Bengaluru: On Monday, India’s most valuable Internet start-up dramatically announced a top-level management overhaul and named Kalyan Krishnamurthy as the CEO of Flipkart’s core business. The overhaul was identical to the one the company’s board had effected exactly 12 months ago, when it replaced Sachin Bansal from the hot seat and elevated Binny Bansal to the role of CEO. In Monday’s reshuffle, Flipkart created a new role for Binny Bansal and named him Group CEO—a role which will see him oversee functions such as capital allocation, mergers and acquisitions (M&As) and, according to insiders, prime the company for a potential initial public offering (IPO) a few years down the line.
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Internally, there have been rumours of a strained relationship between Krishnamurthy and the Bansals—something that both Binny Bansal and Krishnamurthy brushed off and later through a company spokesperson added that they have a good working relationship. In a joint interview on Monday, Bansal and Krishnamurthy spoke about the rationale for the latest overhaul, Flipkart’s strategy going forward and whether Flipkart is ready to be led by a non-founder CEO. Krishnamurthy, who quit from Tiger Global in December, incidentally turns 45 three days from now, on 12 January.
What was the rationale for the latest reshuffle?
Binny: 2016 has been a truly extraordinary year for us, from a growth perspective. We’ve effected a complete turnaround of our business and consolidated our leadership position in e-commerce. What I want to do now...is keep the focus on growth and innovation over the next few years, but also create new engines of growth with PhonePe and somewhat with logistics with eKart.
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Krishnamurthy: 2016 started with some challenges, but over the year it’s been tremendous from a growth point of view...we finished the year on a very positive note and we want to continue with that momentum in 2017.
How is your (Binny’s) new role different from the previous structure when Sachin was overseeing new businesses? How is your role being delineated from Sachin and Kalyan’s?
Binny: That was never the case. Sachin has been executive chairman and his key focus areas have basically been providing strategic direction to our existing businesses, mentoring senior leaders and working with me on the overall group strategy. He has obviously also a key role in the external agenda as well. If you look at the new organizational charter, it’s been specifically created to look at different areas in the commerce domain and see where we want to make big bets over the next 3-4 years. Basically I’ve been playing both the roles in the last 12 months: I was playing the Flipkart CEO role and the Group CEO role and the group agenda has just become a lot bigger with Jabong and PhonePe happening...it’s basically a progression of what we are becoming as a company. As a company, Flipkart started with books only and then we expanded the business by adding more categories. Then we went to fashion, large appliances, etc. A couple of years ago, we went into advertising and this year into logistics and payments. So, we want to keep doing that (adding newer businesses).
Nearly a decade on, investors are asking whether it is too soon for the Flipkart founders to have exited from running the core business—is it really the right time to hand over Flipkart to an external and non-founder CEO?
Bansal: If you look at how Flipkart has grown over time it’s basically on the back of great leadership that we’ve had. If you look at our Myntra acquisition in 2014 and Ananth (Narayanan, CEO of Myntra) coming on board in 2015 and taking on the responsibility of the business...like Kalyan will do with Flipkart, it’s been an amazing success story. For Sachin and me, it’s been really about the people who make the business.
How was your strategy as CEO different from Sachin’s when he was CEO? Given you were CEO for only 12 months, do you think you were given enough time to make all the changes you wanted to effect?
Binny: The strategy at the overall level was not very different. It’s basically as Kalyan also said, it’s been about making quality products affordable across all regions in India. It was pretty much a continuation of that.
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From an e-commerce perspective, it’s still a very small part of the overall retail market. I think it has a long, long way to go. I think taking a narrow view of 6 months or 12 months does not really make much sense. From a point of view of where we are and what we need to do as a group, that is the reason for making these changes.
Kalyan, what will be your immediate priority? How will your strategy differ from the one that was in place under Binny?
Krishnamurthy: We don’t work on a three-to-four month agenda anymore. We work on a longer-term strategy. As I was saying before, nothing will be very different from what we did over the last six months—growth will be the key focus and we will continue to build capabilities.
Binny, what are some of the new initiatives that you will work on over the next 3-6 months?
Bansal: Nothing specifically that I can share but we’ll focus on expanding the market from a new category point of a view and from a product point of view.
What is the latest on your current fundraising situation?
Bansal: On fundraising, the situation is like it always has been for the last nine years. We are in discussions with different people in different points in time. That continues to be the case.
How do you view the Amazon threat?
Krishnamurthy: We have leadership in most key categories. In categories such as fashion, between us, Myntra and Jabong, we have a 75-80% (market) share. In 2017, we will get into some new categories and focus on them and we believe we will be significant leaders in those as well. So, we are not really worried about that.