its loss came down from 1000 crores to like 609 crores. in a file which is the latest that it has file, it's revenue is 2700 crores, which is more or less the same as FY24, just up by 16%. And its loss is down to 298 crores. So just headline numbers, if you look at revenue, 1,400, 2,400, 2,700, and loss goes from 1,000 crores to 600 crores to 290, roughly 300 crores. So that's really where they're at right now. Okay. So yeah, so I think just to summarize, what we're really talking about in what is really matters paying for, it's like the strategic credit investment is essentially like an acquihier with a clean exit story. That's the one. All right. Now, that question answered. Let's move to the next question. Now a lot of the coverage of this deal has been the dominant narrative has been met up finally gets serious about Indian payments. And it's really buying credit for the licenses and for the UPI play. So let's take the OCam's razor to this reporting as well, right? Now today, as I see, there aren't really any barriers for what's happening doing payments. They've got the licenses, they took their time getting them, sure they lost momentum, they're churned through a bunch of people, but they have the licenses. They don't need credit licenses for anything. That's one. You know, another person I said, you know, talk to said that look, I don't think what's I guess two hoots about making money via UPI. Like, you know, I mean, the number one and number two players are still trying to figure out how to make money in UPI and credit is nowhere even. I'll quote, credit has squat, squat UPI shit. That's what that person says, right? So credit doesn't add anything much by way of UPI to what's up. And I don't think it's about Indian payments itself because every payments company in India is trying to figure out how do I monetize this UPI volume. I think it's we've overdone this thing over my god. Look at UPI volumes. Yes, UPI volumes are great, but the companies that are actually number one, number two, number three are trying to figure out how they'll do you monetize it. What have you heard? So I have actually the people who use spoke to are all, you know, in some senses, of course, you triangulated from multiple places and they're all people who are outside credit. I spoke, I spoke to a former senior leader at credit because sometimes I thought, okay, maybe people at credit may have a different perspective and he said exactly the same thing. His words were quote, meta does not care about credit and they don't care about credit's data or users or UPI, nothing. They just wanted to do something with WhatsApp and that was really the primary motivation for all of this. Credit having something over here, some kind of an asset or some kind of a utility, some kind of a grand strategic three dimensional plan for meta doesn't seem likely. All right. So it's not 70 chess. It's not credit. And if the answer for this deal is not, oh my god, meta finally has woken up with the possibility of Indian payments, then what is the answer? And I think since we're doing Okandra, let's take the simplest possible explanation, which is what Kunal is saying, which is what Mark Zuckerberg is saying, which is what Chris Cox is saying and everyone is saying, this is really about WhatsApp's global potential. WhatsApp has over three billion users globally. And yes, the large majority of them are in India, 500, 600 million. But its direct monetization is estimated to be only about 1.2 to 1.8 billion dollars a year, which is a rounding error of a rounding error of what a 1.5 trillion dollar company. Right. So WhatsApp has this massive global reach, but it just doesn't directly monetize it. And I think the simplest explanation is this. Let's listen to what they're saying. Kunal is saying the delta between WhatsApp's current reality and potential is huge. Mark Zuckerberg is saying that so that really is it. They've got three billion users. They've found this great leader in India, who they believe can help them crack monetization at scale for those three billion users. So that seems to be it, right? India isn't really the price. Yes, India will be a component, strong component of that. But as I said, Indian payment companies are still struggling and trying to figure out how to monetize Indian users. So let's not kid ourselves thinking that, oh my god, this deal is really about India. I don't think it is. It's clearly a global deal. Yeah. And if you just go back to what has been said about by Meta, and I'm just going to talk about WhatsApp specifically, like you said, when their revenue is roughly 1.2 to maybe 1.5 billion dollars here, by the way, this is an analyst estimate. It's not broken by Meta. They don't explicitly report this revenue. But what they do say publicly and even privately is that there are a bunch of things that's happening in WhatsApp. Like, for instance, they've started doing business messaging using API. They've started introducing agents to basically so that business can deal with customers. And Meta internally, and they've said this, they believe that this is worth several billion dollars. And so this gap, this 1.2 to 1.5 to the several billion dollars is essentially what Kunal is there for. Okay. Demolished. We'll come back to this. I hope you're holding these ideas in your head because at the end of the episode, we'll have to state our final opinions, which takes me to the next part of this episode, which is really what happens to Kret now. Right? A lot of the conversation has focused on, oh my God, what this means for Kunal and for WhatsApp and for Meta, etc. But