Razorpay CEO Harshil Mathur on Trust, AI and Founder Conviction

Name: How Razorpay Became India’s Largest Payments Company
Uploaded: 2026-05-06T12:00:57+00:00
Duration: 31 min 34 s
Channel: Y Combinator
Description: Summary and key takeaways on How Razorpay Became India’s Largest Payments Company — Summary, covering Early Beginnings Harshil Mathur moved from a tech‑coding

Y Combinator

May 06, 2026

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31 min video

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2 min read

YouTube video ID: X5bABLCuIHA

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Harshil Mathur moved from a tech‑coding background into finance after seeing that payments in India were harder to access than cash, creating silos instead of democratization. The first go‑to‑market plan targeted educational institutes, but schools did not prioritize digital collection, so the strategy stalled. Pivoting to startups provided the traction needed to validate the product and cement the conviction that solving the “payments problem” required deep, long‑term commitment.

Building in Regulated Spaces

Fintech in India endures a long “gestation period” because every player must clear a year‑long certification process. This regulatory hurdle acts as a moat: competitors cannot enter quickly without investing the same compliance effort. Conviction survives through direct customer feedback rather than investor hype. As Mathur puts it, “If it is hard to sell to customers it’s a problem. If it’s hard for other reasons it’s not really a problem. It’s actually a moat.”

Crisis Management

In B2B financial services, trust is the primary product. When a bank pulled the plug on a partner, Razorpay’s response was radical transparency and relentless human support. The rule during crises is never to stop picking up the phone, even when faced with abuse. Human touchpoints are a deliberate strategy to retain trust, not merely a ticket‑resolution shortcut. “B2B is a business of trust and the trust at the end of the day nothing replaces the human touch point of trust,” Mathur emphasizes.

Scaling and Strategy

Razorpay kept capital efficiency by focusing on value‑add rather than burning cash for growth. Being a small, agile player allowed an early, risky bet on UPI in April 2016, long before larger incumbents were willing to integrate. That bet turned a $60 billion market estimate in 2015 into a multi‑trillion‑dollar opportunity, with Razorpay now processing $180 billion in annual payment volume.

The Future of Building

Founders must avoid slipping into “manager mode” and stay directly involved in core product vision. AI is compressing the time required to build, making “what to build” more important than “how to build.” Mathur notes, “AI is going to bring down the building mode as well… The only thing you have to spend time is what to build, how to build it, how should it look like.” Companies that wait to react to market changes are already dead; they must anticipate the future instead.

Takeaways

Deep conviction in solving a hard payments problem drove Razorpay’s early pivot from education to startups.
Regulatory complexity in Indian fintech acts as a moat, protecting Razorpay from low‑effort competitors.
In B2B finance, trust is built through relentless human support, especially during crises like the bank pull‑the‑plug incident.
Staying small let Razorpay bet early on UPI, delivering growth while keeping capital efficiency.
AI is reshaping the building process, shifting founder focus to “what to build” rather than “how to build.”

Frequently Asked Questions

Why does regulatory complexity serve as a moat for fintech companies?

Regulatory complexity requires every competitor to complete a year‑long certification process, creating a high entry barrier. Because compliance demands significant time and resources, only firms willing to invest heavily can compete, giving early entrants a lasting defensive advantage.

How does Razorpay use human touchpoints to maintain trust during crises?

Razorpay’s crisis rule is to never stop picking up the phone, even when faced with abuse. Direct human communication replaces automated responses, providing immediate reassurance and problem resolution, which preserves and strengthens B2B trust during high‑stress events.

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Helpful resources related to this video

If you want to practice or explore the concepts discussed in the video, these commonly used tools may help.

The Hard Thing About Hard Things Book Recommended

This book provides essential insights into crisis management and founder conviction, mirroring the challenges discussed in the podcast.

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Zero To One Peter Thiel Book

This book explores the concept of building 'moats' and creating unique value, which aligns with the guest's strategy on regulatory barriers.

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High Output Management Andrew Grove Book

This classic text on management helps founders transition between 'manager mode' and 'founder mode' effectively.

