Watch Paytm founder Vijay Shekhar Sharma explain how his startup will turn a profit in the next two years after 10 years of losses

• In an exclusive interview with Business Insider, Paytm founder and CEO Vijay Shekhar Sharma explains how Paytm will achieve profitability.
• For Sharma, the ambition is that everyone in the universe who wants to use Paytm, should use it.
• Sharma is also very clear on his stand – no IPO, until Paytm reaches profitability.

When Vijay Shekhar Sharma walks into a startup event, he has the audience enthralled with his witty remarks and ‘desi’ takes on an entrepreneur’s journey. Once the event is done, he receives a Bollywood-celebrity like welcome with a mob of people who want a selfie with him.

This is despite the fact that the company he founded, One97 communications, is posting losses in the twentieth year of its business. Of that, payments app Paytm has been in existence for ten years— with a red bottomline.

Meanwhile, Sharma’s own net worth has doubled in the last few years. He entered the Forbes list of billionaires in 2017, and today his net worth stands at $2.6 billion.

In a chat with Business Insider, the Sharma charted out the path for Paytm in the next two years.


Revenue flat but losses halved

While the growth path and ambition are on track, Paytm has a road bump. It’s parent One97 Communications reported a loss of ₹4,217 crore in FY2019, and its revenues recorded a marginal growth to ₹3,579 crore from ₹3,309 crore.

“2019 has been our discovery of what we should monetize, how we should monetize. Year on year, we have been cutting down our EBITDA losses by half. This is phenomenal because the number is huge. It shouldn’t take more than two years for us to convert to EBITDA profitable. And, the money that we have raised should take us to double the runway that we need,” said Sharma.

The 3-3-3 strategy

But Sharma says that it’s all a part of the plan. “We are a part of a company, a family where we for the first 10 years generated huge amounts of profits, free cash in the bank. Profit is not what matters, it’s the free cash generating capability is what matters. We are aiming to build huge free cash generating businesses,” he said.

He breaks it down further for us. Paytm follows a 3-3-3 philosophy. Three years for product market fit, then three years for monetization pitch, then three years for profitability.

In the path to profitability, there are new products planned.

Preparing for content like Apple did

There was a time when Paytm was just a wallet app, but today it has gone on to offer much more – from ticketing, bill payments etc. But Sharma is not happy with just that. “I’m on my 50th vertical,” he says with a laugh.

According to reports, Paytm already has the beta version of its social commerce app – My Store. This will be an extension of its e-commerce vertical, Paytm Mall.

And while Paytm might soon launch lending and insurance, there’s another exciting category they are building right now – Paytm content. Paytm is already offering news, videos and content through Paytm Inbox, but Sharma has bigger plans.

“It’s like how Apple kept trying for TV and then finally launched Apple TV. We’ll probably take about a year for our content to come up completely. But at the same time, about the number of things we want to do the answer is clear – payment, commerce and then at the end, we are a financial services company,” said Sharma.

Sharma also hinted that in the next few months, Paytm will be launching a big consumer product in line with the Indian Premier League.

Not preparing for IPO

There has also been a lot of talk about startups going the IPO way in India. But Sharma is very clear on his stand – no IPO until Paytm reaches profitability.

“We are not preparing for an IPO, I don’t think we can prepare for one until we are profitable. For the next two years, we are not even in the preparation mode. Once we start talking about the IPO – that’s the way forward journey – that day we will think about where we would list. We are an Indian company, maybe in India,” he said.

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