Razorpay Payment Gateway: "India's Jack Ma" Sees Failure This Way, Says He's Inspired by China to Aim for Mobile Payments

In a surprising turn of events, Warren Buffett's Berkshire Hathaway, known as the "stock market guru", has completely wiped out its investment in Paytm, a payments platform often likened to an "Indian version of Alipay". The move once again puts Paytm in the spotlight, with its founder Vijay Shekhar Sharma's next move in the spotlight. Sharma has always shown strong support for the company after several major shareholders reduced their stake.

Sharma has grown from a small-town boy with limited English skills to India's youngest billionaire, and his sharp business acumen has propelled his enterprise to new heights. How will he lead his company forward in the face of the latest challenges?

**Stick to the company**

Berkshire Hathaway exited its investment in Paytm after selling all of its shares in the company. According to Reuters, this is not the first company to reduce its stake in Paytm this year. Ant Group, its largest shareholder at the time of its IPO, and SoftBank Group, its second-largest shareholder, announced reductions in August and November, respectively.In September, Paytm's founder, Sharma, became the single-largest shareholder when he repurchased shares from Ant Group.

Vijay Shekhar Sharma (AFP)

Sharma has been praised in India for sticking to the company's commitments during its recapitalisation. In an interview with Bloomberg, Sharma said Paytm is now focusing on the lower end of the market and is committed to promoting mobile payments at a low cost, the "Indian way". I will not stop buying shares in Paytm," he said. It is an absolute milestone that the largest shareholder of Paytm is now Indian." He believes that the withdrawal of foreign capital is not necessarily a bad thing for Paytm and will steer the company in a new direction.

The Economic Times of India praised Sharma saying, "A small-town boy has sparked a digital payments revolution in a cash-dominated country. When the company faced challenges, he didn't hesitate to bet everything on it."

**First success in college years**

Sharma was born in 1978 in Allahabad, Uttar Pradesh, to a middle-class family and a teacher. Intelligent from an early age and often called a "child prodigy", Sharma entered university at the age of 15. In 1994, he moved to the Indian capital to study at the Delhi College of Engineering (now renamed the Delhi Technological University). However, as Sharma had graduated from a school where Hindi was the medium of instruction, he encountered difficulties in an English-speaking environment. Due to the language barrier, he was less interested in engineering and found his calling in programming by focusing on the emerging field of computer software and the Internet instead.

While in college, Sharma started a company called Xs Corps with three friends. They used the school's computers to create electronic itineraries for airlines and built a "Travel India" website, earning their first 1,000 rupees (about $85.47). They also developed a "content management tool" to build web portals and search engines for media organisations, including the Indian Express.

At the end of 1999, an American company bought Sharma's company for $1 million and distributed Rs 10 million in cash to his partners. After graduation, many of Sharma's classmates chose to study or work in the United States. However, after being denied a US visa, Sharma decided to stay in India and continue his entrepreneurial journey.

At the time, mobile phones were just starting to become popular in India, and Sharma was quick to recognise the opportunity in mobile communications. His company, One97 Communications, partnered with Indian telecoms operators to provide news and information services to mobile users via SMS, with remarkable success.

In 2007, Apple launched the first iPhone. the advent of smartphones and apps made Sharma realise that consumers were going to move to the mobile internet. "Our business is dying", he thought, and turned his attention to mobile payments. Despite the board of directors of One97 Communications arguing that smartphone penetration in India was low and that the initial R&D costs and operational risks of mobile payments were high, Sharma persisted and launched Paytm, an e-wallet (payments via mobile phones) for individual consumers, in 2010.

**Inspired by China, targeting mobile payments **

According to Fortune India, during a visit to China, Sharma observed consumers paying merchants by displaying their mobile phones, which led him to consider replicating the payment method in India.Jack Ma first introduced Alibaba and Alipay to Sharma at a conference organised by the Wall Street Journal in 2011. He returned to the team and said, "We must create the Taobao of India."

However, he soon realised that replicating this model in India would be challenging due to smartphones, internet access and lack of trust in the new. According to Fortune India, between 2011 and 2012, the number of smartphones in India was between 25 million and 35 million. Initially, Paytm amassed users by offering cash rebates to merchants and transformed itself from a mobile recharge and bill payment platform to a full-fledged ecosystem of payment-related services.

In 2016, Prime Minister Narendra Modi announced a 'demonetisation' policy to stop the use of high denomination currencies and promote digital payments, which further popularised Paytm. by 2017, Paytm became India's first payment app to be downloaded more than 100 million times. That year, Sharma became India's youngest billionaire with a net worth of $1.3 billion.

In an interview with Fortune India, Sharma said he admires the 'failure' mentality of Paytm investors like Jack Ma and Warren Buffett. They didn't have the label of 'success' when they started their businesses, but they never limited themselves to become one of the most successful people in the world.

At present, in addition to the withdrawal of investors, Paytm also faces a number of challenges. First, the Indian government launched a "unified payment interface" to bring all payment platforms under unified management, and stipulated that no platform can charge merchants transaction fees, which cut off Paytm's most direct source of income. Although the Indian government recently said that it would take into account the operating costs of the various platforms and provide some compensation, but analysts generally believe that these policies will not cover the actual costs of companies like Paytm in the commercial competition.

Second, PhonePe and Google Pay are both the most downloaded payment platforms in India and are controlled by US capital. Compared to these companies, Paytm relies on costly and slow new user acquisition methods such as merchant promotions and consumer cash rebates. As foreign capital continues to enter the market, it will become increasingly difficult for Paytm to maintain its current position.

In notes revealed on Indian website Outlook Business, Sharma wrote: "Entrepreneurship works when there is no other option. Hope is a magic potion when things don't go my way."