Go Big or Go Home is an American saying that motivates people to do something big. About 10 years ago, this saying entered the Indian startup ecosystem. And the credit for popularizing this saying goes to Vijay Shekhar Sharma. Vijay Shekhar Sharma or VSS. There is no better brand ambassador of this phrase. This phrase is printed on the walls of his office, on his coffee mug. It is as if this phrase is printed in his mind. He has repeated this phrase in every interview in the past few years. And
we can see a glimpse when on 9th November 2016, Prime Minister Narendra Modi announces demonetization. 500 and 1000 rupee currency notes are removed from circulation. Overnight, VSS had front page ads published in all major newspapers across the country for Paytm. Paytm was Sharma's One97 Communication Ltd's digital payment solution company. The ad praised Modi's masterstroke and called demonetization, and I quote, boldest decision in the financial history of independent India. And with a big pi
cture of Modi, the tagline was written, ATM nahi Paytm karo The good days of digital transactions start with demonetisation And then, everywhere, at every shop, this is the music you hear. Within a few months, lakhs of people open Paytm accounts. That year, due to the demonetisation, the company records 1 billion transactions across the country. Between 177 million users. This was just the beginning. Paytm was included in the list of genius companies of Time magazine in 2018. The company also en
tered the business of airline tickets, movie tickets and gold. VSS becomes a billionaire and 3 years later One97 communications filed for IPO , $2.5 billion raised VSS becomes king of the startup world Feb 2024 - RBI ordered Paytm Payments Bank, jointly owned by Sharma and 197 Communications, to stop on-boarding of new customers. All Paytm Payments Bank customers' accounts including deposit, fast tag, prepaid, recharge, UPI, bill payment, etc. will be shut down after 15th March. People were shoc
ked and worried. But Vijay Shekhar Sharma didn't have to be shocked Many times, RBI gave many warnings to Paytm and penalties were imposed. But they didn't listen. They were confident that no one could touch them. Even after such a big reprimand, VSS says This is a speed bump. If we put this worst case scenario, we will lose 500 crores on EBITDA. This is a one-time worst case scenario. But in a few days, it became clear that this was the biggest crisis for the company. It was the biggest crisis
of Vijay Shekhar Sharma's career. Paytm's main service, its digital wallet business was slipping out of his hands. After 15th March, no deposit, credit transaction, or process linked to Paytm Payments Bank was possible. Consumer accounts, prepaid instruments, wallets, fast tags, national common mobility cards were not able to top up But today's Deshbhakt Deep Dive is not only on this topic. We have already made an episode on this In this episode, we will find out how a company like Paytm, which
was the ruler of fintech, has reached to a point that rumors of it being sold in the market. How has the company that had turned the digital payments landscape of India, has turned its fate? And will also try to learn how a big company, a very big company and thousands of jobs got in danger because of big ego. You must have heard it many times, the same classic rags to riches story. A person who was nothing starts and then with a lot of hard work and a little luck, a little luck, he creates a ne
w empire. Oprah Winfrey is a prime example of this. And if you look at our country, Byju Ravindran is a good example. The story of VSS is very similar to that of Byju's founder, Byju Ravindran. Both start with a simple background. Vijay Shekhar Sharma used to walk 15-20 km to save money for transportation so that he could arrange for breakfast the next day. Both of them studied in such schools, backgrounds and colleges where English was not the medium. According to Ravindran, he learned English
by listening to sports commentary. While Vijay Shekhar Sharma says that he used to read both English and Hindi editions so that he could learn English. Before starting their entrepreneurial journey, they had done small jobs. Ravindran built his empire after he enjoyed teaching for CAT exam Vijay Shekhar Sharma saw a picture of Silicon Valley in a magazine in Daryaganj. He decided that if he can't go to Silicon Valley, then he will build his own company. Both Byju's and Paytm reached new heights.
