Witnessing their company’s introduction on bourses can indeed be overwhelming for any entrepreneur. This was no different for One97 Communications’ founder and CEO Vijay Shekhar Sharma who anyway had a reputation for wearing his heart on his sleeve. He burst into tears when the national anthem was played on the day of One97’s listing — November 18, 2021.
The 43-year-old from Aligarh said in an interview the lines ‘Bharat Bhagya Vidhata’ got him teary. According to him, the lines that translate into ‘India shall define its own destiny’ best conveyed what Paytm aspired to achieve.
He built Paytm into a digital payment powerhouse. But more than two years after it was listed, the powerhouse is facing many headwinds, including regulatory hurdles and shaken investor confidence.
For Mr. Sharma, the journey has not been easy. His entire schooling was in Hindi medium. The smooth sailing went for a toss when he had to adapt to English medium of instruction at the Delhi College of Engineering.
“I moved from the front bench, to the last and ultimately out of the class,” he told YouTube channel MindBatteries. He found solace at the computer centre where he would do programming.
He thought he faced little prospects for a placement. That’s when the entrepreneurial knack sought if he could become a ‘job provider’ instead. Back then, he was already working on his venture ‘XS’, building a content management system. In 1999, he sold the company receiving “a couple of lakhs” every week as instalment payments.
One97 Communications was founded in 2000. Initially, he was making about ₹10,000 a month. Facing financial hardships, the young entrepreneur was compelled to sell a 40% take in his company for ₹8 lakh ahead of his sister’s marriage.
The coming of Paytm
One97 operated bootstrapped for seven years. It was providing internet content via SMS alongside USSD-based services.
Paytm, an acronym for Pay-Through-Mobile’’, was launched in December 2010 as a business-to-consumer brand.
Mr. Sharma’s operating rationale was perhaps best captured in a 2015 interview. Responding to a question on whether he was a disruptor, Mr. Sharma held that with technology, he was only removing “what was not needed” — cash. According to him, cash was not good for the economy because “it enhances corruption, (is) tough to carry and (is) costly”. The other aspect of the endeavour was to impart financial inclusion by bringing “half a billion Indians into the credit note circle”.
The payments platform’s foray into lending was the next step. Further, to make it profitable, it was important that cash flowed from its own balance sheet and not by distributing for third parties. This is to reduce costs. This ambition could only be made possible by acquiring a small finance bank licence.
However, recurrent regulatory run-ins over compliance issues such as flouting of KYC norms, governance issues and lack of risk profiling have put the company in a spot, hurting its ambitions. On January 31, the RBI asked Paytm to halt its payment bank business, leading to a crash in its stock price. On February 26, Mr. Sharma stepped down as non-executive chairman of Paytm Payments Bank.
In a larger context, a former senior RBI official told online publication Founding Fuel, “We weren’t sure he understood what regulation meant — and how to engage with us in a serious manner.” The official stated that Mr. Sharma would shed “crocodile tears” in the meeting and would be found “laughing and smiling loudly” outside.
Furthermore, Mr. Sharma often appears particularly instinctive. “It is not intuition, it is not data, it is an opinionated decision. We will do this because I think I like this,” he once explained. His idea would be to “build a better product by iterating fast”.
The impact of his run-ins can be best gauged from the stock price of One97. It hasn’t recovered its debut price of ₹1,955 on BSE till date. It closed at ₹414 on Saturday after the special trading sessions.
Not for the first time in his life perhaps, Mr. Sharma is living to fight another day, at the same time, striving to preserve the profitable paradigm.