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Full Transcript YouTube

B2B is a business of trust and the trust
at the end of the day nothing replaces
the human touch point of trust right you
pick up the phone you call even today
like just having somebody a human on the
other side saying that yes I am with you
I am managing it gives a lot of trust
so exciting to sit here and chat with
Harshill um I followed along I've been a
fan for a long time um now to give some
context because I would say that Razer
Pay really needs no introduction But
just to set some context, Razer Pay went
through YC in winter of 15, 2015. Uh and
it was the first uh Indian company that
Y Cominator ever invested in. And um you
know from then till now it's it's the
largest uh payments platform in India
and it's grown at breakneck pace. And
what I think is really interesting about
the story is I'd love to learn more
about sort of the early struggles. you
know, many of the folks in the audience
were probably um kind of where you were
in the beginning, right? And um there's
a lot of lessons and interesting uh
parts of your journey that I think
everyone could benefit from. So maybe
what we do is rewind the clock a little
bit. And so did you, you know, kind of
growing up and and in your undergraduate
um studies, was it always the plan for
you to start a company? Like what what
was your mindset at the time?
>> Yeah. No, definitely not. So I think I
was a techie by background. Uh love to
code during college from school days.
Love to code, love to build stuff and
when I was graduating college even
before I started Razer Pay I had no idea
of finance or finance systems and so on
like I just love to code. Uh so like
getting into Razer Pay and getting into
building payments and in regulated space
was definitely not in the cards
completely. But when I graduated from
college, I went into a job. I got placed
into an oil company like you get into
IIT placements and went to work in an
oil company for uh in Middle East and I
never really enjoyed it. Oil was not
really my calling. So I used to spend my
weekends and evenings and like a lot of
people I didn't really have a lot of
life outside work. So I used to spend
those days uh evenings and weekends
coding and building stuff. And for one
of those things we I had to accept
payments. So uh so I was building a
social crowdfunding platform most like a
side project and uh wanted to accept
payments for it. So went through the
standard channel standard approach
approach banks and all of that and
realized that it was fairly complicated
to accept payments in India. First it
was very hard to get just get started
and even if you could get started like
the experience was very like really
really poor because it was not built for
techies to start accepting payments. was
built for large companies to start
exempt events and that seemed like a
take a typical techy mentality is how
hard could this be so I thought that
maybe maybe it's easier and in hindsight
it was a very dumb question but uh but
now I but I can say that at that point
it felt like this seems like such a
simple problem why is nobody solving it
and I started spending on my time
figuring out like what other people are
doing uh Facebook was very popular then
so I would go to Bangalore startups
startups Facebook groups and see what
other people are doing and I saw almost
everyone had the same problem when they
were starting out that payments is
extremely hard in India. In fact, it was
easier to accept cash in India than to
accept digital payments.
>> And which as a techie made no sense to
me like the point of technology, the
point of internet, everything has been
democratization, right? So, social media
gives everyone a voice. Internet gives
everyone a channel. E-commerce gives
everyone a selling point. So, it
democratizes, right? So, when when a
digital system is harder than a physical
system, it it does the reverse of
democratization, it creates silos. And
that felt like a completely incorre. So,
I started spending a lot of time
figuring that out and that's how I got
into payments. But as I say now that it
was probably a very hard business to get
into and if I knew what I knew today
maybe I would have not not started.
>> Yeah. I I think uh this is actually an
interesting pattern for for B2B
companies because I think I I'd love to
understand because it wasn't what I find
really interesting is that it wasn't
your actual idea to begin with. And so
what kinds of you know as you sort of
developed that first version of the
product was there a moment when you said
you know look this is clearly not going
to work and maybe I should just go build
something else or did you know you said
it sort of naturally led to some
insights.
>> How deep did you have to get into the
weeds in order to get those insights?
>> Yeah. So we were very clear we wanted to
build in online payments but we had to
choose a GTM strategy. So, so at that
point of time we thought we'll start by
selling to educational institutes in the
payments for education because it seemed
like e-commerce was a small and harder
market to get into. So, we thought
education seems large because there are
a lot of fees payments in India. Most of
those fees payments were done through
physical channels or non-digital
channels. We thought if we can convert
the fees payments in India into digital,
it could be a very large opportunity.
And it sounds logically right like
massive amount of fees is collected by
schools and universities and if we can
distribage
on that it could be a really good
