Flipkart is in the news. When is it not? However, this time it is a little more serious than their repeated valuation markdowns. There has been a change of guard at the very top; Binny Bansal replaced by a VC-backed CEO.
As usual, pundits of the digital world are out in droves to hammer down the final nail in Flipkart’s coffin, passionately predicting its inevitable demise.
Constructive analysis (by actual experts) is good, as others learn from Flipkart’s mistakes. But the sheer amount of personal vitriol coming Flipkart’s way, as though the Bansal-duo stole our provident fund, has left me unpleasantly surprised, confused and a little numb by the end of it.
It made me wonder, why do we all love to bash Flipkart? Here’s what I could come up with. See if you agree (or disagree):
Before I begin, let me ask you a question – would you trade places with Ankit Nagori (Ex-CBO, Flipkart), who reportedly takes home a 22 crore paycheck at 31 years of age. I bet you would. I would, too. And then all our fundamentals about Flipkart will turn positive, right? You see what happened there? There’s a small word for it – envy.
Deep down at a subconscious level, we are all envious of Flipkart’s success. The story of two middle-class IIT boys taking the country by storm back in 2007, when the word startup hadn’t become an ear sore yet. Moreover, becoming a unicorn in less than 5 years! It is the stuff legends are made of.
But the same stuff makes us cringe. For we all want to fly at some point in our lives, but only a few have the courage to jump off the cliff. The rest of us lesser mortals prefer to look down on the one who did jump and feel taller about ourselves.
We live in a risk-averse (Indian) society, where we are repeatedly told to aspire for safe careers and stable jobs which come with the security of a regular paycheck. Mostly because we are always competing with the next-door Sharma Ji and his prodigal son – the human embodiment of perfection.
Entrepreneurship/Starting-up just doesn’t fit our narrative. It is too risky. And hence Flipkart should fail, so as to restore the balance in Sharma Ji’s, and consequently, our universe. A universe where an IIT-IIM degree, a white-collar MNC job, NRI status etc. are the highest points of success. No one else should come and poke this bubble. So that we can keep our smug look (on social media) as if to suggest – I told you!
But why Flipkart, especially? Because it is the foundation on which the entire edifice of Indian startup ecosystem is built upon. It was the first prominent startup to hit the Indian shores. It opened the gates for the 5000+ startups operating in India now. It gave hitherto unfound courage to Indian millennials to defy the age-old wisdom – be safe and you won’t be sorry. Hence, Flipkart!
Before Flipkart arrived, starting a business meant either asking our parents or knocking on the doors of the convoluted Indian banking system. Flipkart, with its rapid success, brought the much maligned, yet much desired international VC firms and their bucket loads of investments. It was only a matter of time before the tailwind would bring the global giants to India – Amazon, UBER etc. A virgin market – 4 times the size of US – was too big an opportunity to resist for anyone with spare cash.
If there’s one person (actually 2) PM Modi should thank, for bringing Indian entrepreneurship in the global spotlight, it should be the Bansals. Flipkart, in 2007, was a paradigm shift in the Indian economic growth story.
The ‘Allegedly’ Mindless VCs
Coming back to the moot point, a common grudge of our digital experts is against the ‘allegedly’ mindless VCs, who invest in such startups. I think, however much may we argue that VCs are stupid, they are not. Most of us simply don’t have that kind of money to know what to really do with it. A person with 1 crore in his bank will have completely different investment sentiments compared to someone with 1000 crores.
For starters, the former cannot afford to gamble but the latter can. And venture capital is exactly that – corporate gambling based on some obscure data crunching and predictive modelling which we do after getting our much coveted MBAs. If the VCs are indeed stupid, so is Sharma Ji’s Wharton-MBA son who does the math for them.
In their world, most bets won’t come off, except for the one that’ll cover up for the rest and some more. That’s how it works. And the VCs know this before investing.
We, on the other hand, would prefer to invest our 1 crore in a safe option guaranteeing 8-12% annual returns. Nothing wrong with it, but that’s not how empires are built. That’s how houses are bought on a 15-year loan.
Imagine if JRD Tata had the same line of thought. Obviously, there would be no TATA Group today (and also, Cyrus Mistry could’ve been spared the public ignominy. Sorry couldn’t resist).
The Much Talked About Losses
Furthermore, there’s a set of experts who keep pointing out the losses incurred by Flipkart as if they are the only smart ones aware of these numbers. Assuming the Flipkart BODs and VCs can do 2+2 = 4, I am fairly certain they are aware of the losses, too. So why lose one’s sleep? Especially when it is not even our money!
It is not like the people at Flipkart one day decided to go complete bonkers and burn cash like no one can. Instead, Amazon showed up and arm-twisted Flipkart into a price-war, knowing they have the bigger war chest and a capacity to cross-subsidize using their international footprint. What would you do then? Either you fold up, or fight. And they (Flipkart) fought.
The point I am making is two-fold, something I learned from a wise old man:
1. If you do not have anything better to say vis-a-vis the status quo – shut up!
2. More importantly, if you’ve not been in someone else’s (VC here) shoes – please shut up!
A lot of blood and sweat goes into building a company from scratch. More so in an unwelcoming environment such as India’s.
Unless we were there with the Bansal-duo, in 2007, leaving their plush jobs at Amazon straight out of IIT, and, instead, charting their own course, initially delivering books on their broken scooter to the nooks and corners of Bangalore; we should exercise caution before making sweeping comments. It might not affect us, sitting in our comfortable office chairs, but it crushes the soul of the entrepreneur. An objective opinion is always welcome, though.
I personally believe we do not give Flipkart the applause it deserves – something that is above the ephemeral P&L sheets. For instance: does anyone remember the ol ’days when we Indians used to have major online trust issues (rightly so most of the times)?
Flipkart created the concept of Cash on Delivery (COD) and took the risk upon themselves. Without COD, Indian e-commerce wouldn’t be what it is today. Almost every online marketplace uses COD now, including Amazon! In a way Flipkart is/was (depends on who you ask) not just an e-commerce company; it is in spirit the Indian e-commerce!
It is not hard to see that numbers at Flipkart don’t add up. I agree, too. Maybe things could have been handled better. I don’t know since I am not a subject-matter-expert.
Regardless, what makes me a little sad is when I log onto LinkedIn and find senior folks presenting candyfloss theories ranging from faulty business models, to mismanagement and the more aggressive ones comparing Flipkart to an Inside Job – loot of VC money. Projecting the Bansal-duo as some sort of con artists. If they actually were, and didn’t believe in their product, they would have gladly taken the $7 billion or so offered to them for an acquisition back in 2012. And none of the two had to work, ever again.
Things (at Flipkart) may not have worked out as planned in the last couple of years, but that’s life, isn’t it? An optimistic take on the entire management rejig would be to see it as a necessary course correction and not doomsday.
Lastly, if the worst does come true, remember – ‘If you live by the sword, you die by the sword’. Even 50 years from now, people will talk about Flipkart. And that’s a success no one can take away from them!