what about Kret? Kunal was in some senses. The, of course, he's a founder and he's a leading light and like, you know, he's the one who's kind of got the vision with him gone. He still stays a shareholder. But he's not driving it now. He's no longer operational. What happens to Kret? And well, there are multiple possibilities. There is a backcase. I mean, and this is, I mean, a person has spoke to said that look, this looks like the end of Kret. And this person logic was like Kret was fundamentally built as a credit card repayment product. And that habit is gradually eroding. It's shared. I'm not sure exactly of the sources is said to have come down from a peak of about 80% to about 50%. Because card payments can now be done on the DBS rails, right? Which is bar and bill payment system. And and and one of the realities of India's FinTech regulation is that there is always a neutral rail with sort of pops up and erodes the advantage that somebody may have, somebody may have built a payment system. Boom. There's a new payment system called you pay anyone can use it. Somebody's built a motor on bill payments. Boom. There's BVPS. Anyone can make, right? So that seems to be gone. Of course, that's not what makes Kret its money. That might be what brings in users. But Kret really makes money through loans. Right? And loans is a fairly competitive field. Right? And the frequency of loans is not a high frequency product. Right? And if you really, so if it's becoming a lending company and by the way, I mean, just today morning before we were recording it, I heard from someone. I had this completely unverified. Now, when Kunal is moving out, one of part of the announcement from Kret is also that Mithin Sampath, whose Kret CEO, takes in as interim CEO. And from all sources that I've read and I've spoken to Mithin many times in the past. Mithin is one of the best operators in non-founder operators in India, in the tech space. In fact, someone actually compared him to Albin the Dinsa and Blinkit. Right? Like, you know, I mean, yes, Albin, there is a founder off Blinkit. I mean, if you really think about it from what he's doing at Zomato now and that comparison. So Mithin is fairly competent, like, you know, I mean, and I was asking this person, why is he in their MCO? Why is he not CEO? No confirmations, but apparently there is a new incoming CEO on the way, who's probably going to be from the banking sector. Oh. And this is an interesting reveal because a banking sector is. I mean, it's the reality of regulation in India for fintechs because no matter how disruptive you start out, so now later you run into the RBI's rules and data, you, this is very famous, like walks like a duck, quants like a duck. Right. So if you look like a bank, then you get regulated like a bank. So it's sort of create an all fintech companies sort of come down to earth. They start out as over your disruptive tech companies, break first, ask questions later. And so now later they end up being regulated by RBI through bunch of this thing. And then they're like, okay, you're, you're a regulated entity. Your valuations must be much more realistic. So that's actually creds reality that if it's going to be a lending first business, if it's going to be a regulated business, that's, it's, it's okay. I mean, like, you know, it may get to an IPO in three years or two years, but it's not going to be some kind of a disruptive play. Especially with Konal. I'm going to put three facts on the table. And again, this comes from the people that I spoke to. Number one, it's very interesting. You said this that they're probably considering this kind of a succession. Because two people I spoke to, both the former person, it's CRED as well as this founder that I spoke to said exactly the same thing, which is that CRED is the only thing that's working for CRED writer is its lending business and it's effectively a bank. And if it is a bank, it's going to get treated like a bank. And that means that its valuation is not going to be that of a Fintech company valuations, but a bank's valuations. In fact, this person that I spoke to said that he drew this very explicit analogy to explain this to me. And I want to use this analogy with all these caveats, which is that he says that can you think of say, Elon Musk and Tesla as an example. He says that Tesla is a car company, but it has an uncar company like valuation because Elon Musk's the person is attached to it. And he says that's very similar with CRED. It's actually a bank, but the reason it has a non, like it has this valuation that is beyond that of a bank is because Kunal Shah was attached to it. And so if you remove him, then it's going to come down to Earth much more easily and much more quickly. And people are going to see it that way. That's one. Second is we talk about CRED's profitability and its growth in revenue and losses and all of that are said. This other person that I spoke to said that look, it's true that they've, you know, they obviously their losses have been cut down. But he said most of the losses have been cut down not because they fundamentally innovated or built something really new, but because they really managed to cut costs really well. In fact, there are like layoffs that they did. They didn't do it in one fell swoop. So they did this like over several weeks. So there are many teams that have been stripped away, that have been reduced. So those kind of things and the stuff that CRED did in order to build that balance sheeted too much better. - It's interesting that you should mention this concept of Elon Musk and the Elon Musk