Better to associate with Paytm than compete with it:'s Lomesh Dutta

14 Dec, 2015

The tech-enabled hyperlocal services category has been seeing a lot of consolidation. Early last week, mobile wallet and e-commerce venture Paytm acquired local services marketplace, run by Gurgaon-based Thumbspot Inc for an undisclosed amount. In November, Mumbai-based Crenovative Ideas Pvt Ltd, which operates home services startup Taskbob, acquired Mumbai-based Zepper Services Pvt Ltd. Industry analysts say that more such deals are in the works. While several players have raised capital from venture capital firms and angel investors in their bid to remain independent, the jury is still out on how long these firms can continue to function as standalone entities.

Lomesh Dutta, one of's three co-founders, claims that about 400 firms connect users with local businesses for services. That's too high a number to co-exist peacefully. While Dutta expects vertical hyperlocal players and horizontal marketplaces to continue to operate for the next few years, he predicts that 'only a couple of players will survive on both sides'.

Dutta, an alumnus of Delhi College of Engineering and University of New Mexico (US), has been inducted into Paytm as vice president of business. In a free-wheeling chat with, Dutta speaks about how plans to bring Paytm's digital payment infrastructure to its offline merchants. He also explains why preferred to get acquired instead of trying to go it alone.

How does life change for after being bought over by Paytm?

Traditionally, Paytm has worked with a lot of online merchants. So the next goal at Paytm is to on-board the offline merchants. At, we provide access to more than 50,000 service providers, right from a yoga instructor to a photographer. All of them will now be available on the Paytm platform. The entire focus in on offline merchants.

Before the acquisition, our sole aim was to build a marketplace that connects users with service providers for local services. Now, we will also focus on making digital transactions a reality for the unorganised sector. We will try to ensure that all offline merchants go in for cashless transactions. Paytm's expertise with online merchants can be leveraged in our dealings with offline players. We have started working with a couple of Paytm investee firms such as Little.

Will be folded into Paytm or will it function as a separate entity?

As of now, we are working as an independent entity. It will take a few weeks to figure out the future structure. All investee companies of Paytm work in an integrated manner. What we know for sure is that all our merchants will start using the Paytm wallet.

What was it about that got Paytm to invest in it?

There are about 400 players in the hyperlocal services space and many of them are vertical players. Some do only plumbing or laundry services while others have electricians on their platform. Only a handful of players bring all the different marketplaces onto a single platform. We realised that our strengths were aligned with Paytm's strategy of providing a range of standardised services. That's what attracted Paytm to us, I guess.

In January, raised $300,000 in seed funding. Why did you not go for another round of fund raising instead of selling off?

We were in parallel discussions to raise money while discussing a sellout with Paytm. As I said, Paytm had very similar way of functioning. So, it made more sense to join hands with them rather and not compete with them. There was a common vision that we wanted to execute. We weighed both possibilities before coming to the conclusion that an outright acquisition would be the best bet.

In this industry, you can try competing with other players. We felt it is better to associate with Paytm, which is trying to creating a big impact in this space.

How was the company doing in terms of traction before getting acquired?

We had about 10,000 service providers on board and were facilitating 10,000-15,000 transactions every month. We only calculate end-to-end transactions and not requests on the platform. We grew by 40 per cent on a monthly basis for the last two months.

What would you say about the current crop of players in the local services space?

People are misusing the term 'services marketplace'. Many of these firms are not really marketplaces. But already connects users with 1,200 kinds of services. In the next few years, both vertical and horizontal categories will exist on the hyperlocal side. Some specialised players will also remain. However, only a couple of players will survive on both sides.