Sachin Bansal, the Flipkart co-founder, stands to make $1-1.5 billion from the sale. But that won't console the 36-year-old
Bengaluru/New Delhi: In early 2015, Flipkart co-founders Sachin Bansal and Binny Bansal along with Mukesh Bansal, who was set to become the third most powerful executive at Flipkart, called for a meeting with the company’s senior leaders and junior managers. Sachin wanted to explain to the team that Flipkart was being transformed, from its business model to its leadership team.
Many people weren’t convinced. These people, who ran Flipkart on a day-to-day basis, had questions: “how will this work?", “why are we doing this?", “do we need to make all these changes?", “do we need make changes all at the same time?"
Sachin Bansal fielded most of the questions. He said the changes—moving to a marketplace model from inventory, driving sales through the mobile app, bringing a new bunch of senior executives—were necessary if Flipkart wanted to leapfrog into becoming a $50-100 billion firm.
Less than a year later, Sachin Bansal was pushed out of the CEO role. That was the start of the end for Sachin Bansal.
On Wednesday, Walmart announced a deal to buy 77% of Flipkart for $16 billion. As part of the deal, Sachin Bansal will leave the company and sell all of his 5.5-6% holding. He left on a bitter note— in its official statement announcing the deal, Walmart didn’t even refer to his exit.
Sachin Bansal stands to make anywhere between $1-1.5 billion from the sale. But that won’t console the 36-year-old.
“Sachin was the visionary at Flipkart...someone who had the vision and at the same time a very gut driven person," said Abhishek Goyal, co-founder of Tracxn and an early investor in Flipkart. Goyal, a close friend of Bansal’s, had spotted Flipkart as an associate at Accel Partners—Flipkart’s first institutional investor.
Flipkart’s beginnings are well-known. It was started by Sachin and Binny, who had worked together briefly at Amazon’s back-office, from a small apartment in Koramangala in Bengaluru. Among the two, Sachin was the one who set the vision for the company while Binny was more inclined toward operations.
Within a few years, it had become the poster child of the Indian start-up ecosystem. By 2014, Flipkart had become the clear market leader, achieved the status of a unicorn and attracted lots of capital.
In 2014, the e-commerce market exploded. Through the introduction of cheap but high-quality smartphones, suddenly several million people started buying online. That year, Flipkart consistently kept underestimating consumer demand—during its big sale event in October, its platform crashed and it ran out of stock in just 10 hours.
In July 2014, Flipkart had entered the global stage as one of the most valuable start-ups when it raised $1 billion at a valuation of $7 billion.
Sachin Bansal’s profile was elevated overnight. He became the new entrepreneurial icon, and over the next year, he and Binny became billionaires as Flipkart’s valuation doubled.
After that $1 billion fund raise in July 2014, Sachin Bansal became a different man, according to former and current Flipkart executives. He was well-liked and respected inside Flipkart but also had a mercurial personality, prone to mood swings and tantrums. With that fund raise, his behaviour became so erratic that he alienated people who had worked with him for years. He believed that as the leader of a disruptive start-up, he needed to adopt the behaviour of a visionary who does unpredictable things. He believed that Flipkart had to be transformed for it to become a $100 billion company.
Bansal had always fancied himself as a product-design expert. Taking inspiration from people like Steve Jobs, he decided to move Flipkart away from its retail roots and try and make it a pure product company by becoming a marketplace. He had led Flipkart’s mobile-app push from the time it was launched in 2013. After seeing a spike in traction, he decided to shut Flipkart’s websites and make it an app-only platform. He decided Flipkart didn’t need advertising—if its product/platform was good enough people would anyway flock to it.
He also forced out leaders who had helped build Flipkart and became aloof and hostile to people he worked with.
Sachin’s relationship with Binny also soured. Both wanted Mukesh Bansal, co-founder of Myntra, which had been acquired by Flipkart in 2014, to play a bigger role. But Sachin started working more closely with Mukesh than Binny.
What happened at Flipkart in 2015 and 2016 is well-documented: Sachin Bansal’s big ideas failed miserably, allowing Amazon to gain market share in a big way; he was pushed out of the CEO position and all of his moves were reversed; Flipkart brought back Tiger Global executive Kalyan Krishnamurthy, who eventually became CEO.
“Sachin had a lot of big ideas but he was unable to execute any of them. And many of these ideas like the app-only experiment and the shift to marketplace just didn’t make sense. He lost credibility with investors and also with Flipkart executives," another former Flipkart executive said.
The missteps by Flipkart under Sachin and to a lesser extent, Binny, cost the Bansals their company. Tiger Global Management partner Lee Fixel. who had been Sachin Bansal’s biggest backer, installed Krishnamurthy as CEO in January 2017.
A few months later, Bansal started to reassert his authority again. While he still wasn’t given direct charge of any function, he started working with the company’s technology executives. He led Flipkart’s push toward building artificial intelligence capabilities and its effort to build a multi-category brand, Billion.
When Walmart reached out to explore a deal with Flipkart, Bansal was an integral part of the discussions. Until late April, he was confident he will get a bigger role at Flipkart after the sale. But after seeing how Tiger Global had run the company and kept him away from operations, he wanted stronger rights and guarantees that he would have a lot more say in Flipkart’s operations. But Krishnamurthy, whom Walmart wanted to retain as CEO, was resisting Bansal. Dealing with Bansal’s demands could delay the deal. Tiger Global’s Fixel sided with Krishnamurthy and, suddenly, Bansal found himself cut out.
It was also clear that Sachin and Binny were looking after their own individual interests rather than negotiating as a team. Binny Bansal is continuing as Flipkart group CEO.
Sachin Bansal announced his exit on Facebook on Wednesday.
“Sadly my work here is done and after 10 years, it’s time to hand over the baton and move on from Flipkart. But I’ll be watching and cheering from the outside—Flipsters, you better continue to do a good job! I’ll be taking some long time off and focus on finishing a few personal projects which I haven’t been able to find time for. Will catch up on gaming (and see what kids are playing these days) and brush up on my coding skills," he said.
An indicator of the bitterness of the exit is that Sachin Bansal has extracted a very short non-compete clause with Walmart, people familiar with the matter said. He will be restricted from starting any business that directly or indirectly competes with Flipkart for 18 months from his departure from Flipkart,the people said. He will not be able to make any investments or take a management role in any competing businesses for the next 36 months, according to the non-compete clause he has signed.
“Since the start of Flipkart, his life has revolved around it. For him every conversation is about Flipkart and everything is about Flipkart. It is probably a blessing in disguise that he is leaving. He is not someone who will quit or retire this early. He will start his new journey and probably get on to the next big thing," said Tracxn’s Goyal.
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