How Paytm founder Vijay Shekhar Sharma is an exception to the rule

The fastidious Sage of Omaha apparently diluted his rigorous due diligence procedures to invest in the business of one of India's most influential e-commerce entrepreneurs

When Warren Buffett-owned Berkshire Hathaway said earlier this week that it will invest an undisclosed amount in One97 Communications Ltd, which owns Paytm, two things drew attention. One, that this was a rare deal for the world's best-known investor who typically avoids internet firms; and two, the investment was committed despite the fact that Paytm, though India's largest payment services provider, has reported mounting losses. It logged total consolidated losses of Rs 12.6 billion in the year ended March 31, 2017, on a revenue of Rs 8.28 billion. So, this was an endorsement for India's start-up ecosystem but it also said a lot about the maverick founder of One97.    

Vijay Shekhar Sharma is an enormously influential entrepreneur with an instant ability to grab headlines. A Mint report on the Berkshire Hathaway investment quoted an anonymous source as saying that the deal was "largely about Vijay Shekhar Sharma and Paytm". Apparently, Berkshire did not spend too much time on due diligence or conducting protracted checks on the sector or the competitive scenario, as it is known to do.

All it took to move the needle this time was one phone call and two meetings, is Sharma's version of events to various news outlets after the announcement. It was apparently in February that One97 board member Mark Schwartz — who is also on the board of SoftBank Group Corp — suggested that Sharma meet the world's most renowned investor, Warren Buffett's Berkshire Hathaway Inc. That meeting took place a few email exchanges later when, along with Schwartz and Ravi Adusumalli, MD of SAIF Partners, Sharma flew to Omaha to meet Todd Comb, a Berkshire Hathaway investment manager. 

When the investment finally came through, Sharma was quick to acknowledge all the help that came his way. "This day is dedicated to my mentor, independent board member Mark Swartz, and @radusuma (Ravi Adusumalli) who is less an investor more a co-founder of Paytm. Thank you everyone for support and guidance. BRK is a milestone not just for Paytm team, for every Indian start-up," he tweeted. 

Although there might have been less-than-usual due diligence, Berkshire Hathaway is familiar with the payments model being a shareholder in companies such as American Express, Mastercard and Visa besides banks such as Bank of America and Goldman Sachs. On its part, Paytm does have quite a lot of cash to burn — it also has the backing of China's Alibaba Group Holdings and Japan's Softbank Vision Fund. By Sharma's own admission, that was one reason he did not want to pick up all the money he was offered. "Berkshire wanted to invest more than what we have accepted. We did not think it was the right time to raise more money and dilute further, as we already have sufficient capital in the bank," he told journalists.

That said, the battle ahead won't be easy. Besides rivals like Amazon, Google, and Flipkart-owned Phonepe, which have already thrown their hats into the ring, a clutch of players, including WhatsApp and Reliance Jio, are ready to join the fight for a share of India's $200 billion digital payment market. The market is expected to balloon to $1 trillion over the next five years, and Sharma — one of the youngest to graduate from the Delhi College of Engineering (DCE) in 1998 — is ready to play hardball. 

In person, Sharma appears so ordinary as to provoke a "if he can do it, why can't I" feeling. He says he has always been a fighter. Take this — another of his back-stories: Having studied in a Hindi-medium school, he realised he didn't know English well enough to be able to take the entrance examination for DCE. So, he took a year off after Class XII to learn the nuances of the language. At the end of the year, he could read two books — one in English and the other in Hindi — simultaneously. But that wasn't good enough for him. In an earlier interview, he had told Business Standard that when he looked at the multiple choice questions he was asked, he had to look at the answer options given below to figure out what the question really was. Even now, when he meets other entrepreneurs and investors at conferences, he feels they are a blessed lot.

Little wonder then that he considers himself an oddball when compared with the "south Delhi-", "south Bangalore-type" entrepreneurs. "They have this amazing self-confidence having studied in English-medium schools or attending colleges abroad." 

There was little scope for a foreign degree. Sharma comes from a simple family: His father was a teacher — who wouldn't take students for private tuition as a matter of principle — and retired as the principal of Agrasen Inter College in Harduaganj, a small town near Aligarh in Uttar Pradesh. His mother was a homemaker and pushed Sharma to work hard and do well through school and college. 

His family stood by his decision to do his own thing. The only hurdle he faced in life, by his own admission, was finding a girl to marry him. "No parent wanted to give their daughter to a guy who didn't have a regular pay cheque," he had said. 

For the 45-year-old billionaire with a net worth of over $1.7 billion, that episode must seem like a distant memory.