opportunity. So that's how we create a
plan. In fact we applied to YC by saying
that we're going to go into education
institutes. What happened is once we got
into IC we started selling to education
institutes and I would go I remember
like I was in Japur and I would go into
small uh universities and so on and try
to convince them that hey why don't you
accept your fees digitally and the guy
would look at me and say if they've paid
digitally they're going to pay you 1%
extra I said yes so he said then why
don't I charge just 1% more fees right
so uh and that's when you realize that
your customer doesn't really care about
digital collections like a education
institute didn't really care they knew
that if they want whatever way they
charge the fees the guy is going to come
and pay Because education in India is
that kind of a business that if you're
in a college and the guy says I don't I
don't collect digitally I only collect
cash you'll go and give cash. He says I
don't collect check he says you have to
go to this counter and pay you will go
to that counter and pay. So nobody
really cared about smooth easy
collections in education. So on the
parallelly we started selling to
startups because we were working in a
co-working setup and a lot of startups
are our friends who wanted digital
payments. So they said why don't you
give it to us and we started getting
traction there. So we quickly pivoted
our way and said that this is a sector
that is going even though it's small
it's growing for us. This is a sector
that's definitely not working for us. So
we completely pivoted away into startups
and I think it was really good decision
in hindsight.
>> Interesting. Interesting. That's I love
how because you were kind of in the
weeds with the customers and and in
front of them and like watching them and
understanding their problem. You kind of
got those insights. Um I I'm I'm curious
sort of as you look at the fintech space
and you mentioned that it wasn't if you
knew how complicated or difficult the
problem was you know maybe maybe it
would have been a different way that you
would have started. Um but as you look
at regulated industries as you started
to continue to build the product um was
there a moment when you said actually
this is going to give me um more energy
or this is actually the the hardest
problem actually gives you more energy
or perhaps more moat over time.
>> Yeah. So let me talk about how our
journey started. So we decided to start
into build into payments. We applied to
IC. We got into IC. We spent the 3
months of YC without doing single live
transition because we didn't get an
approval from the partners. So we got an
inrincipal approval before YC. It took
us a year after that to do our first
live transition. Now very few businesses
in the tech world have that kind of a
gestation period. Most tech businesses
you can start off out of your bedroom
start selling. You can build an
e-commerce store start selling and
typically YC also recommends those go
and start selling first. We were in a
business where we couldn't start
selling. We needed to wait for
approvals. We needed to wait for up
things. uh even after getting to YC it
took us almost a year to do our first
live transition because that's how
complicated regulated businesses are. We
had to wait for a license. We first had
to get a lot of certifications,
approvals, license, then the final
approval then we could do first live
transition. The so while all of that
sounds fairly complex the and our teams
used to discuss that hey it's taking us
a year to do a first live transition
like how do we have that patience one
thing that I kept telling us is that yes
there are a lot of hurdles but everyone
coming after us will also face the same
hurdles. So it's the hurdles become a
moat over time because unlike most
spaces in India which get funded. We are
still in a space where there's still
much lesser number of companies in
competition because it's not very easy
to just bring build a payment gateway
get an approval started. You don't have
100 companies coming up in our space in
a month because not easy to build in
that. So the the the regulation can seem
unfair to you at times but the best part
is it's actually very fair. No, no
company no matter how big or small they
are, they have to clear the same light
of guidelines, same set of rules, follow
the same one-year process that we
followed to get an approval and go live
and very few companies will have the
patience or the energy to go through
that effort. So that itself creates a
very deep mode that it's not easy to get
into that space. So I'll say regulated
businesses are hard in the sense that
you have they have certain set of rules
you have to comply with but it also
allows you to build a very deep mode
once you comply with them because
everyone coming after you also has to do
the same job and that makes that that
allows you to create a lot of
differentiation on top.
>> Yeah. And and is that what gave you
ultimately the conviction because I
think you know these types of cold start
problems are very very difficult and you
had to wait a year you had to go well
beyond YC to sort of like land that
first solve that first cold start
problem. Was there a moment when you
said actually you know this is going to
take too long or or are you did you get
conviction as you were building? So I
think we every every like say it's easy
to say today that yeah we had commission
it it wasn't really the case like every
single month I would sit my with my
co-founder and say why are we building