Paytm was India's highest valued startup In the pandemic, Byjus surpassed them and became a bigger unicorn. Both Ravindran and Sharma are the gods of their ecosystems in the startup economy. They are icons of India rising on the global stage Both of them were famous for their participation in global events like World Economic Forum. But both their fate turned tragic. A few months ago, we made an episode on Byju's and you liked it a lot. Today, let's see how Vijay Shekhar Sharma and Paytm's bad
days came and what should our entire startup ecosystem, businessmen and the fanboys should learn. In 2000, Sharma started One97 Communications in Noida. For 10 years, the company was in incubation. In 2010, the company officially launched a platform which recharges prepaid mobile and DTH. It was fulfilling a specific need in the Indian market. It was not a big ambition. But it was a start. It soon resonated with the public and investors. People started seeing potential in this company. In 2013,
the company started a business of postpaid mobile and landline bill payments. A year later, launched its own digital wallet. A year later, he launched his own digital wallet. In March 2015, Paytm got a huge funding from Jack Ma's Alibaba Group, the biggest conglomerate in China. Next year, they raised funds from Mountain Capital. The company started movie ticketing and flight booking. Then, demonetization happened. Echoes of paytm were everywhere in the market People were saying paytm for onlin
e money transfer Just like not photocopy, we call it make a Xerox. Paytm became a word in our language. With fame, the company raised more funds. expanded its business in the entire FinTech sector. Whether it is commerce, investment or wealth management. In 2021, it reached Dalal Street. Despite being listed on the discount of its issue price, Sharma's company became India's largest public listing. Paytm's IPO in 2021 was worth $2.4 billion. Which was the biggest IPO listing of the country at th
at time. LIC's IPO comes in 2022 at $2.7 billion But, you think that Paytm raised an IPO almost equal to LIC. This was the status and this was the trust of people on Paytm. But despite that, Sharma and his company were always in trouble. They were called by RBI for banking regulations Then, Sonia Dhawan, Sharma's personal secretary, was accused of extortion and blackmail. Massive data breach cases were reported. Although, Paytm has always tried to downplay all these things. But Dhawan, one of Sh
arma's first associates, gets into a dispute with her husband Rupak Jain. In October 2018, Noida police arrested Sonia Dhawan, her husband Rupak Jain and a colleague. They accused her of trying to extort 20 crore rupees from Vijay Shekhar Sharma. They said they would leak the company's secret data. The accused were charged with various charges of Indian Penal Code. They were charged with bribery and criminal conspiracy. The case was covered by media. But after a few months in custody, Dhawan was
bailed out, and returned to paytm According to his LinkedIn profile, she left Paytm and joined SAIF Partners. In 2019, Paytm blocked users from sending funds to rival platforms like Google and Phone. Saying it was a security concern. A year later, China sentiment led to boycott of Chinese funded companies like Paytm. In the same year, Google Playstore suspended Paytm for breaking their gambling policies But during all this, Sharma was getting money from big companies and funds like Ant Group, S
oftBank, Elevation Capital. When the company dropped its share price to Rs.1950, everyone was silent. No one asked questions. Neither the directors nor the workers asked questions. No one wanted to ask why the share price was so high. After demonetisation and during the pandemic, the company did not have time to stop and think. But if there were people who would have asked questions, then people would have understood that the company has a lot of problems. The basic problem of Paytm was its busi
ness model. Its core offering was digital wallet and payments. They had a first mover advantage. But soon, competition was increasing in the market. Paytm tried to grow to save its market share. And also, they created a super app. Like, it already had lakhs of users. Now, they will sell everything to those users. E-commerce, travel, mobile recharge, bill payments, fast tag, deposit, loan. One nation, one app. Now, Paytm made a super app, but it didn't get the benefit it was expecting. Remember,
in every business segment, there were established players like Amazon, Flipkart, MakeMyTrip, Booking.com. Paytm was not able to expand in more fields. And even if it was expanding, it was becoming a jack of all trades, master of none. Because of this one nation one app, Paytm missed UPI opportunity You must be thinking, what is this? There is Paytm UPI. But in the beginning, Paytm's core offering was digital wallet, not UPI. National Payments Corporation of India introduced UPI in 2016. UPI basi
cally enables users to transfer money directly from mobile phone without wallet, So, the middleman, the digital wallet, is not needed. Within months, Paytm found that it has become an outdated technology But in 2016, no one knew whether UPI will work properly, will it be adopted or not, Paytm decided that they will double down on digital wallet model and will make own payment infrastructure stronger. But UPI became so popular that it took the biggest market share of digital payments. Paytm had t
o adopt UPI. After 18 months. But these 18 months were very expensive. Phonepe and Google pay had established themselves According to NCPI data, in October 2023, the largest market share of phone pay in total UPI transactions which was 46%. And on the second number, Google, it was 36%. Paytm, only 13% market share. Remember, this is the company that started digital payments, but technology changes so fast. Paytm is under pressure. Share price is falling. There were many questions about the comp