premium, which is attached to his companies. I wish it didn't exist, but it does. There is, it's useful because there was one can argue that there was a Kunal Shah premium, which was attached to CRED, when he started, which is probably the reason why the valuation shot up to 6.5, close to 6.5 billion dollars. And so in some senses early on, there is the aura of Kunal. He's going to build something really disruptive. CRED is going to like, you know, but you know, the thing about aura is that you need to keep selling. Either you need to deliver the reality or you need to keep selling larger and larger narratives that sustain that. So in Elon's case, it is really like, well, we're building rockets to go to Mars, like, you know, what gets bigger than that. I don't think there's been such expansion of narrative with CRED, which explains why the Kunal Shah premium for CRED started disappearing, right? And if that argument is correct, then with Kunal Shah leaving, that premium is fully gone. So not only is CRED going to be a regulated boring, fintech lending company, it also no longer has the aura and premium of Kunal always figures something out. So in some senses, it's still an interesting company. It's profitable. I hope it continues to be profitable. It will do an IPO, but this is not going to be a blockbuster company. It sort of explains why, again, we don't know whether that's true or not, that the new CEO coming in might be from banking. Well, no one who came in from banking comes in because they're going to remake this, and turn this into a $10 billion company, right? Those sort of moves are done by product first, entrepreneurs and founders and operators, not necessarily regulator-friendly banking executives. There is a story that we linked to in the show notes, which was written in the Ken by my colleague, Dr. Anakumar Gungyan, in July 2024, roughly two years ago, it was titled, "Where is Kunal Shah?" Ask most CRED employees. The gist of the story was, Kunal seemed to have checked out of actively figuring out what's the strategy for CRED, what will be the next big thing, roughly two years ago. And this, the sort of tracks with a bunch of people that I've also spoken to who said, look, it was sort of clear that, you know, I mean, he was disinterested in any new narratives, with the reality of that, I mean, as I see that as a journalist, is that what is possible? The reality is that where is the growth in India? Where are the markets? And how do you fight regulators? I am not blaming the RBIA, has its own logic for regulation, basis, it's mandate for investor protection, and consumer protection. But it's quite simple. I think Kunal basically lost or did not see the possibility to do any kind of radical expansion for CRED. So he sort of checked out for the last couple of years. So this announcement really means, okay, I mean, let's all accept it and move on. And now CRED becomes another fintech. CRED existed on a different level because of Kunal. Once Kunal is gone, it's just another fintech. And we've got lots of fintechs in India. Nothing wrong with being a fintech and probably a profitable fintech, but it's not just going to be OMG CRED, that's done. Yeah. So I think the real thing that I'll be letting this section with this question of, CRED minus Kunal, CRED essentially becomes close to a bank, point number one. Point number two is lending becomes its only business, which it is right now. So if that is true, I don't think it'll be fair to call it, it's only business, but I mean, it does make money from elsewhere as well. But primarily, I mean, you can argue that, they've got a bunch of products. In fact, at Assemble, this number of products that, since 2021, what are the payments, what are the products that CRED has launched? CRED pay, which was like you're not launched in 2021, again, I mean, it was about UPI, check out payments at merchants, didn't really crack it like middling performance. CRED mint, which was launched in 2021, P2P lending, where members lend to each others at approximately 9% interest rate, I think was stalled, ran into regulation, et cetera. CRED store 2021, Accurated premium D2C storefront, but didn't take off. CRED UPI, full payments within UPI app, but then its market share in UPI is still nothing. CRED tap slash scan and pay, which is tap and pay with biometric UPI, okay, okay, adoption. CBDC, ERUPI, 2023 experiment didn't go anywhere. CRED garage, add your cars and vehicles into it so that they could upsell you insurance, et cetera. I think some decent traction, but nothing like, you know, outlandish. CRED travel escapes 2023, didn't see major traction. CRED money, 2024, using the account aggregate of framework for personal finance. And so I think it's still two early, again, if two years, but it's still two early, it's a very competitive space as well. And finally CRED cash, PPI wallet, 25, expanded credit lines, et cetera, right? So it's been launching product after product for a while, and but that volume has significantly come down in the last two years. In fact, RONAK story talks about one of the mandates that Konal gave back in 2024 was stop thinking about launching new products and targeting new markets. Instead, let's refine and chisel that which already exists. So in some senses, he seemed to have come to this realization way ahead, probably a couple of years ahead of this current announcement. So CRED will continue to do a bunch of these things and I'm possible that it comes out with new products as well. But it's just another, what is the name of that company which Flipkart has for UPI, Flipkart on