<div><strong>By Vishal Krishna</strong></div><div> </div><div>In 2010, Vijay Shekhar Sharma built PayTM at a time when no one wanted another payments solution. In 2013, he was told that his company could not raise the same level of money as the e-commerce giants. But today the Indian online payment platform and e-commerce firm is an established name.</div><div> </div><div>Sharma has invested in over 32 startups in the last five years. In 2014, he convinced Jack Ma, the founder of Alibaba, to take a bet on India's huge mobile market. For the last two years, Sharma has been investing in startups and is voicing the need for a stronger ecosystem for consumer-based startups.</div><div> </div><div>He tells BW Businessworld in an interview that India will be the largest mobile internet market in the world. But startups and policy makers should focus more on creating local language based consumption on smartphones. He adds that if the issues of data privacy and security are not solved then entrepreneurs will be able to succeed.</div><div> </div><div>Excerpts:</div><div> </div><div><strong>How is your role as an investor shaping up?</strong></div><div>I actively invest in startups and invest anything between Rs 25 lakhs to Rs 60 lakhs in them. A decade ago I made the mistake of giving more than 40 per cent of my company for some seed money. I had a very bitter experience with the investor when I bought him out. I do not want startups to ever face that problem. I am also mentoring startups and I want to guide them about the right ways to build a sustainable business. A decade ago many companies were not privy to any guidance and people like me did not know what valuations meant. But things have changed now. Startups are living in very interesting times and with a lot of support coming from the ecosystem in the future we will see great companies being built out of India.</div><div> </div><div><strong>What should startups focus on with so much being spoken about the size of the smartphone industry and the internet?</strong></div><div>I do not follow research reports when it comes to looking at consumption on the mobile internet. I look at what is happening to my target audience. I look at family, my old neighbourhood, in Aligarh, and wonder how they are consuming technology. The numbers will grow and reports just throw the potential. I only focus on my target consumers and check if they are using technology. Only then I know consumption is happening through smartphones. If they are not using it then I do know that it does not work. It is inevitable that people in India will go mobile. In my home town a lot of them have mobile internet.</div><div> </div><div>How does it matter if there are 125 million people or 150 million people using mobile internet today. It is a target. India will have 500 million consumers of mobile internet in five years. Can we build a much better product in that time period? The market is moving fast. It is a race against time when you are working in India, the mobile internet's growth is a once in a life time experience and we have to be the technology company that makes it happen.</div><div> </div><div>For Indian entrepreneurs it is like being in China, a decade ago. Look at how entrepreneurs built TenCent and Baidu. Or even the USA, a decade ago, with the growth of Facebook and Google. This is the dawn for India and there are several companies that are going to be large tech conglomerates. We need to see that consumption increases, logistics should improve, telecom infrastructure should grow faster, local language services should become imperative and payments solutions should get better.</div><div> </div><div><strong>There are so many startups in India that have B2B businesses, why isn't risk being taken for consumer businesses?</strong></div><div>Look at payments solutions from the consumer side. This is something that needs a lot of innovation. We have only just begun. Internet existed in India in 1998. But no one built a great payments system in India and fifteen years have passed. The problem is that tech companies, in India, fear that the consumer business is going to be extremely difficult. Therefore India remained tech producers and not consumers of tech. It was the most popular B2B destination; we built a great enterprise services platform and we are now building great cloud services practice. However we have built very few consumer technology companies. Look at Ola and Flipkart, they have done such a great job in building consumer technology businesses for consumers. It is the age of such companies in India.</div><div> </div><div>When entrepreneurs solve for Indian consumers we need to understand their problems. If consumption has to grow it has to grow with local languages, it is the premise of India. With my experience I see 80 percent of Delhi would consume technology services in Hindi, provided the language was made available on all apps. It is not confusing, for me, that our company should or should not play the language game. All startups, in the consumer industry, must have local language services if they have to grow in India.</div><div> </div><div><strong>Is the availability of robust telecom infrastructure hampering growth of consumer startups?</strong></div><div>Spectrum is an issue. But there are bigger issues. I want to raise an issue on the law of the land. The law thinks that startups that offer market places platforms have to promise the contract between merchant and consumer. Here I am really confused. I am totally victimised, by law, about what is the role of a tech platform versus a merchant and the consumer.