I've always wondered and thought about how peer-to-peer lending would work or if ACKO could play a part in this in some way. Frankly, I've been seeing what's happening in China with its peer-to-peer platform; it has scaled well and then just gets into a lot of complications. I do feel eventually it’ll happen, but that could be as far as 10- 15 years from today. Peer-to-peer is not a new model. Globally, a lot of companies are called mutual enterprises. Mutual is essentially peer-to-peer whereby a company that is managing it only keeps a small amount of processing fee. But the risk is pooled by others making it a peer-to-peer model. The company is only a platform probably taking about 1% to manage the entire thing. Now what is happening is that blockchain can remove this 1-2% of the processing fee too. The issue with insurance is that when you need the money you are desperate. For eg you're next of kin is in the hospital and needs 10 - 20 lakh for treatment; in a peer-to-peer network, building a trust that the money will be available at that particular time is the issue. Here what happens is that when you get insurance from Acko, I am being regulated by the regulator that regulator is being looked up by the government so there are so many levels of check on me that you are comfortable and that I will pay you. In a peer-to-peer situation, unless that trust factor is established at the scale and the level that when I need 20 lakhs, it’ll be available and it is not going to depend on an external factor, this model will not work. At the end of the day, we all need some security right? To reach that level, it’ll take some time or even for people to develop that level of trust and for regulators too. If today I put some money in mutual or peer-to-peer platforms and don't get the money tomorrow, the regulators will intervene. I don't know how will it works, even if it does I think it will be much longer, definitely not in the next 5-6 years.
One of the things we as a team at Acko are really excited about are EV - electronic vehicles because we believe that with EVs the face of insurance will be completely different. Now we’ve got a team that specifically looks at the EV segment. In a combustion vehicle or a regular petrol car or petrol bike, whatever be it, hardly there are any moving parts in the vehicle. 40% of the parts of this vehicle is the battery, therefore the risk has changed. It may become a battery warranty insurance whereby the battery will last as opposed to the overall vehicle. If the battery goes off then the vehicle is of no use. Imagine a 10 lakh car, and 40,000 of it is the battery. If something goes wrong then the claim becomes 40,000 in some sense. Whether the battery will last, will it catch fire, how is the battery being used, what is the load charge, what are the risks, etc.. are the questions to be answered. All our basements today and indefinitely 5 years, from today, will have sockets for charging these vehicles. Will those basements catch fire because the wiring isn't done well? Maybe. We did a bit of research and found that charging as few as 10 cars in the basement would pull the whole grid down unless the power is done well. In India most of our basements have sewage issues, there would be some or the other pipe leakage and so on. So much could go wrong you know, this entire ecosystem could completely change. One of the things we are excited about is - what we monitor. Do we monitor the battery or do we integrate with the manufacturers of the EV? What would the insurance policy even look like? This is something we don't know about but are really excited about it.
Our simple thought was we couldn't scale engineering in Mumbai, we weren't getting the kind of people we wanted. We ourselves dint learn enough to know the kind of people we needed or were available. It wasn't just that we dint find talent but also that our entire worldview was limited to that talent. When we were contemplating, we were clear we wanted to move out of Mumbai, not necessarily to Bangalore but definitely out of Mumbai. We evaluated and had 4 options - would it be Hyderabad, Bangalore, Pune or Gurgaon? We decided that because we are moving out, let's go to the hot belt, anyway everything was going to be alien to us. We were figuring out everything from scratch. One of the best decisions Acko ever took was to shift to Bangalore. You (Purple Quarter) were instrumental in hiring Vish. I don't think we would have hired that kind of talent in Mumbai. The talent too somehow back gravitates to the location. It isn't just the tech talent but also the business talent like pure p&l folks who know how to partner with product and technology teams because they have been groomed in a particular ecosystem, and worked at companies where they talk the same language. Most of these folks in companies like ours are always going to be cross-functional. Unless the product, P&L and the tech guys are going to work jointly, we aren't going to be able to deliver much. And if the P&L person knows how to partner with product n tech, who knows what product is delivered what technology is possible and what isn't, then even those business guys can bring you that revenue. Getting this talent is difficult in Mumbai, Mumbai is great for marketing talent, legal services talent, and core financial services talent. If you really want to build a tech-oriented company and scale, Bangalore is the place! Maybe to some degree, I’d say even Hyderabad isn't a bad choice.
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