SuperPay? Right, SuperMoney. Now it's like, you don't talk about SuperMoney in the same league, right? Okay, it's another FinTech app. There are a bunch of apps that do lending, that do wealth management, like, sure, I mean, nothing wrong with any of this extremely competitive space. And CRED just becomes one more of this. That's it. I'll just not sexy, not the end. It's not doomsday, but CRED has been a bit of a discontent. Yeah, we're not going to say any of that. But what we're going to say is that there are like, fundamentally two paths ahead for CRED. As you, if you take all of these facts into consideration, path one is CRED of course, stays independent. It becomes profitable. It has $400 million. That's the runway that it has. It has two to three year paths. It becomes, goes public heavily pivots into lending. Into financial services. And there is a new CEO, whether it's methane or whether it's somebody else. They build like a financial institution, which keeps it going. That's really one path of it, but nothing really super crazy. It's going to become like that kind of a FinTech. Path two is that meta, which basically now has taken, made this investment. And I think owns about 20% of CRED now as a result of this investment. It follows through and does a full acquisition. And CRED becomes meta, India payments and financial services. Very similar to what? Why? Why would they do that? We already answered this, right? In the release section when we said that, look, CRED has absolutely no interest towards that. So why would what meta take full control? Yeah, I tend to agree. I think that path one seems like the most simplest explanation. And I don't think path two, it seems strange. Why would you do it this way? And why would you win this order of things? Great, which allows us to jump to the next more. interesting part of the question which is why would Kunal take this job? Now the way most of these questions are framed including by me right now sort of inverts the logic. It makes it seem as though Facebook and WhatsApp were in some senses a step down or a compromise and they would have had to really work hard to convince Kunal to could join them. I don't necessarily agree right so put yourself in Kunal's chair now you're a celebrated founder you build free charts sold it then you went ahead and built credit and and all credit to Kunal and credit it did really find that interesting niche of India's premium credit card users and building premium experiences for them and it achieved that product market fit fairly early on but then after that it hit the reality of the Indian market and of Indian regulators and it stumbled right so that's a reality now put yourself in Kunal's shoes would you leave this and go be an operator inside someone else's company albeit a 1.5 trillion dollar company like meta running off all things a quote unquote messaging app right so why would he do that so now three potential explanations very quickly first look credit has hit the ceiling we've already explained to you we showed you the evidence of that we talked about like you know stories from two years ago where you know I mean his behavior like you know and towards credit and the potential had changed so crates India journey has hit some sort of a natural limit and beyond this I mean regulators and the market reality just won't let you group right and the exciting frontier has moved elsewhere so it's not India any longer and I think that's really important to understand all of us in India are sort of wired to assume that oh my god India is the land of opportunities right but let's like kind of look outside where is the exciting frontier right now it's the US it's Silicon Valley it's where AI's of we have one could also say some of it isn't China but that's sort of out of bounds right and a person like Kunal who's extremely creative ambitious and wants to create things and has as a brilliant product sense and a consumer sense he's smarter to realize that AI is going to be wired it's already rewiring the world and that's where the opportunities are and that's where the potential is and that's not in India and that's in the valley right and doing that in a company which is a 1.5 trillion dollar company with a product which has a 3 billion user base is a order of magnitude I can with for Kunal then whatever is possible in India even in the medium term of let's say three years or five years like that's just the reality from Kunal's point of view so yeah if that's the reality then he just got to figure out okay I want to do that but I also want to be the gentleman who doesn't doesn't just drop the people who kind of put their faith in me the investors who backed me up etc so that's sort of for me that does seem like Kunal was one of the earliest people founders in India to kind of get on board the AI wave I remember when a chain GPT was launched Kunal was I mean back when I was in Twitter I remember him engaging in Twitter chats with Sam Altman and you know I mean there's a bunch of so so he's been ahead of that curve and I'm sure he's been seeing the potential for AI and now here is an opportunity at a global scale with 3 billion people in a company where who knows what else is possible right that's what I think from Kunal's point of view it's absolutely makes sense there is nothing more to grow in India right with Kret the opportunity lies outside I don't know if the people you spoke to use this word but I think the people I spoke to kept repeating this word again and again to me which is he is bored it is bored and this is something exciting and I think this word bored kept