Big Billion Startup: The Untold Flipkart Story

by Mihir Dalal

  Lee Fixel leftTiger Global in June 2019 after a spell of thirteen years,8 during which time he established himself as one of the most promising young investors in the startup world globally and accumulated a personal fortune that will soon approach $1 billion. Much of his wealth is on account of the Flipkart wager. Lee plans to start an investment firm of his own. He continues to serve on the Flipkart board.

  While Kalyan’s record in delivering market share gains has been almost exemplary, he is yet to prove that Flipkart can attain profitability. After agreeing to buy Flipkart in May 2018, Walmart had stated that it would seek a public listing of Flipkart shares within a few years.9 To date, this remains only a distant possibility, as Flipkart presently burns through approximately $1 billion in cash every year. Kalyan now has to reduce costs without sacrificing too much sales growth. It won’t be easy: e-commerce in India is an inherently expensive business.

  One surprising windfall for Walmart could come from PhonePe. When Flipkart bought PhonePe in April 2016, it was optimistic that the latter would become a serious player in the digital payments space. PhonePe has surpassed Flipkart’s expectations. In early 2019, PhonePe entered discussions to become independent of Flipkart and raise capital from outside investors. The company could be valued anywhere between $5 billion to $10 billion.10 It would come as a huge win for Walmart if PhonePe is able to pull off a funding round at the higher end of the spectrum. Whatever the price, the PhonePe founders, Sameer Nigam and Rahul Chari, are sure to be worth hundreds of millions of dollars.

  Apart from PhonePe, Flipkart has spawned several other successful startups. Not only did the company help turn internet entrepreneurship into a desirable occupation, dozens of its employees have left to start their own companies over the years. The most prominent among these curiously reside next to each other in HSR Layout, a few kilometres away from where Flipkart was started: CureFit, a fitness and food platform that was launched by Mukesh Bansal and Ankit Nagori; and Udaan, a marketplace that facilitates business-to-business commerce that was birthed by Sujeet Kumar, Amod Malviya and Vaibhav Gupta.

  In a sense, the founders of Phonepe, CureFit, Udaan and the other Flipkart-spawned startups are all indebted to Sachin. Many of them played important supporting roles and made Flipkart possible. But in the final reckoning, it was Sachin’s imagination and his audacity in pursuing big ideas that made Flipkart’s spectacular rise possible. Thinking big is now a mantra for startup founders; its prevalence can be traced directly to Sachin and to Flipkart’s success.

  Meanwhile, Sachin has started a new venture. In late 2018, he incorporated a holding company by the name of BAC Acquisitions Private Limited. He has already invested a large part of his wealth into startups and financial services firms. At BAC Acquisitions, he has teamed up with Ankit Agarwal, his former hostelmate at IIT Delhi and NGV flatmate. Sachin’s LinkedIn profile states that he is ‘pursuing opportunities in the BFSI (Banking, Financial Services and Insurance) space.’11

  It may seem like a plain statement, but Sachin’s zeal for pursuing the improbable remains undiminished. Sachin now wants to create a new corporate behemoth: a $100 billion enterprise in financial services. One could assume that this company, too, will have all the characteristics of a Big Billion Startup.

  AUTHOR’S NOTE AND ACKNOWLEDGEMENTS

  This book is based on more than two hundred and fifty interviews, emails, regulatory documents, news reports, and video interviews of Flipkart executives available online. In most cases, the dialogues and quotes that appear in the narrative have been used verbatim from news reports or from interviews that I conducted. In the odd case, they are reconstructed from statements made to me in interviews.

  While I have interviewed them several times in the past, the Flipkart co-founders Sachin Bansal and Binny Bansal declined to speak to me for the purposes of the book. Flipkart did not participate either. I reached out individually to all the major characters at Flipkart who appear in the book. Some of them declined to talk or did not respond to my requests. However, I had deep access to many of the people who played a crucial role in the making of Flipkart since its founding in 2007.

  I first wrote about Flipkart in 2013. In the four years before its sale to Walmart, Flipkart had been the main subject of my coverage for Mint. The book is the culmination of this experience.

  Apart from Flipkart, the book traces the development of the wider startup ecosystem in India, by which I refer mostly to the internet companies that serve shoppers. A smaller part of this ecosystem comprises startups that provide software for companies, as opposed to shoppers. Their development, while somewhat related to the internet companies, has not been covered.

  Many people deserve thanks for contributing directly and indirectly to this book: Sukumar Ranganathan, my former editor, for giving me the opportunity to write on startups and for backing me fully on controversial and sensitive stories. I learned a great deal from him. My friend and former colleague Shrutika Verma, together with whom I learned about startups, and news reporting. Vinay Kamat, my current editor at Mint, who generously allowed me the time and space to work on this book. It was truly gracious of him. Pankaj Mishra, my former boss at Mint, who compelled me to track startups before he left. Somak Ghoshal, who introduced me to my agent and provided helpful advice on various matters. My agent Anish Chandy for believing in this book and working diligently to bring it out. His feedback on the book and advice on related matters were critical. A special thank you to Teesta Guha Sarkar, my editor at Pan Macmillan India. She was the arbiter of the book’s tone and quality, and if the book is readable, it is thanks to her. And, of course, thanks to my family – my grandmother, parents, brother, and in remembrance, my late grandfather – for their unwavering support.