in this space like why don't we do
something else why don't we like there
were companies getting funded in
e-commerce companies getting funded in
uh food delivery and so many spaces and
we said why don't we just do that why
don't we we we are techies at the end of
the day we can spend our time coding
something else we can spend our time
building something else but we connected
with the problem so much because we
spoke to so many founders so many people
who could be our customers and I That
gave the highest form of energy. Every
single customer we started meeting,
everyone said yes, we have a problem.
Yes, nobody's solving it. And that gave
us the conviction that yeah it is hard
but the hard see if it is hard to sell
to customers it's a problem. If it's
hard for other reasons it's not really a
problem. It's actually a mode because if
it's hard for other reasons then nobody
else will get into the problem and and
if your customers really care about it
once you build it for them they'll
really love you. So once we started
getting customers once we were actually
able to start onboarding customers the
customers loved it. Hey finally you are
there. finally there's something who
solves for us the way we want it to be
solved and I think that really created a
deep mode and we had a lot of lot of
loss of conviction through this process
the only thing that he kept us going is
like there were enough customers as Bice
says make something people want so as
long as there were enough number of
people who wanted what we were building
I think we were in a good shape
>> yeah it's it's interesting that's a very
common theme among really really um
really generational founders and
building generational companies is that
ultimately the customer kind of gives
you energy Right. And that's that's
really what what you focus on, not
investors, not sort of regulatory
bodies, but really the customers that
give you that energy. Um, one thing that
you know is often quoted is that points
of crisis or, you know, when you kind of
have these like near-death experiences,
um, you can either survive them or you
can actually get out of them stronger.
And, you know, in our conversations,
there's some near-death moments or or
crisis moments. would love to hear a
moment when you thought maybe things
were going to end and how you kind of
tackled it and how did the company get
stronger because of it.
>> Yeah, it keeps happening in a business
we are in. Uh I can tell you one of the
early days right we got a bank approval
we got a license I was telling you
throughout the YC time uh we were not
live just a week before demo day we got
a final approval and we actually went
live and launched in fact before demo
day we were considering that YC has an
option that you can delay and do the
next demo day discussing not to launch
uh on demo day because you're not ready
but we got approval week before demo day
we did techrunch launch we went live all
great we did the demo day a lot of
investors were interested about 2 weeks
after demo day the bank that had enabled
us pulled the plug. They said like uh
there were some issues, some uh one
customer did a complaint and they said
we can't support you anymore and they
completely stopped our platform. We had
at least 50 customers live, merchants
live who were using us for payments and
one day all of them were shut because
the bank pulled the plug. Now this is
like the like it's the hardest place you
can be in a payments business because
your customers want to collect money.
somebody has finally agreed that they
want to use a small payment gateway like
you to accept your money and now you
have to tell them that hey we your
business is shut because our bank pulled
the plug u and I think that was the
probably the hardest time of the company
because like a lot of us were in the
room we tried begging and pleading the
bank that hey give us some more time and
they said no we can't and it's done and
they didn't care and so so I think uh we
had to take some very like we had to
discuss what we do because in a payments
business trust and reliability is so
critical that once these guys go out and
say hey raise a pay like duped us or
whatever and then our business is
impacted because of them and we had just
done a YC launch like it could be its
own set of things and then we'll never
be able to establish trust. I think the
one fundamental principle we set is that
we'll call every single customer and
tell what is happening exactly why it is
happening and what we are doing about
it. We'll I think a lot of times when
this crisis happens people stop picking
up calls people stop responding because
you don't have much to say like what do
you tell your customers just going to is
going to pick up the phone and scold
you. uh we said we'll get the all the
scolding we'll hear all the abuses but
we'll never stop picking the phone we'll
never stop calling these people and
telling what's happening so we had a
like six seven of us six of us sat in a
room started calling each and every
customer explaining what's happening a
lot of them understood a lot of them
didn't understand a lot of them abused
us and I can tell you like uh when
Indians abuse they abuse a lot so so
they're like uh fullon Hindi abuses that
our team had to and me I personally had
to listen to but we said it's Okay,
we'll listen through it. We'll hear them
out. We'll let them vent their
frustration. We'll tell them what's
happening. And we kept doing that and uh
it took us about four or five days
before which we could get another