coming up again and again like Kret has become boring it was exciting now it has become closer to a boring business and basically because it is focused on lending now because it is regulated it's sort of like constraints its ability and Kunal's ability to do interesting and exciting things with Kret and so in that context if you look at say WhatsApp which is of course older but still looks fairly exciting now the possibility seems immense and and you're right about AI in fact one of the people that I spoke to the former Kret person said that Kunal is really big on AI and I was curious and I asked him but I don't really see Kret doing anything with AI and he was like no but like he did things like of course like giving everyone cloud code in the company and all that but I believe one of the reasons why they could not do much was because how much AI can you do if you are a fairly regulated FinTech so you do I think the potential of what you can do with AI also suddenly like dramatically reduces so that's another reason why the WhatsApp thing looks very very interesting by the way I will also say that couple of other things that I heard which is that number one I believe one of the people that I had spoken to a founder said that he had Kunal was already looking for you know opportunities in the valley and the west like for instance one of the things that was mentioned was he wasn't talks to join Y combinator as a partner but that did not work out and the conversation with Meta has been going on for a while in fact just today morning Bloomberg reported a story that Chris Cox who is the head of product and CPU at Facebook and Meta was had called Kunal's back in spring which I think I believe must have been like a few months back asking him for advice on what kind of leader should I pick for like WhatsApp and he had a conversation with him and I think apparently Kunal said a few things about WhatsApp we sort of stuck with him and then the conversation started okay what does it take to like get you back and into WhatsApp so I guess yeah so all of these things sort of like came together so the simplest situation seems to be that there wasn't much scope for Kunal to innovate and grow in India boring is just a function of you know I mean how much potential is there and how much can you kind of extract out of it right it's as a fintech as a payments business in India there isn't much it's pretty brutal and even assuming he takes it to an IPO it's a pretty hard grind running a public company in India in the payments space when you're just one among many this thing right so this entire so that's that's a reality that he's standing and this is really about Kunal he's excited about AI he sees a massive orders of magnitude higher opportunity at a global level again to come back to our okam's resolution that's literally what he said the difference the delta between WhatsApp's current potential and what it exists globally and that's what like you know excites him and that's what takes him to better and to WhatsApp so that's why he took his job he took this job because he wanted it what about WhatsApp India for the longest time everyone has been saying oh my god given WhatsApp's user base in India if you allow it to make payments it's just going to steam roller everyone else and that moment has been coming for a while for a while for a while and as never come WhatsApp has never cracked payments in India and it's not for want of trying it has chewed through leaders of all kinds abija both had joined us WhatsApp head of WhatsApp India in 2018 he left then I think Manish Mahatmeh would joined from Amazon pay joined and left a bunch of other people as well and a common you know frame was that look global leadership just doesn't and this is a true for many international companies that so reason why Stripe also at some point just decided to exit in there willing to a story that we did on that as well which is they don't see this as that important a market to let product strategy be run out of here right so this entire thing of oh my god what will this mean for WhatsApp payments in India I think it's we're reading too much into it I don't think meta hired Konal Shah so they could crack UPI through WhatsApp payments in India I do think it will play a strong role as it try to figure out ads commerce agentic integration etc in their largest market which is India but I don't think it's India that's driving it's just one large market One of the day's really, really hard. So let me ask you. you a question PGK right? A bunch of but the reality is that Facebook has been hiring people to crack WhatsApp in some sense as commerce payments etc. for years and not succeed it right including of course Wilkath Karte who's moving on to a new role right given WhatsApp's potential at $3 billion and its reality of monetization it's a huge gulf and they've tried to crack it and they've always failed do you think Konal will finally crack it? I don't know if you allow to crack it yeah but I think three things are structurally different or seem to be structurally different this time and I think these these three things are true then it could lead to a different outcome structurally different thing one number one is this is not head of WhatsApp ID all the people you said are people who were heads of WhatsApp India this is global head of WhatsApp in fact one of the others that I spoke to said that the initial conversations between meta and Konal was in the territory of WhatsApp for India but then that later got changed to WhatsApp global so that's one so clearly overall leader of WhatsApp makes a