</div><div> </div><div>Why do we need to have someone policing market places? Consumers put money in a wallet and when they pay a merchant the contract is between the merchant and the consumer. Unfortunately the enforcers of the law or the police think that we are not delivering the service when the merchant fails to make good on his contract. Obviously we guarantee that the consumer is protected. But we cannot guarantee the ability of the merchant. When companies like us and other startups are growing, there are legal issues which will stifle our growth. There are also cyber security issues. There is this belief that consumer data will be stolen and the consumer will be bombarded with spam. Startups have to build secure systems; this is something that all consumer technology companies should solve. The point is that, as an example, on a high traffic road, with a crossing, there needs to be a flyover. This is what the internet is about; we need to solve consumer problems. Language, security and data privacy are issues that we all need to solve on a constant basis. Otherwise the 500 million consumers will not consume on smartphones. This may stifle entrepreneurship immediately.</div><div> </div><div><strong>How would you advice a startup raising money, are funds controlling the fate of startups in India?</strong></div><div>It is no doubt that funds have smart people who have seen the world and they will tell startups to follow a particular vision. The funds have put India on the map. The inevitability is that they will control some decisions. But who is stopping an entrepreneur in disagreeing with investors. The entrepreneur is supposed to be confident to run the operations of his company because he knows what works and does not work. The fund is a guide and brings inputs. It is like, in life, you listen to so many people and in the end you have to make a decision on what is right for you.</div><div> </div><div>Opinions should be treated as opinions; you cannot go by opinions to run a business. You take the best from the investors and execute the business. Remember an entrepreneur must keep an eye open to perspective, which I think is very important. I, personally, will first listen to my investors and then understand that their thoughts are guidelines to executing a strategy. I make sure everyone is in the loop and I try to execute their ideas and bring in my reasoning too to implement a particular strategy. I am very frank and friendly. It is the same when you hire big names suggested by funds.</div><div> </div><div>Those who say "I have been there, done that" are not going to have the same fire in them to build your startup. We have burned our hands so many times that I have frank chats with the investors and the board. I do make it a point to tell them that these names were suggested by them and that the strategy was not executed well. I am very lucky because my investors were patient and I found an incredible balance. Today the investors and I work on building hypothesis together. I would credit Ravi Adusumalli of SAIF Partners for working with me to build this company. Investors, one must remember, are less risk takers, it is the entrepreneur who is taking the risk and investors have bet on the idea and will not be able to guide the entrepreneur. They will douse the fire once they sense the entrepreneur is not in control. This happens in most cases.</div><div> </div><div><strong>Is fundraising more about a comfort factor with investors?</strong></div><div>You should raise money from people you are comfortable with. It is like a marriage. How do you know that, in a relationship, you are not really being dominated? It is as a matter of chance and you never know. You have to get good references and feedback about the investor before you sign a term sheet. Also look at the recent investments that the investors have been making and how they have been with those entrepreneurs. In the end, the fund's personality and the personality of the investor will come into your company. A fund may have a libertarian view and a conservative view, but if the fund manager has a contrarian view to your beliefs then the company is not going to grow.</div><div> </div><div><strong>Take me through how you built PayTM?</strong></div><div>When we entered payments six years ago, while we were still a content marketing company, people said we could not do a consumer business. I needed to build a resolve and say "people either follow me or not". I had investors who advised me not launch a consumer business. They said I could not make it. I continued to fight this and it took me four years before we hit big. If the stakeholder of your company is critical you cannot make it. This guy can veto you and throw you out.</div><div> </div><div>The entrepreneur needs to have incredible amounts of communication and make them understand the context of what you want. I spent hours with my team, I would speak in forums back then about why we need to build a strong payments system for India. We made a deal that the parent company, One97 Communications, will be taken care of on one side, and those who wanted to build this new payments platform can build this with me. In between I had a resource crunch in 2011 and I did not know where to go. I had to build a platform to a level and raise money or else I would have fallen flat on my face. I have learnt that the mind is the only barrier and I have never been lazy when it comes to making my business succeed.</div><div> </div><div>There was $25 million dollars in 2011 and that money came down to $10 million by 2012. We were bleeding and there was a board meeting. Some of the shareholders quit and the others stayed because I convinced them that payments were the way forward. The pain has to be the fuel of the journey. That is when I met Jack Ma, the founder of Alibaba. A two-minute meeting lasted for a couple of hours and the money came through for PayTM. They were interested in the opportunity that we were grabbing on to in India rather than knowing what we had done so far.</div>
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