partner and we could take it live and
then uh we were able to get a lot of
these merchants live and even some of
those merchants some of the merchants
who even abused us are still live with
us with razor pay even today. uh because
yeah
because at the end of the day like uh
B2B is so unlike B2C B2B is a business
of trust right that's and in
particularly in financial institutions
it's a business of trust and the trust
at the end of the day nothing replaces
the human touch point of trust right you
pick up the phone you call even today
like for when customers get raise a
support query or questions we have a
rule that if it crosses two or three or
four exchanges you pick up the phone and
call the customer be like the just
having somebody a human on other side
saying that yes I am with you and I'm
going to I am managing it gives a lot of
trust uh even though the efficiency
might be weaker the trust coming out of
that is stronger so for example a lot of
companies are using AI to replace uh
support today and we've taken a call
that we are using AI in everything
except replacing customer support
because in customer support in in our
case customer support is not about
solving the problem it is a channel to
establish trust that hey we are here
there's somebody as a human spending his
time on solving a problem and we can't
take that away so it I think that
fundamentals got us set up for us
because of the crisis because we learned
that even when we had the worst of worst
happening to us just because we were
picking the phone and ask saying that
hey I'm on top of it and I'm spending my
time just figuring this out. Give a lot
of trust to these people.
>> That's that's dedication. That's very
inspiring. I think um that's a hugely
important lesson for building any
company but certainly very very much for
a trustbased company. One of the
interesting things about our
conversation was this notion of
conviction that you guys had very early
on and you know this was a time and I
think you know folks probably realize uh
maybe some of the folks here are a
little bit too young to remember you
know the UPI systems wasn't there uh
demonetization has not happened yet um
and so early days there are many
competitors particular competitors from
overseas competitors locally and you
know they would say things like, "Oh,
you know, we're going to we're in this
space already. Um, you don't know
anything. You don't have the background.
We're going to crush you. How about we
just buy you?" Or, you know, um, and
they're certainly motivated by some
amount of fear associated with that,
right? So, what was your mindset at the
time? Like what gave you conviction to
keep going when in some of those cases,
I think some founders probably would
have said, "Well, you know, maybe we we
pack it up and and join one of these
companies or maybe we're not going to
win."
>> Yeah. And I I think that that happened
very early like in in our space it
actually happened very early when we
were in YC even before we launched we
started getting acquisition offers uh
from from one of the some of the largest
payment companies in the world uh
started saying that hey because of YC we
got noticed uh so some of the large
payment companies so founders of them
reached out and said why don't you join
us why did you build India for us and so
on I think it uh and I think some of
those were actually exciting because the
companies were really good uh I think
what kept us going is a India is very
very hard and very different so when we
met a lot of these uh companies global
companies I felt they didn't understand
how complex India is and the worry from
that perspective was not that what will
happen today but our worry was that two
years years out the amount of investment
India needs uh so India is a massive
opportunity today but at 2014 2015 if
you looked at India India like the
payment volume was $60 billion right the
total GMBB that's what I put in my
business plan B my YC uh application I
put the payments market of India is $60
billion today raise alone does $180
billion right so that is the way the
market has grown in last 10 years right
so it's so hard to
it's so hard to plan for India now if I
told a company that hey for a $60
billion market we need $500 million to
build it's going to be very hard uh to
convince them but if I if somebody
understood that it's $60 billion market
is going to scale up massively right and
there's a lot of opportunity that is
going to have even today I feel 180 is
very small India is going to be a
trillion plus market at least in
payments right but it's very hard to
explain that to a global player who's
not seen that because most other markets
in the world are not growing at that
pace. So I think for us it was very
clear that if we have to solve India, we
have to think a very long-term
perspective and if if we were able to
consider that we need to have a partner
who is going to be able to understand
that that is a long-term play of India
and we didn't find that. So I think for
us the answer became very clear then
unless we feel that what we want to
achieve we can achieve faster with
somebody else there's no reason to work
with somebody else and we never found
that.
>> Yeah your your insights were pretty
unique in that regard I think. Um so it
did work and it did start to take off
and you know um there was a period I
think um in sort of 2017 2020 um even
before the pandemic where you guys had
grown some insane multiple like 40x um
at what was amazing about that wasn't
just the growth it was that you guys did
