[Operator Stories] Mikhail Lomtadze (Kaspi) on building a $20Bn valued business out of Kazakhstan, the Super-App strategy and secrets on execution

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On this episode Pat sits down with Mikhail Lomtadze, CEO of Superapp Kaspi.?We dive into the origin story of the business, its humble beginnings in Kazakhstan to going public on Nasdaq earlier this year at a whopping $20Bn market cap.?

Tl, dr

• Comprehensive Super App Strategy: Kaspi is a super app in Kazakhstan with a $20Bn market cap, offering a wide range of B2C, B2B and B2G services including e-commerce, financial services, travel bookings, grocery delivery, and government functions all within one ecosystem
• Learning Through Evolution: Kaspi's strategy of launching simple products and gradually adding features allows for continuous learning and adaptation. By starting with one key feature and expanding over time, the team grows alongside the product, gaining valuable experience and insights.
• Collaboration with Government Fuels Innovation: The partnership between Kaspi and the Kazakh government illustrates how private-public sector collaboration can drive significant advancements in service delivery. The? government's openness to innovation has been instrumental in launching services like digital document issuance and vehicle registration through the app enhancing convenience for citizens.

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A $20Bn Vision

Mikhail Lomtadze is the CEO of Kaspi - a super app valued at $20 billion in Kazakhstan. Kaspi offers a comprehensive range of services, from e-commerce to government functions all within a single ecosystem.

Originally from Georgia, Mikhail demonstrated an entrepreneurial spirit while still in college.?He set up a consulting company, hired his teachers and fellow students to work in that company alongside him. Couple year later he sold it to EY.

After his undergraduate studies, Mikhail attended Harvard Business School. He then worked in private equity, which he saw as "the closest to running a company."

In 2007, Mikhail transitioned from private equity to entrepreneurship in Kazakhstan when he and his partner decided to take over a struggling bank. This pivotal moment marked the beginning of his journey with Kaspi. His decision to remain in Kazakhstan was influenced by the relationships he built there, particularly with his business partner Vyacheslav Kim.?

“Life is all about the type of people you meet.”

Interestingly, Mikhail views his lack of industry-specific experience as an advantage. He believes that approaching industries from a consumer perspective, without preconceived notions, allows for innovation.?

"When you are approaching the industry from a consumer perspective... you are not loaded with all this experience, what is the good practice this business needs. You always look for something different."

A One-Stop Digital Ecosystem

Kaspi integrates B2C, B2B, and B2G services into a single mobile application, making it a comprehensive super app for daily life in Kazakhstan. The functions include:?

• Financial Services - Now the largest retail financial institution in Kazakhstan.
• Payments - A proprietary network four times larger than Visa and Mastercard combined.
• E-Commerce - With a dedicated delivery network.
• Travel Services - The biggest travel agency in Kazakhstan.
• Grocery Delivery - Transforming how consumers shop for groceries.

Offering all those functions, the app boasts high user engagement, with users making an average of two transactions per day and over 65% of monthly users accessing the app daily.

With that, Kaspi ranks as one of the most engaged apps globally, second only to WeChat in China.

Building from the ground up?

Lomtadze emphasizes the importance of simplicity and customer focus.

"The product has to be self-explanatory and extremely simple, so even a five-year-old kid can use it. Those are the type of things which are extremely important."

Kaspi's approach to product development is rooted in a deep customer focus, measured through its net promoter scores. The company has implemented a robust feedback system, asking up to 400,000 consumers on a regular basis. Potential features are then prioritized based on their potential impact on customer satisfaction.?

Turning around Online Grocery

Kaspi's online grocery platform has achieved profitability within just two years, a rare feat in the industry. Mikhail attributes this success to three key factors:

• Optimized Assortment: The company reduced its SKUs from 26,000 to around 10,000, focusing on high-demand items. This decision led to improved supplier relationships, better product quality, and increased margins
• Increased Operational Efficiency: By focusing on high-demand products, Kaspi reduced its days to sell from 45 to 15, dramatically increasing productivity in their dark stores
• Focus on Service Quality: Recognizing the importance of customer retention, Kaspi prioritized delivery speed, product quality, and overall service excellence

The results speak for themselves, since the business is growing at least 100% a year.?

Transforming Public Services in Kazakhstan

Kaspi's partnership with the Kazakh government has revolutionized public services, demonstrating the potential of digital solutions in a usually low tech evironment. This collaboration is a testament to how innovative tech companies can work with progressive governments to enhance citizens' lives.

"Clearly the driver behind this has been the president and the government because they've been very open-minded."

This willingness to embrace innovation has allowed Kaspi to leverage its expertise in user experience and digital solutions.

Kaspi's strategy involves a user-centric approach to digitizing government services:

• Identify High-Impact Services: Focus on services that can significantly improve citizen engagement.
• Simplify and Digitize: Start with one service at a time, making it fully digital.
• Enhance User Experience: Ensure that services are easy to access and understand.

A notable achievement is the digitization of car registration, allowing users to transfer ownership entirely through the mobile app:

The digitization efforts have had a profound impact:

• Small businesses can now register, change tax status, and pay taxes digitally.
• Enhanced efficiency and accessibility for public services.
• Increased satisfaction among citizens due to reduced queues and improved service quality.

It has, e.g. led to approximately 60% of car registrations occurring online, significantly reducing wait times. Wow!?

Dive into the full episode on

?? Spotify

?? Apple Podcasts

?? All Others

Similar episodes you might enjoy

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[Investor Journey] Christopher Schroeder on the Venn Diagram between the private & the public sector , unleashing entrepreneurial talent and US leadership in tech

[Investor Journey] Unlocking VC in Pakistan - Rabeel Warraich (Sarmayacar) on starting the first institutional fund in the country , false perceptions and getting the flywheel going

If you haven’t yet subscribed, join?the?+3,000 Enthusiasts?via Substack , Medium , or LinkedIn and follow the show wherever you are getting your podcasts. If you enjoy the work we are doing, drop us a review or rating on your preferred podcast app.