Big Billion Startup: The Untold Flipkart Story

by Mihir Dalal

  On the demand side, Sachin left no such room for criticism. He led the company’s email and other digital marketing efforts. He personally crafted the first set of marketing emails that Flipkart sent to customers. He set absurdly high targets and pushed his team hard towards them. In 2016, when Sachin, who had now become an investor in startups in a personal capacity, was asked about what he looks for in an entrepreneur before investing, he said, ‘Is the entrepreneur going after really big problems? To the extent that it should almost feel scary. Is it really possible what this guy is thinking?’1 He consistently urged his colleagues and investors to think along similar lines. The greatest instance of this was when he set a sales target of $1 billion – to achieve this, the business would have to grow by one hundred times in four years.

  The number one billion held special significance for Sachin – he was in its thrall, and would be for many years to come. An in-house brand would be coined Billion; Flipkart’s annual shopping event would be named Big Billion Day. To Sachin, this was a fitting nomenclature in a country of more than a billion people. It was an expression of Flipkart’s mission to take e-commerce to the masses, and also, perhaps, an expression of Sachin’s own desire to become a visionary billionaire entrepreneur.

  In Binny, Sachin had the ideal foil. Where Sachin was given to grandiosity, Binny was grounded. Sachin took the bold decisions, while Binny was more thoughtful about how to implement them. It wasn’t as if Binny was less ambitious; he completely backed his business partner’s larger-than-life vision, and was just as demanding. But he was the calmer of the two. Where Sachin glared and shouted, Binny was more willing to hear out employees who had done disappointing work. He had an eye for details and numbers. He would deliver post-mortems of failures or underperformance in a cold, even tone, often using sarcasm, that would make the recipient feel diminished.

  When Flipkart was still new, Sachin ensured that the company stayed true to its promise of pleasing customers. He would insist that new employees spend their first few days fielding calls from customers and would obsessively track what customers said about Flipkart on social media.

  A key associate of Sachin in this enterprise of pleasing customers was Tapas Rudrapatna. Tapas didn’t have an official title. On his LinkedIn page, he described his role as Flipkart’s ‘Sex Appeal Bringer’. With his long hair, exceedingly thin frame and many tattoos, Tapas resembled the hippies at the US technology startups of the seventies. His two-bedroom bungalow, full of books and guitars, was located near a popular Koramangala bar called Sathya’s which Tapas visited every evening. He ate little, often getting by on just one meal a day, and kept odd hours. His house served as the unofficial guest house for Flipkart employees. In the US, hippies like Stewart Brand, editor of a popular counterculture magazine in the sixties, and John Perry Barlow, a member of the band Grateful Dead, had later turned into the cheerleaders of the internet, subsumed by the cause of capitalism. In the India of the new millennium, Tapas was no different. He was as relentless a ‘customer advocate’ as Sachin. But while Sachin’s mania was informed by his experience at Amazon, Tapas’ stemmed from his idealism, his belief that the internet was a force for the good and that Flipkart was driven by high-minded principles, unlike a typical corporation that only cares about sales and profits.

  Tapas was friends with many of his Flipkart colleagues. But this wouldn’t stop him from screaming at them if a customer lodged a complaint. ‘Why the fuck has this customer not received his book?’ he would yell. ‘You guys are useless.’ And yet, he was well-liked around the Bangalore office. When out drinking with his colleagues, Tapas would unfailingly foot the bill. His only condition was that each person present had to contribute one hundred rupees in tips for the waiters – Tapas was the most popular patron at many Bangalore bars.

  In the early years, it was Tapas who kept Flipkart true to its more idealistic impulses. Rohan Jahagirdar, a friend of Tapas who worked in Flipkart’s marketing team, recalls that there would often be a debate around who the company should value more: the customers who spent more money or the ones who ordered more often. ‘But Tapas always insisted that you can’t bucket customers like that. You have to treat all customers equally. Since he always came from the point of view of the customer, it was very tough for anyone to argue against him because Flipkart was built around customer obsession.’

