Vijay Sharma’s moment of revelation came in October 2011 as he watched Alibaba’s Jack Ma give a talk in Hong Kong. The young Indian entrepreneur knew little of Ma’s business empire, which was well on the way to becoming the world’s largest eCommerce company. Yet he was enraptured as Ma talked about the scale of his operations, and explained how he had seen off a range of American competitors, not least online auction site eBay.
“I did not know my life would change at that conference,” Sharma says. He was struggling to build a digital payments company that would let Indians buy cinema tickets or settle utility bills using their mobile phones. It was the latest in a series of modestly successful technology ventures, but growth was frustratingly slow.
“When you are born in India, you are mesmerised by size, and you hope you’ll some day build a service that hundreds of millions of Indians want to use,” says 35-year-old Mr Sharma. “So when I heard ‘half a billion people’, when I heard him talking about ‘building a $100 billion business’, I was like — wow!”
Sharma listened as Ma laid out Alibaba’s model, which brought together Alipay, an online payments arm, with Taobao, the online marketplace that connects millions of small Chinese businesses to customers online. The penny dropped. Back in India, he set out plans to build a similar mobile marketplace, to go alongside the payments business, allowing thousands of Indian businesses to sell goods from silk saris to Apple iPhones easily online.
The result was Paytm, now one of India’s most high-profile start-ups, with a valuation of about $2.5 billion.
“After the event, I became totally interested in China, Alibaba and Jack — all three things,” says Sharma, who like Ma comes from a modest background. Seeking further ideas, he travelled to Beijing, picking up more tips from Chinese internet companies such as Baidu and Tencent.
Their focus on smartphones rather than desktop computers made an impression. The huge importance of messaging applications in China did, too. “In that year, I learnt that if you want to learn what is happening in mobile internet in the world, you don’t go west, you go east,” he says.
Meeting Ma took longer, Sharma admits. After slogging away for a couple more years, he decided in 2014 that he needed to raise funds. By this time hype over Indian eCommerce had helped rival start-ups to pull in hundreds of millions of dollars.
Paytm risked being left behind: “We were literally a nobody on the road because we didn’t have, what, $10 million in the bank,” he says. A friend who was a venture capitalist suggested Alibaba might be interested. Sharma was thrilled, and recalls the date he flew to China to meet Ma and his team: October 22 2014.
“This meeting, which was supposed to be less than an hour, ended up being two-and-a-half-hours,” he says. Sharma tried not to be star-struck. As things wrapped up, however, and fearful that talk of a partnership might go nowhere, he asked Ma for a selfie, which he shows happily on his smartphone. He need not have worried.
Within three weeks, Alibaba signed a deal. The Chinese group has since invested $680 million in Paytm, easily its largest investment in India.
Alibaba’s interest stemmed from Ma’s desire for a foothold in a potentially huge market which many think will mimic China’s explosive online growth. Paytm seemed like a good bet too, not least because its mix of payments and marketplace businesses so closely mirrored Alibaba. Yet the tie-up between the companies seems also to have come about because of the chemistry between their founders.
It is not hard to see why someone would warm to Sharma. Sitting in his chaotic office on the outskirts of New Delhi, he is relaxed and informal, in faded jeans, blue loafers and plain shirt bearing a Paytm logo. Words tumble out as he talks, and his black-rimmed glasses bob up and down as he laughs self-deprecatingly at his early entrepreneurial mistakes. The effect is endearing, and he shows little evidence of the brash ego that often marks out young tech titans.
With Ma, however, the rapport went deeper, given that both men overcame difficult upbringings. Sharma was born in a poor town in Uttar Pradesh.
His father, a teacher, saved to send him to Delhi College of Engineering, but Sharma struggled with classes in English. Instead he was drawn to computers, concluding that entrepreneurship was the only way he might find enough cash to study in the US.
“I literally felt like an orphan at that time, who had to earn his own money for anything that he wanted to do. So in my college days I started this internet company, so that I could earn money to go to Stanford.”
In the end, Sharma shelved dreams of California and focused on his young company, showing the determination that ultimately impressed Ma. “He was sort of echoing — ‘I understand what you’ve gone through and I see you coming to this place, I have a respect for that’,” Sharma recalls of their first meeting. “My continuation of the company even when I did not have money to have dinner or food, and then my lower-middle-class values and ethos ... this echoed with him,” he says.
Alibaba’s investment has pushed Paytm into the top tier of Indian internet companies, nipping at the heels of larger rivals such as US-based Amazon and India’s Flipkart, which aims to sell about $8 billion worth of goods this financial year, roughly three times more than Paytm.
Continuing that growth will not be easy. Many formerly fancied Indian start-ups are running into financial difficulties, although Sharma says his thrifty upbringing will help him to avoid a similar fate. Instead, he plans a rapid expansion, notably by turning his mobile-wallet arm into a bank, with as many as 500 million customers by 2020. The ultimate aim is to turn Paytm into an “internet conglomerate”, he says, whose platforms will see transactions worth more than $100 billion of goods in a decade’s time.
In addition to Ma, Sharma cites billionaire Masayoshi Son, the self-made founder of Japanese technology group SoftBank, as proof that grand goals are possible, even for those with modest upbringings.
“In their childhood [they] went through some incredibly tough adversities, but still ended up building hundreds of billions of dollars of business,” he says. “One did it in Japan, one did it in China. And we will be able to build a $100 billion business out of India.”
Financial Times
