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“We believe we have to dominate ways merchants get payments” – Vijay Shekhar Sharma

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Mobile payments and commerce company Paytm* announced that it had sold 25% stake to a subsidiary of Alibaba, China’s e-commerce behemoth last month. Paytm and Alibaba are similar in the sense that Paytm has a consumer markertplace business as well as a payments business (via the Paytm Wallet). Paytm founder Vijay Shekhar Sharma (VSS) has also applied for a Payments Banks license.

A couple of weeks ago, MediaNama spoke at length with VSS about the company’s structure, investor relations, payments bank licence and expansion plans. Part two of our discussion with VSS:

MediaNama: What is your plan for advertising and marketing?  We noticed that you were doing a lot of marketing around the Cricket World Cup?

VSS: We want to be the one of the most trusted  platform in the country.  If you do good and people don’t see you then you’re not trusted because essentially people have not experienced you. Our trust journey starts with the number of times you’ve seen our name, number of times you’ve  used our platform. On our platform, every Joe does about anything above three orders a month. Can you beat it? This is called trust. From about 3.2, 3.5 orders a month it’s headed towards four. So the point is if you want to build trust, you have to be visible. You have to be in the company of brands who people trust. So the Cricket World Cup is one of those. They have to try us a ‘n’ number of times which is what we are very proud of. So consumers are doing four transactions a month on Paytm already and I include third party merchants which use our wallet.

MediaNama: So how important is the wallet in the scheme of things?

VSS: It’s the starting point of our life. It’s the first thing the consumer puts trust into and it’s the first relationship building moment of us and the consumers. Wallet is the most important thing in our business model. We incidentally look at Wallet as a primary business. Because we believe we have to dominate ways merchants get payments  as merchants have sorted out the problem of acquiring customers but not the payments.

MediaNama: So how quickly do you release payments to merchants?

VSS: Seven days

MediaNama: Isn’t that long considering you already have the money in a quasi-escrow account?

VSS: We will give right to release the escrow to consumers, which means when you’re buying, the money is blocked for a merchant and you can release the money immediately or it will get released automatically.

When you are a buyer purchasing something from a seller, the money gets blocked in your Paytm account. And then you can release it, or in a time-bound manner it will automatically release it. Lets say you have Rs 10,000 in your wallet, and you bought something for Rs 2,000 so in your account you will see that this amount is blocked for the particular seller. So the seller gets it as an order status. Once you get the delivery you can click release the money or the escrow will get released automatically in a time-bound manner. So there is no payment cycle we would have. Again the misunderstanding you have is that we buy the inventory. But the payment cycle is a function of the business model. And if any market place says that they make the payment in X number of days that means they’re buying from the seller.

MediaNama: Are you looking at acquisitions? What kind of companies would you like to acquire then?

VSS: I don’t think there is reason for us to look at acquisitions as of now and in the current state of the company because we have a tremendous scope of work. But I’ll not fire away something which fits in our plans and something that adds to our business. It’s not a proactive persuasion but we won’t give up something which comes on the way.

Anything that accelerates our customer acquisition, merchant management. So that’s what we want to focus our company on; anything that creates capabilities of merchant management.

MediaNama: What is your hiring situation? How many people do you have in the company?

We have about 2,500 people now. And we would look to add no less than 4,000 more by the rest of the year. As I talked about, there is a number of people needed for merchant management, dev, operations and support.

MediaNama: What do you think of the situation in terms of the battle for talent? It’s taking costs through the roof for many players

VSS: There’ so much amount of money coming into the ecosystem that one can go in two places. Either it goes to the consumer or employees.  Both sides get benefit. Consumers must be happy because they get goods at a better rate, better pricing in the real world.

People need to identify how to treat their team members. You don’t shortcharge them on benefits and ESOPs. We share more equity sincerely than most players in the industry . We believe that those things will come in as a differentiator for talent. Right now it’s a golden age for people. Number one you can start building something which is a great opportunity. Number two is that you can be part of these incredible time-changing and life-changing companies that are working hard to change the size of the economy. So it’s a tough choice. But I believe once you join the company, you join the purpose of we strive for. Our purpose is to bring the economy to the millions of companies we haven’t identified yet.