  Tapas would spend three hours every day, from midnight until 3 a.m., reading customer emails. The volume of these emails increased exponentially over the years; he would still read them all. By 2011, Flipkart had set up a large call centre team under Marcus Terry, an experienced customer service leader. Marcus’ team would handle hundreds of customer calls, social media messages and emails daily. Sachin had allowed his team leeway to resolve customer issues directly. But the really truculent customers would be leftto Tapas. To placate the particularly difficult customers and win their trust, and sometimes just to delight them, Tapas would simply send them free books. During Flipkart’s first few years, Tapas gifted his customers thousands of books. He would make conversation with his customers, speaking with them in a friendly manner and winning them over with his charm. Many people who would call to rage about their orders would end up as fans of Flipkart.

  Before Flipkart had a large marketing team, Tapas oversaw all its social media promotions and wrote the company’s blogs. These blog posts sported a witty, irreverent style similar to that of Hugh MacLeod, an American cartoonist whom Tapas idolized. MacLeod is known for his cartoons about business and marketing and is the author of Ignore Everybody: and 39 Other Keys to Creativity,2 among other books. One of Tapas’ blogs intended to encourage people to apply to Flipkart read: ‘Come, join us. As a perk, we give free samosas.’ Another blog recounted how Flipkart employees, including the CEO, would come in on Sundays to sweep the floors themselves. His blogs and social media posts gave the impression that Flipkart nurtured a bohemian culture. In reality, however, Flipkart was a fast-growing startup engaged in the age-old business of selling products to people. It was true that Flipkart’s corporate culture was refreshingly democratic, merit-based and far less uptight compared with the ‘lala’3 culture with which Indian businesses are typically associated. Most of Flipkart’s employees enjoyed working there, relishing the independence and power they were given at a young age. But it was ultimately a Darwinian workplace run by capitalists, whose lead investor was a financier in New York, the mecca of capitalism. The company’s purpose was to expand its business as fast as it could and get higher valuations. So, bohemian it wasn’t. Yet, working at an internet startup, a continuum of the real world and the virtual, especially one at the frontiers of a new industry, allows for such romantic ideas.

  Tapas’ idealism was an encapsulation of how Flipkart saw itself in its preliminary years – it helped the company believe that it was an underdog pursuing a noble mission, that it was unique in its endeavours and ambitions.

  Sachin and Tapas would compete to come up with the most popular Flipkart post on Facebook. Tapas won one of these rounds by posting a plain white image, which was so odd that many customers found it arresting. In the next round, Sachin countered it by posting a plain black image. They were also responsible for commissioning and approving Flipkart’s first television advertising campaign which was set in an old English village. Unsurprisingly, the campaign bombed. When Flipkart finally hired a specialist marketing head in early 2011, their colleagues were understandably relieved.

  Tapas was Sachin’s most trusted associate; he was also quite selfless. A few months after Flipkart restructured itself and created WS Retail, it was Tapas who was projected as one of the owners and directors of this new company.4 It was a very risky undertaking – if Flipkart was ever investigated by regulators, Tapas would be in the firing line.

  Tapas was also one of the few Flipkart executives who could stand up to Sachin, oppose him, even ridicule him on occasion. When Flipkart began, Sachin and Binny were not in favour of luring customers with heavy di
scounts. In the first few years, the company, in fact, sold books at higher prices than some rivals. The Bansals believed that if they delivered consistently excellent service, customers wouldn’t mind paying a small price for it. But after raising venture capital, the company’s solitary objective was to grow fast. Discounting increased 2010 onwards. Tapas would constantly taunt Sachin about how Flipkart had turned into a discount brand. In 2011, when Flipkart had come up with a set of corporate values, ‘excellence’ being one of them, Tapas emailed Sachin a Hugh MacLeod cartoon that ridiculed how companies abused the word, rendering it banal, meaningless. ‘Excellence in excellence,’ Tapas wrote.

  This was a common phenomenon in the early years: the only people Sachin truly respected were the ones who stood up to him. Not only did he wield power because of his position as Flipkart’s co-founder and CEO, he also had unusually strong views about most things. He was a formidable geek–bully. It took courage and intelligence to spar with him, and he showed regard for those who did so and could prove themselves right.