it with record capital efficiency
what was your mindset in that because
you know I think You know, we get a lot
of questions obviously about how much
money do I need to raise? Um, I need to
do this thing and therefore I need to
raise a lot of capital to do it. Um, but
you guys were able to grow, you know, at
a break neck pace but say very very
capital efficient and very lean. What
was what was that mindset?
>> Yeah, it is uh in fact it's again a
great thing in hindsight but if you know
the 20185 to 2020 time period it was not
really considered a good thing for a
company to burn less money. Like there's
a there's a time when people were
investors expect you to burn a lot of
money. So we raised like when we raised
our series A funding we raised like
about 11 10 11 million. We didn't really
have that much burn. Our burn was less
than $200,000 a month. So we took that
money and we put it in bank FDS uh fixed
deposits in India. Uh the interesting
part was the interest on the deposits
was more than our burn. So we became
profitable and uh our investor was very
unhappy with that because he was like
we've given you this money to burn and
grow. Why are you why are you making
profits out of it and we had to explain
that because they were investing a lot
of other consumer companies which were
burning massive amount of money and here
we were we had $11 million we growing
their money just because of interest
rate and that made them very unhappy. So
it was a very hard conversation in
hindsight but I think for us it was very
clear we are in a B2B business right in
a B2B is a very logical business right
unlike B2C which in my belief because
I'm a B2B founder I find it very
illogical because you have to in B2C you
have to first get the customer spend a
lot of money get the spend a lot of
money to grow the customer spend a lot
of money to uh build engagement and then
at some point through some other channel
you monetize that customer in B2B it's
very simple you add a value to a
business the business pays you for it
it's a simple business that you go to a
business you say hey I'm adding this
value to you this is what I need to
charge for it. Either the business likes
it or dislikes it. But that's how it is.
There's no point of burning money for
it. There's no point of spending money
to engage and all of that because the
business is going to be logical. He uses
you today because you add value. If you
tomorrow stop adding value, he uses
somebody else. There is there is modes
and there is depth in product but at the
end of the day it's about the value you
add to that their life. So I think for
us it was very clear. We told the
investor that like I can burn a lot more
money and grow a lot faster. It's not
going to do anything because there's no
point of that. It's not a DAO mama
business where I can have that DAO and I
can say hey tomorrow this is going to be
worth this much value. It has as much
value as the value I'm adding to him
today. If I stop adding that value it's
going to move out tomorrow. And that
makes the business far more logical but
also there's a lot of intensity to the
business because every day you have to
fight for your share. You're the
business uh decision maker on the other
side is every day evaluating are you
still adding more value than you're
charging me for? Because if you're not
then you're going to find something
else. And it it is easy to say but it's
harder to constantly compound especially
as or gets larger. So to give an example
like you said like UPI was launched uh
in 2016 April 2016 actually we just
celebrated 10 years of UPI. April 2016
is when UPI was launched. U there were a
lot of payment gateways at that point of
time and I don't know if people here
would remember but in 2016 when UPI was
launched there was a lot of skeptics a
lot of people didn't believe that UPI
will take off. The two largest banks of
the country hadn't integrated on UPI
till demonetization happened till
November 2016. So most payment gateways
in India actually didn't integrate UPI
at all because they felt that with
without the two largest banks of the
country being on UPI, who will use UPI?
Uh right. So and that's where the value
of being small is so high because we had
nothing to lose. We had 10,000
merchants. We were very small. We had
launched in 2015. This is 2016. Uh in uh
in September October 2016, we became the
first payment gateway in the country to
go live on UPI much before the largest
banks of the country had gone live. And
then and then November is when the
largest banks went live and then
demonetization happened and no other
payment gateway was ready to support UPI
at the scale at which we were. So all
the largest uh companies we were only
seringmemes before that but the largest
companies at that point of time zomato
swiggy book my show all of them went
live on razor pay in a period of couple
of weeks because suddenly everyone
wanted UPI and we were the only payment
offering that now that's the advantage
of being a small player that you can
make these bets early on that worst
thing and we discussed with our team the
worst that will happen that UPI doesn't
take off it's fine we are still fighting
the battle anyway but if it does take
off it creates a unique wedge for us and
we can go out and So that bet that early
bet played out in a massive way for us
because it took 6 months for any other
payment gateway to go live on UP after
we went live and in that 6 months we
were able to enter spaces that we
couldn't have entered uh if there was no
differentiator for us to play on and