difference and its different altitude you're sitting in the US you're part of presumably part of Mark Zuckerberg then a circle it makes a big difference second of course you also because you're there you have a lot of resources and you have a lot of backing so you don't really get the same you know stepchild status that a WhatsApp they got earlier I think a lot of people quit because they never really got the attention of the head office it was much harder to convince people and I think the third thing is of course that this is not about payment this is about monetization it seems like that's really the big thing that meta really cares about so if you look at all the levers like say ads subscriptions commerce it's not the same as trying to say oh you're a payments leader now come in and make make sure that we improve UPI share which really the only lever you have is very limited it's cash back and ads but here it's something else so I think the fundamental question this time around is that the of course the person has changed the role has changed WhatsApp is in a very different place so if all of this has changed I think that the outcome could be a little different so let's see where this goes okay so best wishes to canal for cracking Facebook's notorious political culture as an outsider who's coming in from India for the first time I hope he does it okay but let's assume I mean our discussion till now has sort of led us to believe or at least me to believe that look this isn't really about you India first it's not that Facebook is doing this because they want to crack India it's just that they found in Kunal a great leader who they wanted to kind of bring on board at a global level but despite that the reality will be that because India is Facebook's largest market whatever Kunal does with WhatsApp and payments and commerce and whatever else will end up impacting India significantly and impacting a bunch of other companies right so who's affected who wins who loses for a minute let's forget about credit and Kunal let's think about WhatsApp if meta does indeed turbocharged WhatsApp Monta's in India who would feel it first and my guess is biggest risk is to phone pay the absolute leader in payments for a while no sorry I said for a year but it's like forever right nobody has been able to kind of make it budge like you know even a point one percentage point here and there right and this is a company that has been wanting to IPO of searching for the right time window etc and it's path if you look at phone pay's path ahead okay it's crack UPI market shared but needs to continue to develop monetization methods around that whether they be selling loans and insurance or ads or anything else in many ways those will be the exact same paths it will find itself intersecting with what WhatsApp won't do because the delta between UPI payments is done and dust it everyone now understands that payments is just a way for people to get you to use their app they're going to cross sell and upsell you other things so that path from now to the future which is other things we definitely have WhatsApp being much more aggressive I'll put it differently think about Kunal say three years from now think about what Kunal's what success for Kunal might look like what KPI is key performance indicators he's sort of negotiated with WhatsApp to define that right and with matter to define that I would bet a lot of it is called as monetization right and from where WhatsApp is today right and especially in India and globally even if it goes up who do you think that share is coming from so if in India WhatsApp is able to do a great job of monetization over the next three years to really think they're getting that share only from bit players or from the big players which is phone pay number one followed by Google pay right so I definitely feel that phone pay will have to watch out because now you've ordered incredibly deep pocketed rival who is not worried about an upcoming IPO and profitability but has dramatic scale right and has now a founder incredibly product minded person who understands the psyche of consumers at the health so it's like the worst sort of enemy you'd want to be dealing with rivals sorry not enemy right who else I think two other people tend to lose one is of course existing investors of credit I mean of course the four hundred million dollars we know was given for second reason but that means that there are still people who are holding credit shares and who are existing investors for them assuming this thing of if we believe that look credit is going to become boring credit is going to go into stasis and it stays in that level or even like the bear case comes true or they are going to be they are going to be the losers of this because at least the other investors got their exit but these people are still going to be there and that company is not going to grow as what they had expected so they're not yet that's one yeah I mean I can but in the sense that now they will have to I mean look everyone in the Indian starter ecosystem has been dealing with this reality of you know the multiples aren't there the valuations aren't there right so credit's investors will do now and I'm sure they knew of it right I mean this is a company that had like a forty-five percent down-round down-round are not easy on investors right so when they came down from whatever six point two six point three to three point five a lot of the investors would have already sort of made peace with that so the so from the point of view they're like look okay we get something and there is primary