  ONE OF THE biggest drivers of Flipkart’s growth in 2011 was forced on the company by Sachin against the advice of many colleagues. Even though Flipkart was expanding at an extraordinary rate, Sachin hankered for more. He was particularly unsatisfied with the mobile phones business. A year after launching the category, Flipkart was selling up to a couple of hundred phones every day. Vipul Bathwal, who had overseen the mobiles category, had leftthe company to join a rival. In early 2011, he was replaced by Flipkart’s Bombay office head, Indranil Dutta, who had moved to Bangalore to take up the new role.

  Sachin had gone to the US for a visit that same year. There, he observed that Amazon and other e-commerce companies offered shoppers the choice of returning or exchanging products that didn’t satisfy them. In India, however, it wasn’t easy for customers to return products as most sites struggled to get products to customers in the first place! No Indian e-commerce company had built the infrastructure to handle returns; the logistical cost was thought to be prohibitive. This prevented them from allowing shoppers to return unsatisfactory products, who, in turn, would be displeased on being stuck with products that didn’t match up to their expectations. Since Flipkart’s founding in 2007, Sachin and Binny had known that Indians lacked trust in online retailers, preferring to go to malls or independent stores to buy books, electronics and clothing. There was too much uncertainty online, too many annoyances. This only compounded the customer’s inherent resistance to buying things they hadn’t seen or felt. Although Flipkart’s unrelenting pursuit of pleasing customers had won over a few hundred thousand sceptics, e-commerce was still just a niche business.

  Sachin came to realize that Flipkart would have to constantly coax and lure customers with special incentives to encourage them to overcome their mistrust of e-commerce. He also understood that offering product returns wasn’t even a special incentive; it was an essential feature of commerce anywhere. In a low-trust society like India, how could a retailer not offer this facility? It would have to be done. In the middle of 2011, he proposed the introduction of an ultra-flexible thirty-day returns policy.

  Flipkart executives were shocked. The company had just begun expanding its nascent in-house logistics service; it wasn’t equipped to handle returns. Besides, Flipkart’s overhead costs would shoot up. Even Binny protested, pointing out that their spending might go up by two per cent. To this, Sachin had a ready counter: ‘But our business will grow as well.’ Another senior Flipkart executive insisted that a returns policy would lead to fraud, that it would be misused. Sachin shot back angrily, ‘For that one per cent, why would you penalize the ninety nine per cent? We’ll just blacklist them.’

  In the second quarter of 2011, Flipkart introduced its returns policy. Customers could return any product within thirty days without having to provide an explanation. It turned out to be an inspired move. Customers took to the policy immediately and orders increased further.

  But introducing the returns policy wasn’t enough in itself. It had improved Flipkart’s popularity with its existing customers, but it didn’t attract large numbers of new users. The problem was that while the company had surpassed its predecessors and peers and greatly improved the online shopping experience, most Indians, even in the cities, were yet to hear about Flipkart. And most of its present users still saw Flipkart primarily as a books retailer that happened to sell other goods. They were tremendously loyal, but their numbers were insignificant within the overall retail market; Flipkart was still just a cult brand. To take e-commerce to the masses, at least in the urban areas to begin with, the company would have to turn to mass advertising.

  Around the time it launched the thirty-day returns policy, Flipkart had started considering marketing seriously. This was hard to believe if one was familiar with the company’s first advertising campaign of April 2011. Set in an old English village, the ad featured an English grandmother who ordered books online through her pet mouse. Ordering books online was presented as an act of magic. After ninety seconds, the fantasy abruptly ended with the punchline: ‘You don’t need magic. Just log on to Flipkart.’5 Few bothered to. In 2016, Sachin spoke about how he had unsuccessfully described the concept of Flipkart to his own grandmother, ‘I have tried [to describe Flipkart to my grandmother]. But I don’t think my grandmom really liked it. I told her, “This is a phone. You press a button on it and the product arrives at your doorstep.” She told me, “Why would somebody do that? Why wouldn’t you just go to the shop and buy?”’6

  By early 2011, Ravi Vora had joined Flipkart as the head of marketing. A short, dour-looking man, Ravi had spent nearly a decade with the consumer goods makers, Hindustan Unilever and Heinz, known for their expertise in marketing and sales. He was unimpressed by the previous advertisement that had been overseen by Sachin and Tapas. Immediately he set to work on a new campaign.

