Gulveen Aulakh & Jayadevan PK, The Economic Times
Bengaluru/New Delhi, 12 January 2015
Inside a four-storey office in Noida’s Sector 5, Vijay Shekhar Sharma, the founder of One97 Communications, pointed to a sign on the glass wall of a conference room — "Go big, or go home," it said, adding, "One million orders a day will happen here first. That’s our vow. That’s our game."
In the reception below, a dozen-odd job aspirants were waiting to be interviewed.
That was in mid-September. On Sunday, ET reported that Chinese ecommerce giant Alibaba is set to invest $575 million in One97 Communications-owned Paytm at a valuation of over $1.9 billion. A deal could be announced in the first week of February.
In the weeks leading up to September, Sharma, 38, had doubled down on hiring for Paytm, ploughing in profits from One97 Communications, a mobile value-added services firm, to build up its unit into an online marketplace. "We’ve bet the whole company on it."
"Every rupee we had was being used to grow Paytm," Sharma said. To compete with the likes of Amazon, Sharma needed more money and a strong strategic investor.
That’s exactly what seems to have happened over the past few days, making it the fastest Indian startup to cross billion-dollar valuation. Paytm, which began as a mobile recharge and utility bill payment service in late 2010, quickly morphed into a fullblown ecommerce marketplace similar to Amazon and Flipkart, only focused on mobile right from the start.
Many employees own equity in Paytm
In October, Sharma set in motion a massive fund-raising exercise that was to last several months and culminate in a deal that would give Paytm the money and the muscle. Around the same time, he inducted veteran Silicon Valley investor Mike Levinthal onto the board, a US-based partner at a venture capital firm told ET.By the end of January, Chinese entrepreneur Jack Ma, who built the world’s most valuable ecommerce company Alibaba, is likely to make the deal official. Sharma declined comment but at least two sources said that in October, he met top executives from Japan’s SoftBank, Singapore government’s Temasek Holdings and Chinese ecommerce firm Alibaba.
The companies couldn’t be immediately reached for comment.Alibaba and Alipay will have one member each on the company’s board, besides two founder directors, one of which will be Sharma, said a source close to the developments. Of the current 2,000-strong team, about half hold equity in the company. About 100 executives in the senior management and tech teams have shares worth at least Rs 1 crore, said another person. ET could not immediately verify these claims. The company is learnt to be issuing new shares so all current shareholders dilute their stakes, after which Alibaba and Alipay are likely to get an equal split of equity following the infusion of $575 million.
As a company, Paytm has evolved from when it was first launched in December 2010. "At one point of time, we looked like a recharge portal, then a utilities payment service, now we are a marketplace," said Sharma. The company motto this year, printed on its 2015 calendar, is "Game on!" On New Year’s Eve, Sharma threw the "biggest party in town" for employees with local band Euphoria performing. He was back at work early next day.
Co-workers know him to be perpetually in motion, putting in long hours at work alongside his team at the Noida office, which does not have any cubicles. "I get at least three emails where a customer satisfaction issue has been highlighted. He (Sharma) personally looks at all escalations," said Amit Lakhotia, vice-president of business at Paytm.Having skydived from a plane in Australia and rafted through treacherous rapids in Rishikesh about 20 times, Sharma is an "adventure junkie", always looking for the next big adrenaline high, said people close to him. Sharma and his friends also like going on road trips across Europe, one of them added."I’ve known him for seven-eight years and I can tell you his mind is all over the place all the time. It’s a mark of impatience, of getting things done, which is needed when you’re leading a fast-growing company.
At times, conversations can go in many different directions — he has so many different ideas," said a director at one of One97’s companies, requesting anonymity. Sharma was born to Sulom Prakash Sharma, a biology teacher who retired as the principal of Agrasen Inter College in Harduaganj, a small town near Aligarh in Uttar Pradesh. His mother was a housewife and Sharma grew up in a studious atmosphere at home. He was a top scorer in school and was one of the youngest to graduate from Delhi Engineering College in 1998.
He started his first venture, web solutions firm XS Corps, while finishing his electronics and communications engineering course. A year later, in 1999, he sold the company to US-based Lotus Interworks LLC. Over the next few years, before starting One97 in 2000, Sharma was part of a number of companies including Riverrun Software Services Group, Inter Solutions Software and Startec Global Communications, where he was chief technology officer. The companies focused on design and development of of various products and applications for the technology, media and telecom industries. Sharma is one of the few startup bosses who have mentored other startups during their early days.
Gaurav Dahake, founder and CEO of BuyHatke.com, recalled that Sharma guided the IIT-Kharagpur alumnus when he approached him through a business networking site and connected him to Pratyush Prasanna, vice-president at Paytm, from the same school. Prasanna was founder and CEO of Plustxt, a privacy enabled text messaging system in seven Indian languages that was acquired by One97 in 2013. "He is very approachable. I simply left him amessage on a community on Quora saying ‘How do I get in touch Vijay’ and I got a prompt reply from him," Dahake said.Sharma is popular among the startup, venture capital and emerging business communities as passionate, aggressive, being a stickler for detail and consumer-centric.
"He spends a lot of time on the design and user interface of Paytm, the way it should look and feel to the end consumer," said Lakhotia, who has worked with Sharma for the past two-and-a-half years. To be sure, even with a combination of Sharma’s experience in dealing with the Indian consumer and Alibaba’s money and experience in China, it’s not going to be an easy run. Flipkart, Amazon and Snapdeal, three of the largest Indian ecommerce companies now, have significant market share and access to capital.
Paytm is likely to differentiate itself by connecting millions
of Chinese merchants on Alibaba’s marketplace to the Indian market
and the consumer in its home country to a wider variety of products
available on the marketplace. But there may not necessarily
be an automatic match, said an expert. "India has different
needs from China so you can’t just port something from China and
bring it here. Indian banking systems are also regulated differently
and I’m not sure how much of this synergy will actually apply,"
said Devangshu Dutta, CEO of retail advisory Third Eyesight.
(Published in The Economic Times)