coming in and this company will continue to run and it is committed to an IPO so we'll get an exit we just not may get like a multi-banger exit or like a 10x multiple etc but again like Boohoo Crimey River sort of thing right like it becomes they become another investor in another fintech company they no longer are in some kind of a special investor in a distinctive a payments company yeah yeah so essentially I think the main thing is that like a very clean narrative is meta is trying to enter and crack India's payments via WhatsApp but the most simplest second order read is that if that happens and WhatsApp monetization really works then the pain is going to be felt by all of these existing players which is of course phone pay and most notably credit and credit is now a smaller specialized player in it it's not a big player in this fight so they're all going to feel a certain amount of pain when WhatsApp calls very paradoxical but it's interesting okay we're at the end of the episode we've covered a bunch of interesting questions I think we've resisted the urge to rely on a lot of assumptions and we've tried to kind of stay true to our promise of using the Okan's razor and first principles let's go one by one through what we covered right one what exactly is meta paying for we broadly into the conclusion that look it's actually paying to get Kunal Shah on board and the cost of getting him on board was essentially this additional investment and it's okay that money is not going anywhere it's not that they're writing of that investment and this is actually like nothing the amount of money that's sloshing around in the US right now especially around here and for large companies like a meta is orders and orders of magnitude right like the last AI company that they are quite acquying higher was KLAI for $14 billion. So this isn't nothing. Second, is this about Indian payments and how WhatsApp is finally going to crack Indian payments? I don't think so. I don't think this is primarily about India. We are reading too much into it because we are in India and we'd like to think that India is the center of the global FinTech universe. Well, great. It may be, but this is not just about Indian FinTech. This is something much larger. This is WhatsApp at a global perspective with AI, with commerce, all of that thrown in. Three, what happens to CRED? Well, CRED becomes, it's shown off the aura of Konal Shah. It becomes another FinTech company. It hopefully continues to make profits. It maybe does an IPO into two to three years and it's spoken off in the same breath as a bunch of peers which are doing similar kind of business. Lastly, why is Konal doing this? Because from his point of view, that's where the opportunities, AI, whereas the opportunity is global, whereas the opportunity, Silicon Valley is where the opportunity, he's going there. I think this needs to be said because we've been reading a lot. I think Praveen, you've done an episode in the past about why is everybody going, why are all AI founders and wannabe founders and investors going to the valley? If I'm not mistaken, you did that about six months, nine months ago. The gist of that episode was the opportunities are there. People are just going there because it's sort of like, and this is just that except at a very, very different scale. Konal is still young. He's got incredible potential. He's got vision and he sees writing on the wall and he says India is no longer big enough or exciting enough. So when we say boring, it's really that there isn't much to build here. I think we have to accept that. That's why he's leaving. And that's why Facebook was able to get him or Metta was able to get him. So a small anecdote about going to the valley. I was speaking to another investor and operator like sometime back. And I was asking him, I'm like, what's this whole thing about the valley? And he said this to me that it's almost the metaphorical thing. He said, I can't explain it to you. I can explain it to you. It's like, it's metaphorically, it's like if you go there, it's like you're walking down the street and someone literally drops gold coins in your pocket. He's like, that is the feeling when you're there at the valley because each interaction, each time you're there, you stumble upon so many things and all of it feels like somebody's dropping gold into your pocket, which I thought was very interesting. So those are the broad four answers we came up with. There are still a bunch of things that we don't know. We talked about credit becoming sort of like a quote unquote boring lending driven company. And we'll see how that goes. How it's business fairs is a function of what it's lending, economic side, what it's retention is, how it's able to kind of bring in new leadership, etc. It's an unknown we'll see. $900 million from meta is just part of like impending part of like a full acquisition. I don't think my sense is that it's not this is it. I don't think meta is interested in anything more, but we'll see if there is something else. Whether Kunal finally gets the mandate and the support and you know, and whether he has a sharp elbows within Menlopak, California, which is Facebook's headquarters in order to kind of get the resources and drive the vision or whether quote unquote the old gun and meta will again kind of stymie him remains to be seen. Yeah, say anything else that I miss that we still don't know. That's really more or less. All right. So let me ask you, we covered this. We started from the point of you have seen that look. You're not going to start with a narrative and trying to sell you