  It had two primary goals – to attract new users, people who had never shopped online before, and to position Flipkart as an all-purpose retailer that sold a range of products from phones and laptops to cameras, and not just books. The overarching feeling that the ads would need to cultivate among viewers was that of trust. It was decided that this would be best achieved by promoting Flipkart’s cash-on-delivery and flexible returns policies, its low prices and expansive product assortment. After some hesitation, Ravi retained Happy Creative, the agency that had helped create Flipkart’s first ad.

  Work on the new campaign went on for more than three months. A few weeks before Diwali, it was ready. The ads featured two children conversing in would-be adult voices about shopping on Flipkart. One child was sceptical about online shopping, their scepticism playfully dismissed as ignorance by the other, who pointed out the various benefits of shopping on Flipkart. The tagline ‘No Kidding No Worries’ suggested that one could shop on Flipkart without anxiety, and it was so easy that even children could do it.7 The ads were memorable and created a general feeling of warmth and familiarity about Flipkart. In the weeks and months after the ads were released, Flipkart’s brand was transformed. The company saw a huge increase in traffic and sales. It continued to run the campaign for two years. Internally, Flipkart executives cleverly transposed the message of the ad campaign. Flipkart had once been dismissed as a kids’ enterprise by cynical suppliers, investors and rivals alike. The company had now proved that the kids could hold their own.

  The Kids campaign, as it came to be known, was launched towards the end of a spectacular year for Flipkart. The gross sales of ₹10 crore in December 2010 had more than quadrupled a year later. The company was hurtling from one milestone to another, month after month, demolishing barriers, becoming stronger and greedier for more.

  Flipkart’s rise had helped spawn an entire startup ecosystem in the country. Naturally, it also attracted critics. Future Group CEO Kishore Biyani continuously predicted that the end was near for Flipkart and other internet startups that burned through investor cash with no concern for profitability. The larger
corporate world was similarly dismissive. But in its early years, the most vociferous Flipkart critics were from within the startup ecosystem. Prominent among them was Mahesh Murthy, the chief of Seedfund, a venture capital firm. There were many others. They had valid and irrefutable reservations about the poor economics of e-commerce, as evidenced by the fact that Flipkart’s soaring sales were offset by its losses. It was commonly believed that this trend would continue for many years. Sceptics also thought it was futile to invest in a business that would some day have to compete with Amazon. While these reservations were legitimate, Flipkart was mocked for being a ‘copycat’ of Amazon, one of the most innovative companies in the world. This analogy would come to be well established. It also happened to be nonsensical.

  Selling goods to people was not an idea for which Amazon deserved credit. It wasn’t even the first company to think of selling products online. What made Amazon inventive was that it discovered, through trial and error, a series of business innovations that made buying online a habit for a majority of Americans, and Amazon the country’s most compelling shopping destination which remained indispensable to its customers through constant improvements to its service. In effect, Amazon had invented the rules of e-commerce. Even if a new competitor entered the field, that company would have to operate within the paradigm Amazon had created. Flipkart had done the same thing in India. There was no doubt that it had taken inspiration from Amazon. But e-commerce in India had few similarities with the retail space in the US. The innovation of cash on delivery, the creation of unique warehousing and logistics processes, the introduction and implementation of the product returns policy, the unique methods of managing everyday dealings with customers, and dozens of other smaller inventions particular to the Indian ecosystem, are what comprised the paradigm of e-commerce in this country. Here, Flipkart had set the rules of the game. Amazon’s entry later and its adoption of these ways and means would validate just how innovative Flipkart had been as a company.