MediaNama: We see a lot of companies are shifting core ops to Bangalore because that’s where the talent is. You have an office in Bangalore, but your core ops are still in Delhi. How are you looking at expansion?

VSS: We have an unquenchable  thirst of engineers. We have offices in Delhi and Bangalore. Few months back we opened an office in Toronto.  We must be one of the few internet companies which are development centres in the West because we believe can acquire a lot a larger volume of talent and build incredible capability there. Bangalore is essentially a lot more similar, if not the same as the international market . Our expansion is there in the international market so that we can expand in other geographies . We want to be the cult destination for engineers. We don’t want to be a company that has a thousand people who built something that could have been done by 200 people. So we have a very high bar for talent filtering. But we don’t shy away from giving them a best offer so that we can give differentiation.

We still need thousand more engineers and to do that we are not only expanding in Bangalore, but also in Toronto. There’s also a Paytm labs there.

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MediaNama: So how does this work in terms of leadership perspective? You’re also a essentially a single founder company and if I look at most of the other companies like, Flipkart, Snapdeal – they’ve all got two founders. How does that work for you?

VSS: I think if you look at Paytm you should treat it as founder team and it’s not just one founder. One97 definitely had three founders and two gave up. And Paytm had five founders and not just one or two. Paytm was produced by team members who we worked with for so many years. Another thing I like about our business is that our team has excellent cohesive comfort which is a little tricky when you have young fledging companies which has early stage growth. What I know is after running companies for 15 years is there is a lot more understanding of how leadership as a cohesive team should work.

As far as Paytm is concerned I’m lucky to have five founders that was not me. In fact, I was not the guy who wrote the first line of code or even registered the domain name. I’m not the founder in that sense. It was a business vertical that doubled down to become really big. I’m the founder of One97.

MediaNama: So what happens to One97 now? Will you merge Paytm into One97?

VSS: Yeah we had to do that because for the RBI application for the payments bank. It’s better to have a single entity because they would value that. So Paytm which was an individual company got merged into One97 . And One97 as a company continues to do multiple lines of businesses, marketing, payments and a marketplace.

MediaNama: Have you retired the One97 mobility fund?

VSS: No, we have invested in a couple of companies. We have done investments in the last few months. We invested in Targeting Mantra, which is a 500 Startups company, we invested in CareTech which is a friendly neighbourhood health care company. So yeah we’re also investing in a couple of other companies as we speak.

MediaNama: How much of your company’s equity is in ESOPs? And how much of the company do you currently hold?

VSS: It’s  four percent in ESOPs. And I control something around 27%.

MediaNama: So most of the company is owned by investors, what kind of board control do you have?

VSS: I always had investors in majority only. Because day one I started, it was 33% for me. So it was 33% among three people. And today I have about 27% and I’ve never had majority control over the company ever. I think it’s about having a great supporting investor and board member. I would give credit to Ravi Adusumalli who’s not just been an investor but also been sort of a co-founder for the business that we’ve done. He’s more active than most team members would be.

MediaNama: Is that a pressure on the business having an investor who’s so active?

VSS: No, not really. We have an investor who we have great chemistry and you understand them and they understand you. And that’s equal to co-founder status actually. So my co-founder is a fixed guy who can give me money and that comes out as a great asset! And he knows whom to talk to, what not to talk and he doesn’t get into how should you release an app and how you should hire the merchants and there is an incredible admiration for each other and chemistry on the work we do.

MediaNama: Why did you apply for a payments bank licence in your individual capacity?

VSS: Very simple. The payments bank guidelines required an Indian owner and Indian control. And One97 is a majority foreign owned company. And we couldn’t file that as a One97 application because ultimately One97 has foreign majority ownership. So One97 owns as much allowed, and rest is my ownership so in that perspective, I become the promoter and not the company. So first is the acknowledgement from the RBI is that this is fine.

*Disclosure: Paytm is an advertiser with Medianama

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