When you invited me, sir, first of all, thank you. I was surprised that we have built payments as an industry. It's a privilege that people associate Paytm with their lives. But I learned that Cibil is not a noun, it's a company name. The way everyone talks about Cibil score speaks volumes about your abilities. When I got the invitation, I thought, 'Wow, I am going to Cibil.' So thank you for inviting me.
Vijay ji, first of all, thank you very much for being with us. You came from Delhi today, just flew in. Thank you for taking the trouble. We are taking a leaf out of your book. Everyone says 'I paid him via Paytm' or 'I made the payment via Paytm.' So thank you for leading the way.
Thank you. Truly a pleasure.
It's truly a privilege to have you. I got a warm... Actually, every person should have the Paytm app and a good Cibil score. You are talking about AI. It's interesting that from my calendar, I got a message from Paytm today asking if I want a ₹50,000 loan. It's amazing, I don't know how. But first, I want to say that we know you as an amazing entrepreneur. I have huge respect for entrepreneurs in India. When you started your journey, ease of doing business wasn't there. You went through a tough journey. I have seen many entrepreneurs myself. I made some seed investments—I call them expensive PhDs. I don't know if money will come. But you joined engineering at 15, graduated at 19, and while in college at Delhi College of Engineering, you started your first startup, IndiaSite.net. Can you tell us about that?
Yes, sir. I can speak in Hindi. I am from a Hindi medium background, so I feel more comfortable speaking in Hindi. Thank you for allowing me to do that. When I went to engineering college, I came from a school where we studied in Hindi. I am from the Uttar Pradesh Madhyamik Shiksha Parishad board. I completed class 12 at age 14. I was one of those who skipped classes early. At 12, I was 14 years old. All engineering college tests were in English. That was a big translation challenge—I had to prepare for the tests because all books were in English. Luckily, I was one of those who could answer objective questions easily because you don't have to write in English. For people who are not fluent, it takes time to learn. So I had a drop year after class 12. I am a drop-year candidate. So while you might think I was a teenage engineer, I also had a drop year. Both things have shaped my life. It's a very interesting life. I truly respect the opportunity that God gives us. I treated it as a job time. When I graduated from college, I thought I wouldn't get a job because I wasn't used to typical benchmarks. My classmates were top performers. So I thought, let me create a job for myself. That's how I started my company in college. I had a company doing internet content management system in 1999. I graduated in 1998, and in 1999 I did it. I consider myself lucky. I sold it for my first million dollars at age 20, one year out of college.
It would have guessed it. My father sent my cousin to check on me. His name was Gyanesh. He said, 'Go see what this boy is doing. Why is he giving him money?' And that happened. After that, you started 197 Communications. In 2000, but I don't know how everyone knows you as the Paytm guru. But when you started 197 Communications, it was mobile content: news, cricket scores, jokes, exam results. Not exam questions, exam results. So through this time, technology has changed dramatically. You had barely 1G, 2G, then 3G, and the iPhone came. Can you talk a little about your transition from this into payments?
As you can see, my customers were content publishers on the internet. Living Media, Indian Express, Jobs Ahead, Zip Ahead—those were my customers. My business had a problem: my customers were not making money. So I had no hesitation in leaving that business. When your customer can't make money, you should get out. That was the calculation. I learned from the internet that telecom operators have a charging method to the customer because India didn't have a payment system in those days, and internet-based payment systems didn't work. So it was a big problem: either advertising model or nothing. I was clear that advertising business model was one of those hot companies but still didn't make much money. So I landed on the telecom side, thinking, 'Wow, the telecom operator has a charging pipe to 100 million people potentially, and I could send some service.' That's how I created the SMS-based content service that telecom operators needed. Telcos needed people to use their service because people didn't send SMS. So they said, let's provide some content for people to interact with via text. That's how 197 started as a content service. By the way, the first 197 service was 'Tell me Sharma ji's number' and 'Tell me Venkat sir's number.' That was the first service. That's why it was named 197. Nowadays, nobody would understand. The audience in this room understands because they are older than me, others are younger. So 197 Communications is named because of that. Over time, I learned about voice-based content. We did cricket scores, ringback tones, ringtones. Many of you would have seen one of the services we launched for ringback tones. As we were doing this, when the smartphone came, I thought, 'Oh my God, the telecom operator's right to give content will end. Because you are browsing the internet, you have the content. There is no arbitration layer left between internet content and what the consumer can see on the mobile.' So I deduced based on every layer of business model that payments will still remain out of their pocket because no more companies can share 30% and 70% with them. They typically charged 70% and gave 30% to us content managers. So I thought this won't work. Let's build a payment system for the app ecosystem. That's how Paytm through mobile originated. And this is the origin: I took a bet that smartphones will win. And if smartphones have to win, payments have to exist with them. So, if you latch onto a big thing, you become successful. I latched onto the smartphone, and that became Paytm, and then Paytm came to you.
That's very interesting. You said—I was going to ask you—you caught the technology absolutely perfectly. You caught the wave. I wanted to ask the audience how many know the full expansion of Paytm? Paytm mobile used to be very strange. Earlier, people would call on TV and say, 'Vijay, what should I call this?' I said, 'Paytm'—it's a brand. That's the power of branding.
I made a question on television with a TV anchor. She was calling it 'Paytm,' and I was like, 'God, how do I do it?' Thank God for hashtag demonetization; the world got to know 'Paytm karo.'
