Mumbai: Flipkart Ltd’s fundraising in April, which saw Tencent Holdings Ltd become a shareholder, and a proposed deal with SoftBank Group Corp., may see the return of Sachin and Binny Bansal, co-founders of the company, to more prominent positions in one of India’s most storied internet companies.
A Flipkart spokesperson didn’t respond to an email seeking comment, but the company’s official position all along has been that the Bansals never went anywhere. Still, it has been clear to most people that starting January 2017, when Kalyan Krishnamurthy was named CEO of Flipkart, he and Flipkart’s largest investor Tiger Global Management have been in charge.
That is changing now with the April fundraising making the Naspers-Tencent combine an influential shareholder in the company (Naspers, a shareholder in the Indian company, influenced Tencent, in which it is an investor, to invest in Flipkart). And if the deal with SoftBank goes through, Flipkart will end up with five strong voices on its board: SoftBank, Naspers-Tencent, Tiger Global, early investor Accel and the Bansals.
Since he first wrote a $10 million cheque to Flipkart in late 2009, Tiger Global managing director Lee Fixel has been the most powerful presence on the company’s board.
“The SoftBank deal is the one to watch out for. They usually like to call the shots (at the board level) in any company they invest in. It’ll be interesting to see how they work with Tiger and the Bansals. There’s also Lee’s personal equation with the Bansals. It’s a very delicate situation," a Flipkart shareholder said on condition of anonymity.
A SoftBank spokesperson didn’t respond to an email seeking comment.
Already, Sachin, and in particular, Binny, have increased their involvement in the running of Flipkart, three people familiar with the matter said on condition of anonymity.
In January, Fixel pushed through a leadership change at Flipkart, naming Krishnamurthy, a managing director at Tiger Global, as the company’s new CEO. Binny was moved to the role of group CEO just a year after he took the role from Sachin, who retained his position as executive chairman.
The CEO change was meant to leave the day-to-day running of the company to Krishnamurthy, who had led Flipkart’s turnaround efforts after rejoining the company in June 2016, and newly-promoted chief operating officer Nitin Seth. It was also seen as a signal that Binny would step back from any kind of meaningful involvement in the day-to-day running of Flipkart, which also owns fashion retailers Myntra and Jabong and the payments app PhonePe. Seth was to run logistics unit eKart and a few other functions and report to Krishnamurthy. And that’s how things were until April.
Over the past two months, however, that has changed, the three people said.
In late May, Flipkart announced to its employees that Seth was leaving. In an email to employees, Krishnamurthy said Seth was resigning for personal reasons. Mint has seen a copy of the email. Seth’s departure came as a shock to Flipkart insiders because he was considered close to Krishnamurthy and took charge of Flipkart’s logistics unit only in January.
The three people said that Binny and Sachin Bansal were critical of Seth’s performance. Seth did not respond to a phone message seeking comment.
Weeks before Seth left, Binny took over corporate communications from him and Sachin took back the responsibility of government relations, the people said.
Binny is acting as “mentor" at eKart and Sachin at Flipkart’s technology function, the three people said. Since May, Binny has been regularly meeting middle managers at eKart and playing a more active role in the company’s strategy function, they added.
To be sure, Krishnamurthy is still firmly in charge, the three admitted. He is backed by the board and enjoys strong support within Flipkart, particularly in the sales and business functions. On day-to-day matters, Krishnamurthy is the undisputed authority and the 45-year-old has earned his stripes. Under him, Flipkart has held its own against arch-rival Amazon India; it is showing healthy sales growth; and, most importantly, the company bagged a massive round of fresh capital because of his turnaround efforts.
The Bansals are pushing for the appointment of a chief product officer and at least one senior leader in engineering, the three people said.
“The Bansals have said that Flipkart cannot lose its technology culture. (There’s a perception that) because Kalyan is a business (sales)-focused guy, Flipkart’s tech focus may be diluted. So they have been pushing for more tech and product leaders," one of the three people said.
Since the January change, Krishnamurthy, Myntra CEO Ananth Narayanan and PhonePe chief Sameer Nigam all report to Binny. In the first four months after becoming CEO, Krishnamurthy enjoyed almost complete autonomy in running Flipkart. But the organizational structure left enough room for the Flipkart founders to assert themselves—and they have done so over the past two months, the three people said.