that is how it compounded for us.
>> That's that's such a classic I think
lesson.
>> Yeah, it's such a classic lesson. I mean
we we talk a lot about you know being
able to be faster, right? your rate of
building product, your rate of learning,
your ability to adapt to markets and
those advantages acrew to startups. This
is a such a classic story and and such
an amazing indication that that works.
Um I'm curious um you know as we look at
the age of AI there's obviously multiple
things that it's fundamentally shifted
our thinking on product on how we run
companies right both of those things and
I'm curious how you think about the
product and I think you guys recently
launched you know core AI functionality
layering in the fundamental sort of AI
backbone for running a business um how
do you guys think about in integrating
AI into the
Yeah, I think AI is such a fundamental
shift. So, first we have to calibrate
ourselves a lot, right? So, I think it
starts at the top. So, I am like I and
the leadership are spending so much time
on AI like I am addicted to cloud code
so much right now. uh I was I was
meeting the anthropic team yesterday and
I was telling them that that you need to
start having de addiction programs
because like we sp I'm personally
spending so much time on cloud code on
openclaw and so on and it's so much fun
and exciting and it allows like I think
as most founders like we start building
companies because we love building we
love coding but over time you the layers
get built in the company gets large and
you end up becoming people manager and
honestly no founder gets into building a
startup to become a people manager so I
think AI is such an amazing tool because
it allows you to get back to building in
from ship inform uh and I think I
personally I've been loving that but the
advantage of that is that when you spend
your time doing that you understand the
power of the tool you understand the
power the technology brings in and that
is allowing us to make some very
fundamental decisions so like couple of
months back we just sat down and said if
I were to start razor it today how would
I build it right and we just started
putting down on drawing board that how
would our integration look like how
would our onboarding look like how would
our support look like how would our
platform look like how would people
interact with us how would people use us
and we just put it all down on a And he
said okay like let's make that happen
this because that's the incumbent policy
right like you start believing that hey
we have everything we are well set and I
mean the payment disrupted a lot of
incumbents to get where we are and it is
because of the UP example was the same
reason everybody felt that we we are the
largest payment player we are doing all
the cards and everything if something
changes we'll respond to it but the
respond to it the the market changes
faster than you can respond so if you're
going to respond when the market is
starting to change you're already too
late so we said that we going to do the
Same thing with AI and we're not going
to act like an incumbent. We're going to
act like a startup. We're going to
decide what changes are happening and we
are going to bring these changes before
a new startup brings those in. So we
completely reinvented the platform end
to end. We launched it a couple of
months back and the traction has been
massive because like it fundamentally
allows you and some of this is not
perfect yet because AI is still
evolving. The tech is there but not
fully there but you have to go with that
belief that it's going to get there.
It's improving every day. And so we had
to spend a lot of time building this
rewiring our teams rewiring and it's not
easy because when you have large pools
of capital sitting large pools of teams
sitting doing something that doing every
day asking them that hey we'll hurt
ourselves in short term but you know
going to private ourselves completely to
what is going to make sense longterm it
is hard and every team has an incumbent
fallacy but it's the only way to survive
in the world that we're heading towards.
AI is going to bring down time to build
so rapidly that the only differentiation
is going to be how fast can you move,
how fast can you really decide what to
build because the build itself is a very
short process. I think that's the only
mode I think I think we've seen that
tech itself was the only mode in tech
became how fast can you execute because
a lot of other things came down. There's
not the capital mode came down the
infrastructure mode came down. I think
AI is going to bring down the building
mode as well because build itself is
going to be very easy. The only thing
you have to spend time is what to build,
how to build it, how should it look
like. But just the build itself is going
to compress massively and every single
company will have to go through the
transformation. Now some of them are
going to take the time and say, "Hey,
I'll respond to the market." And any
company who takes that call that we're
going to respond to the market is
already dead. The only way to survive is
to figure out what the market is going
to be and move today. And that's the
call we had to take.
>> This is true founder mode right right
here.
Um, that's amazing. That's amazing. Um,
you know, as as you look at your
journey, your startup journey. Um, you
know, you've you've grown from, um, you
know, a few people maybe in an apartment
in in Jaipur when you started to now
sort of one of the generational
companies. How have you think you've
