Harshil Mathur: AI Is Compressing Every Moat

Razorpay was the first Indian company accepted into Y Combinator in 2015, and has since grown into India's largest payment platform, processing $180 billion annually.

During the three months at Y Combinator, they couldn't process a single transaction due to lack of partner approval, and it took a year from obtaining approval to the first live transaction. The strict regulations served as a barrier to entry, allowing them to build a deep moat with fewer competitors.

Two weeks after Demo Day, their partner bank ceased services, affecting 50 customers. They called every customer to explain the situation, endured insults, but maintained trust, resulting in many customers still using Razorpay today.

In September 2016, Razorpay became the country's first UPI-enabled payment gateway, before India's two largest banks joined UPI. After demonetization in November, major companies like Zomato, Swiggy, and BookMyShow migrated to Razorpay within weeks.

Between 2015 and 2020, Razorpay achieved 40x growth while prioritizing capital efficiency. They raised $10-11 million in Series A funding, but their monthly burn rate was less than $200,000, and the interest earned from fixed deposits exceeded their burn, leading to investor dissatisfaction.

B2B is a business of trust, and they decided against fully replacing human customer support with AI. If a query exceeds 2-3 exchanges, they always call the customer, building trust through human interaction.

AI compresses the building process, but the essence of entrepreneurship remains unchanged. The key is "what to build," and success lies in founders finding a problem they can passionately commit to for 10 years.

Returning to 'Founder Mode' is crucial. Harshil initially shifted to 'Manager Mode' after hiring excellent leaders, but realized no one cares about the company as much as the founder, and core aspects like product vision require direct founder involvement.

A few months ago, they completely redesigned the entire platform from scratch, based on the premise of 'how would I build Razorpay today with AI?' Moving proactively to anticipate market changes, rather than merely reacting, is the only way to survive.

AI eliminates the 'building moat,' making 'how fast you can move' the sole differentiator. Companies must avoid the incumbent trap and continuously innovate like startups to survive.