Davos 2023 | Going public is like adulthood, becoming a private unicorn is like teenage: Paytm's Vijay Shekhar Sharma

Moneycontrol's Chandra Srikant spoke with Paytm founder Vijay Shekhar Sharma about the company's journey of the past one year, the roadmap for the future, and the broader tech and startup ecosystem.

The past 14 months have not been easy for Paytm. While its Rs 18,300 crore initial public offer was the biggest when it listed in November 2021, its fortunes took a hit soon after.

Shares of One 97 Communications, which operates Paytm, have lost about 75 percent of their value since the IPO. In the meanwhile, the digital payments company came under fire from retail investors, market analysts, and proxy advisory firms and felt the pinch of regulatory flux in the fintech sector.

Although the company has been criticised for its large losses each quarter, the management has repeatedly said that profitability is just around the corner. It sprang a surprise with its fast-growing loan disbursal segment, but the market is not yet convinced about the company's fortunes.

At the World Economic Forum in Davos, Moneycontrol's Chandra Srikant sat down to talk to Paytm founder Vijay Shekhar Sharma about the company's journey of the past one year, the roadmap for the future, and the broader tech and startup ecosystem. Edited excerpts:

Very nice question. Those two are different roles actually.

As a founder of a unicorn in the private market, you are more or less looking at how you can grow dramatically, how to expand to a new space. I mean, there was no business that you would have given a thought about. You could definitely give it a consideration and drop it. But when you are listed, you also understand the responsibility towards the capital that you raised. The most prudent allocation of capital is extremely important. And the focus of the company is towards the bottom line and quality revenue, something that I think all of us young companies that are listed or going to get listed are learning.

So I'd say that we got the maturity of about three years in one year. I'd say that going public is like adulthood, while becoming a private unicorn is like teenage.

I remember you saying many years ago ‘Mere paas Ma hain aur Masa hain’ in reference to your investors Jack Ma and Masayoshi Son. We have seen Alibaba and SoftBank paring their stakes in Paytm. What would be your message to retail investors as the stock has fallen about 75 percent since listing?

To both retail investors and large institutional investors who are equally valuable to us, the single message is that the company's management is committed to create a transparent, soundly governed, profitable, free cash generating company in the long term. The sustainable moat is free cash, which is what we are driving towards. And as far as the stock market is concerned, there are many layers of reasons for stock prices to get impacted.

Credit – and especially small credit –  is an area which is massively underserved in the country. In fact, more or less, this is a space where informal lending would come in. This is a space where you saw the app nightmare happen. So, I believe that structured lending institutions who have large books enabling small loans is a great opportunity. And I think this is not about competition intensity. It is for a number of people to do this.

And if you look at the market landscape, I believe that a company which is focused now on payment and credit will look at everybody as a potential challenger or a potential market player. We continue to be very vigilant and also understand how we can serve customers well. In fact, at the end of the day, our customers are lenders because they need access to the market. And our consumers or merchants get a privilege of getting loans from those lenders. So, we work with lenders in giving them more technologies, helping their systems scale, offering them different kinds of consumer cohorts. I believe that the more the lenders participate, the better it is for the small consumer who borrows.

Everything is done in a transparent manner, on the basis of shareholder approval.

I'd say that both payment and credit disbursement are in their infancy. The disbursal of credit is also very small at a big-picture level. This year, we will be more focused on these and a few products will come up in due course.

I can't get into somebody else's shoes and say anything. I can only say that I've seen people make choices. And there must be something in the context… You make choices about how long and how big you want to build. Crypto was another thing that we saw. People make choices. That’s the message for all of us.

The statement that it is unregulated and that is why it is better serving the customer didn't pan out as expected. I am hoping that crypto finds a way out of this.

Once we start seeing a practical use-case of a new technology, we all become a customer. I was a founder in 2001 when everybody thought: What is this fancy thing called the internet? What do you do with the internet? What do you do with email? But now, we can’t think of life without it. So, technology takes time to find its way.

Naysayers always have a good way of saying that what new technology can do is already being done out there. My only answer is that new technology takes time to get morphed into usable technology. That's the statement I'm gonna say. Can crypto be a usable technology? It is very early days to say. Can blockchain be a usable technology? It is definitely early days. Will it have practical and useful use-cases which will sound magical? 100 percent.