I want to ask a question. November 8, 2016. Where were you?
I was in Bombay. If you want to know, I was not preparing any paper to announce anything. I was obviously in Bombay, part of an award function. I clicked a photo of the award and sent it in the group. Then I was like, 'My God, 75 messages?' I didn't understand what happened. Everyone was there. I was sitting with Mr. Harsh Goenka next to me, and it said Prime Minister Modi has announced something about demonetization. I was like, 'What does this all mean?' We were all totally confused. I think as you know, I was not able to hold myself. I didn't think about what would happen. I understood that everyone would want to go somewhere. So after that, I literally said it in the newspaper too: this was a once-in-a-lifetime moment. What could be done in many years could be done in the next few months. So multi-year work could be done in few months, and that is exactly the bet I took. All the company, all the company—we also used to do commerce, many other businesses. I said everybody only one work: teach everyone how to use Paytm. Use newspapers, create ambassadors. We used volunteers, signed up merchants across our team. And I think what got achieved in those two to three months, and then I think the country learned how to scan a QR code and pay. It was definitely one of those moments that I would never have believed we could have had in the country.
Absolutely. Fantastic. And this is one of the persons who is definitely delighted with demonetization. Everyone was confused, but you were very nice.
I think if my capacity was that much, my situation wouldn't be like this. Those who need to understand, understood.
You have said in an interview that you want to make 197 Communications and Paytm as AI-first companies. What does that mean? Earlier, Sandeep sir was talking, and if Sandeep sir is in this audience, I want to say in front of you: a leader who removed ratings in the company did this thing, and such a mesmerizing conversation was going on. I was also thinking how he is talking so much. So for him it was... Now going back to AI. Fundamentally, let's talk about the concept of what AI trigger is. Typically, we always needed something as an assistant. The computer ATM came, where you could deposit and withdraw money. Computers did a lot of work slowly, slowly. But human superiority always remained: you know what you want to do. Around us, except for humans, the maximum brain is considered, say, a chimpanzee, or the generation that we believe has intelligence. So intelligence was an exclusivity of humans. AI has just reset that. Now the machine can be equal and more intelligent in a topic, and over all topics, it's actually phenomenal for humankind. It's not a discovery of electricity or the wheel. It's literally that you now have a capability that there is somebody, something, rather than body, who is more capable than an individual could be. And that would mean extraordinary amounts of productivity, extraordinary outcomes, and productive life that we all will live. Just like right now, many of us don't know how life used to be before WhatsApp, Paytm, and QR—before smartphones, we don't know life. I can take a bet that from 2030 onwards, many of us will not be able to believe that there was a life without these machines. How are you? Very serious? You should be a link, my friend. You don't know what childhood was like. Mom used to scroll pages, right-click open, then scroll again. Then a pop-up would come. To get knowledge from one page, we used to browse so many pages. That's how we will talk. And you have already seen it. This is the nearest that is happening. So from content generation to the decision of operating something, there will be extraordinary phenomenal productivity enhancement in the world. And we are talking about credit, and I can say this very comfortably. I am very proud that we actually use Cibil. So I am very happy to say that we not only use it, but I see the progress it is making. It is a machine that will be continuously updated and will be able to take decisions. So although the chief risk officer and commandant will remain, it will be more like a pilot in an aircraft. The machine will run on Cibil-powered autopilot, but a chief risk officer and the entire underwriting team will still exist so that the aircraft doesn't automatically take off and land on its own giving loans. But the efficacy and efficiency will become so dramatic. The word we were discussing—how will you include the new generation for financial inclusion? It will be out of it. As soon as the cost of payment lowered, it reached everywhere. As soon as processing credit, disbursing it, and collecting it becomes easy, it will go further. I mean, the cost of credit servicing will reduce, cost of capital will reduce. You can see it everywhere. So, AI in my opinion, whether we talk in the context of credit, Cibil, financial inclusion, or everyday life, productivity—I am shocked that many of us are not living the euphoria and excitement that I see in myself.
You are euphoric. You mentioned productivity many times in this conversation. Does your team fear that with productivity, what will happen to them? No, our team knows that we have a rocket in our pocket, and with that rocket we are going to another planet. In other words, it is so productive. The world will be split between those who leverage technology and those who don't. Exactly this will be the split: you leverage AI or you are not part of AI. In my opinion, most of us will, and there is no reason for it not to be. So as a company, we believe we are early in this; we can build many use cases, models, and methods that will be a benchmark for many to follow. So we are happy to be the leader of trial and error and building something, and that will give us an edge in the market. So for us, it is the differentiation: what used to be done in many years in the past could be done in one year next.
Absolutely. One of the comments here about AI, and you have the IBM C? You talk about it: most of the use cases today are around efficiency, only one or two in 10 cases are around revenue.
Yes, this is classic like the internet. First came email. People thought it was a replacement for courier—you can make a PDF file and email it. So the concept of PDF also became more prevalent after the internet. It's not that the use of the internet is only email. Yes, obviously, the classic human incarnation is what I see: I will optimize, then some people will think internet-first, AI-first, and new revenue will come. So the product will show up very differently.
Switching gears, we talked about AI. You have very rich UPI data, cash flow, hardcore data. And one thing we all struggle with is the number of people who are credit active with credit cards versus debit cards. Debit cards are far more people use their accounts and UPI payments as we have now. In credit decisioning, how can we use that better? What is your view, because you can play a big role in this?
