Why is Paytm getting thrashed?

Paytm will never be able reach its true potential taking the path it is on.

What is the thought that causes you to open an application?

Camera - To take phones

WhatsApp - To send messages

Facebook - To waste precious time

Amazon - Shop something

Swiggy - To order food (not grocery)

The world of applications began its journey with Microsoft. Perhaps due to technological constraints or due to great vision, they kept their apps separate. Microsoft office was a constellation of apps. Mainly, Word, Powerpoint and Excel but others as well for power users. Similarly, many of Adobe’s apps are used alternately by designers in their workflow. Photoshop along with Illustrator; Illustrator along with InDesign; but the company keeps the apps separate and distinct. 

The reason to keep the applications separate is to clarify the purpose of the application and also to ensure that they seem much larger in the minds of the user than they really are.

Look at Google, arguably, a company with the largest user base in the world. They attempted to take advantage of that user base by cramming their social media initiative Google+ into the search engine and Gmail. An abject failure. By comparison, their constellation of apps strategy seems to be succeeding. Google Pay was launched as a standalone app and today has the second-highest UPI transaction figures.

There are several other startups that have followed the constellation of apps strategy and succeeded. Zerodha is doing it with Small case, Varsity and Tickertape even though all of them arguably serve adjacent functions and not new ones. Even Nike, which is not even a tech company has separate apps for shopping, exercise and running. 

This brings us to the failure of Paytm.

Paytm is a clusterfuck, to put it kindly. The app is a wallet, meet UPI, meet payments, meet shopping, meet travel, meet insurance, meet public transport, meet loans, etc. I am sure even Vijay Shekhar Sharma CANNOT list everything that the app has folded into it. How can a user?

This for me is the biggest undoing for Paytm. It is remembered for the wallet alone, as a result, UPI transactions did not take off. To add to it, all of the things that they now offer is lost in the infinite scroll that the app has become. Instead of creating 10 apps and taking a lot of the customer mind space, the company has folded everything into ONE app which does a pathetic job of representing all that it does.

I assume the thinking was that there would be a need to make the users download another app and this will mean more Customer Acquisition Cost (CAC) and the best way to avoid that CAC would be to keep everything in one app that is already on every phone.

Also, please don’t shit yourself into believing that they are building a super app. I wrote a separate piece on that one.

Even when companies have to unlock value, they spin-off businesses. Most acquisitions only result in value destruction. Separating the businesses unlocks value. Now, don’t tell me about Instagram, it was run almost like a separate company, at times competing with Facebook even after the acquisition. Read - No Filter

No wonder, apart from the people at SoftBank who are given breathless presentations, nobody can see the value in the company.

One of the arguments that I hear is that the company does not have any moat. Are you serious? And Nykaa does? Like really?? 

Paytm’s brand is its biggest moat. Determining that the only way to leverage it is by wrapping everything into one app is its biggest undoing. 

Is it too late? perhaps not; will they realise this? perhaps not. Why? Culture.

P.S. Amazon Pay will also bite the dust for the very same reasons. It needs a separate app. Same as it does for its grocery delivery service. Even Swiggy needs to spin out its grocery delivery.

Zomato started grocery delivery and then shut it down. They did not see enough traction. Why? It was bundled into a restaurant search app!