A popular personality in the Indian startup ecosystem, Kunal Shah, has recently become the protagonist of a heated debate on the internet. One LinkedIn post of a senior consultant of a major company wondered why Shah is such a justified entrepreneur in view of his companies having gigantic losses, despite not a single year of profitability, in more than ten years. This post, which became a phenomenon, discussed the financial issues of Shah Enterprises, Freecharge, and CRED and raised a more universal question of how to understand success in the world of startups. Even Shah has responded to the criticism, and his answer has only continued the controversy, with some picking sides on his legacy.
However, Shah entered entrepreneurship in the year 2010 when he and some business partners launched Freecharge, which gave the consumers the ability to recharge their mobile phones or make any bill payment online. Freecharge had earned a revenue of 35 crore as of 2015, yet the cost of operations came out to 269 crore, including high expenditure in cashback offers and user acquisition. Snapdeal had bought the company for a massive 2800 crores, and the deal was regarded as a huge triumph at that time. But it only took two years before Snapdeal sold Freecharge to Axis Bank at an inflated price of only 14 percent of the former valuation at 370 crore. This drastic decline awakened some eyebrows and served as one of the major arguments on the track record of Shah, whose role has been criticized widely in the recent past.
Shah started CRED, a fintech company aimed at rewarding individuals who make timely payments to credit card bills, in 2018. CRED has become one of the most discussed startups in India, which involves services such as reminders to pay bills, credit score tracking, and cashback rewards. The company has encountered financial challenges in spite of its popularity. The reports state that CRED registered revenue of 4,493 crores in seven years with an unbelievable net loss of 5,215 crores. These are the figures used in a LinkedIn post that wondered why the success of Shah has to be lauded when his projects are still unable to make money even after 15 years.
The post by the consultant did not only make mention of numbers; it criticized the account of Shah being a success. It stated that the startup culture tends to idolize founders no matter that they make profits regularly, which led to a question of whether innovation and vision should be more important than profit. This post instantly went viral, with some of the people supporting the idea that the emphasis on losses should work as an indication of a gap in the system of measuring success, and others have defended Shah, remarking on his capacity to innovate and create a difference in the India digital payment world prior to UPI.
Shah answered the criticism head-on, accepting the criticism in the points. His response was characterized as brief and modest, a trait that portrayed his readiness to interact with the opposers. The advocates of Shah claim that his projects have turned out to be important value additions besides profit. Freecharge is but one example of an early adopter of digital payments, which preceded the later platforms. CRED, meanwhile, has been able to create a substantial user base and just this month received 617 crore (72 million) dollars in funding from investors such as GIC, RTP Global, and also family offices of Shah himself and QED Innovation Labs. Although the valuation of the company added by half, from three and a half billion dollars to six billion dollars, CRED plans to become profitable in 2026 with a long-term initiative to expand.
Other arguments in the startup culture of India are also in the discussion stage. Others are arguing that the need to grow fast translates into massive losses, whereby organizations are focusing on growth rather than profits. Some others think that innovators such as Shah, who are not afraid to take big risks, would bring about innovation and take the economy to another level in the long term. Consider the example of Shah, whose ventures have already provided employment to thousands of people and also encouraged thousands of entrepreneurs, though the books may not be showing it yet.
The reactions have gone viral on social media. The fact that profitability is not the sole indicator of success was mentioned by some users, reminding about such global players as Amazon, who had to operate at a loss for years to establish market leadership. The question is, as other people underscored, doesShah have the business skills to raise huge amounts of money and build start-ups of high value even though none of his companies are profitable yet? However, critics opine that the idea of honoring founders who always lose is an illusionary expectation for new business owners.
This argument concerns a period when the startup scene of India is being questioned. As the funding starts to slow, investors are being a little more reserved, and profitability is being placed as a priority. The tale of Shah resonates with the problem of striking the balance between innovation and fiscal restraint. There is no doubt that his ventures have influenced the fintech area, yet the question lies in another question: is success to be measured by its impact, its vision, or its profits?
In the subsequent part of this conversation, his reaction has demonstrated that he is the kind of person who does not shy away when it comes to criticism. No matter how you look at him, as a visionary or an overhyped founder, his story represents the complexity of the development of a startup within a competitive and rapidly changing market. Till now, the controversy continues, question mark unanswered, big on speculative answers as to what makes a great entrepreneur.
