Raj Narayanam’s fintech Zaggle is an SaaS firm that ensures its clients don’t worry about financial control, as it uses cutting-edge tech to manage enterprise expenses and staff rewards & incentives
Way back in 1987, sixteen-year-old Raj Narayanam took up odd jobs in order to pay for a pair of Nike Shoes he wanted. He managed to save about Rs 1,200 from his salary and approached his father for the balance. Dad, however, gave the young lad a dressing down for wasting so much money on footwear, on which the father himself spent only Rs 99. Undeterred, Narayanam started selling t-shirts to bridge the gap between what he had saved and the price of the leather. The great zeal to work hard for his money, the seed of which was sown by that lecture from his father, is what eventually led Narayanam to build companies that today do over Rs 15,000 crore worth of businesses a year.
Administration and economics are in Narayanam’s blood. As an economist, his father was close to various leaders including two former Prime Ministers, his elder brother is an IAS officer, his mother comes from a family with varied business interests.
Tryst with politics
Narayanam himself had earlier wanted to get into politics. He led the anti-Mandal agitation during his college days at Delhi University and was also the youngest President of the North West Delhi Congress. He could not pursue his political ambitions, as his father gave him an ultimatum: “Get a PG or leave home.” Narayanam had no choice but to give up his ambition, which today he feels was the best decision he took.
So, the 16-year-old t-shirt seller turned into an equity investor when his friend, who was from Haldiram’s family, introduced him to the stock market. Narayanam could make some money in the short run, which he used to pursue his MBA. Narayanam, who didn’t approach his father for money ever since the admonition he got as a youngster, started a merchant banking company called SSL in 1994, which he eventually sold to Peterson Services and used the money to pursue business management and finance in the US and get global exposure.
The entrepreneurial bug
Narayanam joined PwC in Management Consulting Service (MCS) practice for a few years, advising multinational companies on business process re-engineering (BPR). After about four-and-a-half years, at the age of 26, he and his Polish friend Richard Maziarz started Gap Solutions, a tech firm when outsourcing was growing in 1999.
However, within a year, Narayanam returned to India after parting ways with his partner, who was conservative and lacked the aggression of the Indian. It was a golden handshake. Narayanam retained the India operations, Maziarz continued the US operations.
Then, in April 2000, Narayanam started pratima.com, a web-based entity offering customized t-shirts to clients. However, by late 2000, the dotcom meltdown had begun and Narayanam was up against several challenges. But he quickly adapted to the changing situation by converting his online platform to a brand merchandising business and joined hands with his maternal uncle who was running a Rs 10,000 crore business.
“Customers were getting very demanding and we were finding it difficult to cater to their ever-changing demands. We were losing money. We needed to have more products to offer, not just t-shirts, mugs, or clocks,” Narayanam says.
The focus then shifted from individual customers to corporate entities. Offloading the dotcom baggage, pratima.com metamorphosed into a new avatar – eYantra, a corporate merchandising platform.
It became India’s only prepaid gift card creator in 2009, and a one-stop shop for Reward and Recognition programs, brand merchandising, and prepaid gifting instruments. The outfit has serviced over 4,500 top corporate clients, who in turn had over 500,000 dealers and distributors.
eYantra’s first corporate sale was to Tata Consultancy Services in Hyderabad. Then came a big order from Coke for t-shirts, caps, and clocks. There was no looking back since then, Narayanam says.
The fintech foray
In 2011, Narayanam set up fintech startup Zaggle, digital payments, cashback, and analytics firm, to help companies and retailers with gifts and experiences across multiple channels – employee rewards and recognition, employee benefits, channel partner incentives, online shopping cashback, and restaurant cashback. Zaggle offers a complete solution set for companies with its platform on which merchants and consumers can seamlessly interact, creating value for both parties.
Zaggle quickly built an app that helped employees find merchants with whom they could redeem deals using their corporate cards. A loyalty card is useless unless it has a network of dealers that benefit the user. The card is like a debit card, the difference being the money and spending is controlled by the corporate employer. Zaggle handles the entire loyalty point exchange between the retailer, corporate, and employee. So if you dine at a restaurant, points are added to your name. Zaggle ensures the retailer adds loyalty points to the employees’ accounts and follows up with the corporate to track the spending.
The mechanism helps corporates and SMEs manage employee engagement and recognition programs, and customer and consumer loyalty programs, apart from channeling incentives for companies. Corporate clients include Microsoft, Vodafone, Samsung, Zydus, Star Health Insurance, Hiranandani, among others.
Zaggle will play a crucial role since employee reimbursement and expense management automation & digitisation will Save up to 80 per cent in costs. Companies will have to ensure overall manual process automation to rationalise the cost since digital solutions are cost-saving and efficient.
The company uses deep tech and artificial intelligence to provide platform solutions to businesses for expense management & employee reimbursements, as well as for rewards & recognition.
Zaggle deploys cutting-edge technologies such as AI (Artificial Intelligence), ML (Machine Learning) and OCR (Optical Character Recognition) in providing seamless experience to businesses and users.
Zaggle, which was traditionally competing with Sodexo and card companies like QwikCilvr, initially started with gifting and reward cards and soon expanded to employee benefits. Later, the startup included employee reimbursements and added other business expenses like utility bills. It focuses on both B2C and B2B.
Once Zaggle gets data on how corporates are spending their money, it consolidates the expenditure and opens it to a network of banks that can bid to provide working financing to these companies.
The company is now looking at becoming a neo bank, which will be an automated platform that aggregates all the financial resources of a company for a bank.
The pandemic has led several companies to start their digital journey and look at managing expenses digitally and reward employees with digital points. While other companies have been slowing down operations, Zaggle has opened offices in Canada and London.
The B2B fintech SaaS company is digitizing spends to unlock value and drive growth. Nine years back, Zaggle had a gross transaction value (GTV) of Rs four crore. Today it is Rs 10,000-11,000 crore.
“SMEs need capital access. We have started a Founders Card with an expense management system, where founders use the card for credit, and we track their business expenses and increase their credit. Every swipe shows what they have bought in the market and for what purpose. The founders can convert this into an EMI if needed,” says Narayanam.
Says Ganesh Mahadevan, Partner, Thinksynq Solutions: “Zaggle has neat solutions that solve large pain areas for employees, partners, and internal finance people. Areas like expense management, rewards & incentives, and payouts have been a sore thumb for businesses and have impaired innovation, as internal controls were found wanting. Through its solutions, Zaggle has let enterprises bring in fresh approaches in these areas without worrying about financial controls.”
His Vision is to list Zaggle in New York or in NASDAQ by 2025, while roping in an investor for ZikZuk, a company set up in July 2020. Zikzuk is an SME neo bank whose first product is to be launched under the banner Founders Card. It is a card meant solely for SME Founders and Entrepreneurs.