that narrative instant, which is going to go one by one and us the most obvious questions and right one. So those questions using OCam's razor, which is the simplest explanation, which requires the simplest assumptions using evidence that is visible or objective or public. We did that. So what's your conclusion? Well, my conclusion at this point in time. Well, is this the point where I basically can share my opinion or is it the point where I can just conclude whatever we have said? It's your point, Casbro. You decide what you want to do. Okay. I think that we have been very disciplined. We've been talking about the facts and we've been saying whatever has happened and we're trying to get the simplest explanation. I think we have to now let loose a little for the last 10 minutes and tell what really we think is going to happen. I'll go first and I'm going to begin by basically saying number one. I think Konal Shah of course is going to move to meta. I think it's going to have a really, really difficult time there. And I say this for two reasons. Reason number one is what meta is going through right now. And if you're following the news, meta is one of the worst places to work right now in Silicon Valley. There's practically a mini revolt going on because most of the engineers are getting pulled out. They're basically doing stuff that they call data labeling, which is not exactly data labeling, but what they're doing is they have to give a lot of their Instagrams, trust and safety team has been pulled out. All of this has been reduced significantly because they're really going all in on AI because they've missed the event into the meta was that didn't work out. They didn't into AI. Now they're really going deep into it. So I feel like he's walking into a cauldron at this point and it's a company that is fairly chaotic. And I think unlike other people from the value who would get into meta, usually they come in with their own team. They're able to get their own team there as well. I don't know how much he'll be able to do that because I imagine that his team and most of them will be at credit right now. So it'll be a little tricky to pull them out of credit in order to get him into his team. So he's going to have a very difficult time. But I feel like it's going to have some basic successes. My prediction is that credit is going to become this middling FinTech company. It'll probably go public meta will not acquire it. It will become and it's it already is in some sense. The only thing when you say credit will become the the only thing that why we didn't say that till now was Kunaal. So now in some sense you're saying Kunaal's what is the saying Hindi they call it Chhatrachaya what what's the equivalent in English is perfect if covered is gone. Yeah. Yeah, not just that. I feel like the Kunaal Krilyma is very real for credit. And I think with that yeah and with that gone is just going to become a middling FinTech company which will go public but it'll be in that middling stage is what I think unless something dramatically which I don't see how it'll happen. Last thing and I'll predict this which is that I think in some time whenever Kunaal's thing with meta ends he is going to become a really capable and interesting AI founder from the valley. I think that transition nobody has really completely made from India where an Indian executive has gone to the valley created a AI company that has like really made a mark and I think he's going to go there and he's going to do that. Okay, what do I think I think the real import of this story is a wake up call for India. If some of the most bullish and capable founders in India like Kunaal who build businesses raised a billion dollars into companies like you know talked about India's potential is in some sense it's checking out and going to where the opportunity is. Mix of reasons right because there's just no growth there's too much regulation even if you get massively successful. There's a real risk that you'll be targeted with regulation post facto is I think I mean a warning sign for India up till I mean we've used to warning sense oh my god you know the young people want to immigrate oh my god IT services getting disrupted. Now you're seeing an example of I mean I don't think I've seen this kind of an example and this doesn't shock us I don't know what will which is an absolutely top tier founder signing that this market is not big and exciting and ambitious enough for him to build on and him relocating I think it's an absolute shock up I mean best of luck to Kunaal but also best of luck to India. That's a very counter intuitive take Roen everybody online is celebrating what a great achievement this is for India but I think you're seeing it the other way. So that's what we have done we have applied the method and at the end we have also made a stand very clear which we hope we have earned by the end of it and I think the order is very important we didn't start by telling you what we thought we started with the questions we removed all the corporate stuff we stuck to the facts we did our reporting we followed the money and of course we tried to pick the explanation which has the fewest possible assumptions and then after the end of all of that we kind of committed and made what we think would happen and we do that and for the next big confusing announcement which I think there will be for years to come we think that if you apply this kind of a method it will become a lot less mysterious so Roen thank you so much for doing this and for joining in back to Dubai too. Thanks for having me P.J. (upbeat music)