changed you know as you scale? Certainly
the business changes, the organization
changes. Um but one of the things that
we often hear is that founders that
choose to build um and have this
intensity to build they change. They
become a better version of themselves or
a more formidable version of themselves.
As you reflect on your journey, what has
changed about you?
>> Yeah know I think there are a lot of
learnings in the 10 years and it's not
that we did everything right. I did a
lot of mistakes. Uh let me speak about
like for example some of the mistakes
like the founder mode that you spoke
about like I loved that essay when it
came out because we went through that
same journey. What happens as a founder,
you typically start a company, you are
into it every day. The first two, three
years, you're ramping up. You're
figuring out, you're in the trenches.
Then the company starts taking off. Then
you start hiring a bunch of executives.
You start hiring a lot of leaders and
you start feeling that, hey, now I have
good leaders that can take care of what
I used to do and I don't need to spend
my time on that. I can just manage the
leaders. And that's what the essays say,
manager mode. And a lot of founders
shifted to manage mode. I myself shifted
to manager mode for a couple of years
where I said, I have the best leaders.
The leaders know what they are doing.
Why do I need to get into everything
like let me just manage the leaders and
that's the worst mistake you can do. Now
there's a fine line between
micromanagement and being in founder
mode, right? So you don't want to be
micromanaging everything. But the things
that really matter to you, the founder
has to get into it. For example, as a
product company, the product vision, the
pro direction, the way a founder is
going to think about it, no leader can
ever think about it. So like I think and
we had to all and I've spoken to a lot
of founders who had to go through the
journey where you start acting in
manager mode, you start getting your
leaders and you get the best leaders. We
had like raise some amazing leaders. But
at the end of the day, what
differentiates a company is the
founders's conviction on something that
your day to day-to-day execution people
can't take. And those decisions have to
come from founders. So, and I think the
fundamental point point is that nobody's
going to care about your company as much
as you do. And that that is never going
to change. It's not going to happen on
day one. It's not going to happen on day
year 10. It's not going to happen on
year 20. And I think every every company
whether it's Facebook or whether it's uh
any large company is run by the founder
the founders slowly and quickly realize
that nobody no good leader can care
about your company as much as you do and
I think we had to go through the
journey. So I think that journey took
almost 10 years for me to personally see
that hey I need to be into the core
things that matter to the company is
something I need to be there and I need
to spend my time on it and everything
else I can delegate and I think that
learning took a lot of time. Um, one
last quick question for me. So, as as we
look at, you know, the over 2,000 people
that are here that maybe reflect where
you were when you started, what advice
would you have for folks to take
actionable steps to get building and to
get started on a on a company?
>> Yeah. I think the the core premise of
like entrepreneurship, right? Like AI is
making a lot of stuff easier, right? So,
people are think, hey, maybe
entrepreneurship will get easier. I
don't think entrepreneurship is going to
get easier because of AI. I think the
fundamental tools required to be build a
company are getting easier but the core
aspect of entrepreneur is the ability to
connect with the problem deeply and
spend all of your time and effort in
solving that problem right and I think
with AI my worry is that because it's
easier to build it's easier for people
to latch onto problems that they don't
really care about right because it's
easier to say hey I can whiteboard
something I can build something and
deploy this and I can start going live I
think what every founder really needs to
think is is this something that you can
spend your next 10 years of your life
building because that's what it's going
to take. It is can be easy to build and
deploy a software on AI today. It can be
very easy to deploy a website on AI
today. But is there a problem statement
that you can spend your 10 years of your
life building because that's what it's
going to take if you're going to make
build a last successful company. AI is
going to make the build process easier.
The company building part is still going
to take 10 years of your life and every
day spending that hour. So need to find
a problem statement statement that you
closely connect with not just because
something is cool or because AI allowed
me to make that that code that Y
project. The only thing that's going to
work is is that a problem statement that
you can spend all of your time and
effort for next 10 years solving for
because that's what it's going to take
at the end of the day.
>> Inspiring. We're going to leave it
there. Everyone give it up for Harshell
Matur from Razer Pay.
>> Yeah. Thank you. Thank you.

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Paul Graham, Founder of Y Combinator, Live from Stockholm

Y Combinator

May 13, 2026

Building in Regulated Spaces

Crisis Management

Scaling and Strategy

The Future of Building

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