any's public offering. But the company did IPO and price fell. It became one of the worst performing IPOs. But Sharma was flamboyant and stubborn. This is one of his biggest downfalls. After the listing, in an interview with CNBC TV 18, you can see this yourself. Look at Sharma and Chief Financial Officer Madhur Deora's attitude. Look at the difference in response and behavior. Sharma's arrogance and Deora's courage. After decreasing share price, the company tried to reinvent itself in 2022 and
some hope did arise. The company started giving very small personal loans. If you can scale and track it, you can earn a lot of money. Paytm jumped into this game. But it fell on its face. There was no transparency in loan approvals. Many times, customers didn't know the lender's identity. Interest rates were high. There were many gaps in Paytm's KYC data. Because of which many fraud cases started happening. company enters RBI's radar. We have made a full episode on this. But RBI has been warni
ng Paytm for the past 5 years. A lot of things were revealed in the audit. Paytm even paid penalties. Management was under a question mark The directors should have been aware of the mishaps In 2018, RBI flagged Paytm Payments Bank for the first time. After several warnings, RBI imposed a penalty of Rs 1 crore. A responsible company would have been able to understand that it is time. But in March 2022, RBI found out that technology, cyber security and KYC compliance is a problem. RBI's restricti
ons increase. The company keeps saying that they will fix everything. But nothing is fixed. Penalty after penalty. It is clear that the company had no interest in Cybersecurity and KYC regulations. Because they were just concerned with how to grow. But here, another big question arises. Why did the market regulators and the government give such a long delay? Paytm and Byju's story raises a question on the entire entrepreneurial ecosystem Both mislead investors and paytm mislead regulators too Bo
th tried to grow aggressively. They just wanted to increase their top line. Nobody cared about cost, margin or profit. Byju's didn't even think about the product. Both had already put aside regulation and compliance. Sharma thought he was a hero He will save the story in the last moment. If you look at the problems of companies like Paytm, Byju's, Bharatpe, you will understand that the aggressive and sometimes dishonest behavior of the founders is causing a lot of reputational damage to our star
tup ecosystem. Yes, everything was not Sharma's fault but leadership was in question The company took a series of decisions which led to the current situation. Sharma has to take some responsibility as the founder and CEO. How can a company fail in compliance? How can it ignore so many warnings? Why can't they take it seriously? There is another similarity between Paytm and Byju's Both of them did not respect their employees. One was that their work environment and culture was toxic. They did no
t have job security. They could be laid off at any time. In December, Paytm laid off some employees. In the last few days, voluntary resignation news is coming buy paytm denies Another similarity is they hide behind tricolor when there are problems We are businesses who are working and serving for the country We want freedom, if you hurt us, then you will hurt entrepreneurial spirit of country It is true that founders inspired a whole generation of entrepreneurs. Their hard work, their passion,
their talent is not questionable It is not easy to start a billion dollar business without generational wealth. But remember, it is not right to just run after the end goal. It is not right to adopt shortcuts. It is not right to justify wrong paths. How you make a business, what work culture you follow, what regulations you follow, how you respect RBI, this is also important in business. Otherwise, these founders who have inspired the youth, will themselves hurt the entrepreneurial spirit, becau
se if they become the icons. So, what is going to happen to Paytm First mover advantage is over Paytm Payments Bank, which was their key thing, has been snatched from them Now the question is, the things that are not working, the customers are having problems with their tags, their cards. Paytm has become a third-party UPI app, like Google Pay, Phone Pay. But it is difficult for Paytm to compete with them. But you cannot write off Vijay Shekhar Sharma. He is not one of those who give up. He is s
aying that the movie is still left and it is possible that tomorrow Paytm does something new in the world of AI. If you see Vijay Shekhar Sharma's tweets, he shows a lot of interest in AI But has he learned from this episode , maybe not Recently in a Tokyo summit he said.. not to trust your team members and advisors. Solve some problems yourself. He is still telling that he is innocent. Someone else was wrong. Whatever it is, it is very important to take management accountability and try to take
the company on the right path. But here, we all have an important lesson to learn. We should not make such entrepreneurs who want growth at any cost, God If we want role models, there are many entrepreneurs who are doing good work and not speaking much They may not have so much venture capital, but on their own feet they are solving country problems You will find many such examples in small and medium scale industries. Those businessmen are not on social media, do not take photos with big cars,
do not go to big conferences. We salute those companies hope that you will also take inspiration from such companies Not those companies that will flout the regulations all day, not respect the workers and just think that let's become a unicorn soon and get a billion dollar valuation. When we value the real companies, especially small and medium, then we will understand who is running the wheels of the country. And maybe if there will be a thousand more such companies, then we will become world
leaders in manufacturing and business.
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