  Most of all, I thank all the Flipkart officials and everyone else who participated in the development of this book. Thanks especially to those who spoke without inhibition. I am unable to name them for obvious reasons. But without their help, it is unlikely that this book could have been completed. These people spoke with me several times, spending many hours detailing their experiences and perspectives. It helped me immensely in piecing this story together.

  Footnotes

  * Name changed

  * enterprise resource planning

  NOTES

  1 BREEDING GROUND

  1. New York Times. 2004. ‘Google Goes Public’, 20 August, available at https://www.nytimes.com/2004/08/20/opinion/google-goes-public.html

  2. Sabarinath M. 2005. ‘Meet Kishore Biyani, the Sam Walton of India’, Economic Times, 15 October, available at economictimes.indiatimes.com/articleshow/1263228.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

  3. Business Standard. 2004. ‘eBay buys Baazee for $50 million’, 24 June, available at https://www.business-standard.com/article/management/ebay-buys-baazee-for-50-million-104062401142_1.html

  4. BBC. 2004. ‘BJP admits “India Shining” error’, 28 May, available at http://news.bbc.co.uk/2/hi/south_asia/3756387.stm

  5. BBC. 2009. ‘India billionaires double in 2009’, 11 March, available at http://news.bbc.co.uk/2/hi/south_asia/8562957.stm

  James Crabtree. 2018. The Billionaire Raj: A Journey Through India’s New Gilded Age. Tim Duggan Books.

  6. While Shockley was a brilliant physicist, he was a terrible manager whose mismanagement pushed his colleagues to leave his firm and start Fairchild Semiconductor, a pioneering hardware startup. For more, see: Scott Rosenberg. 2017. ‘Silicon’s Valley first founder was its worst’, 19 July, available at https://www.wired.com/story/silicon-valleys-first-founder-was-its-worst/

  7. Raj Chengappa. 2013. ‘Bangalore clocked to be the fastest growing metropolis in India’, India Today, 22 July, available at https://www.indiatoday.in/magazine/cover-story/story/19830415-bangalore-clocked-to-be-the-fastest-growing-metropolis-in-india-770617-2013-07-22

  8. Hindu. 2005. ‘The Bean City’ available at https://www.thehindu.com/mp/2005/02/22/stories/2005022201010300
.htm

  Divya Shekhar. 2017. ‘Krishnaraja Wadiyar IV: The philosopher-king who laid foundation for modern Bengaluru’, Economic Times, 14 September, available at economictimes.indiatimes.com/articleshow/60510235.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst Divya Shekhar. 2017. ‘Date with history: The 107-year-old home in Bengaluru that is a tribute to Mysore’s first Dewan’, Economic Times, 12 January, available at economictimes.indiatimes.com/articleshow/56499881.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

  T. J. S. George. 2016. Askew: A Short Biography of Bangalore. Aleph Book Company.

  Janaki Nair. 2005. The Promise of the Metropolis. Oxford University Press

  9. Chidanand Rajghatta. 2004. ‘Bangalored: function – transitiveverb!’, Times of India, 23 July, available at http://timesofindia.indiatimes.com/articleshow/787599.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

  10. Thomas Friedman. 2005. The World Is Flat: A Brief History of the Twenty-first Century. Farrar, Straus and Giroux.

  Friedman’s theory of the modern world being flat has been discredited by many intellectuals as an overly simplistic idea that distorts the understanding of globalization and its workings.

  11. Amazon. 2004. Available at https://press.aboutamazon.com/news-releases/news-release-details/amazoncom-acquire-joyocom-limited

  12. Amazon. Available at https://www.amazon.jobs/en/principles

  13. Divya Shekhar. 2016. ‘Aga Ali Asker, the Persian horse trader whose legacy lingers on in Bengaluru’, Economic Times, 21 January, available at https://economictimes.indiatimes.com/magazines/panache/aga-ali-asker-the-persian-horse-trader-whose-legacy-lingers-on-in-bengaluru/articleshow/50667052.cms

  14. LinkedIn. Sachin Bansal, available at https://www.linkedin.com/in/sachinbansal/

  2 THE BANSALS GO TO IIT

  1. Mihir Dalal. 2018. ‘Why startups are exiting Bengaluru’s Koramangala’, Livemint, 3 September, available at https://www.livemint.com/Companies/LnV18zLsDCfIGcckMb9tsI/Why-startups-are-exiting-Bengalurus-Koramangala.html

  2. Chandigarh official website, available at http://chandigarh.gov.in/knowchd_gen_historical.htm

  Sunil Khilnani. 1997. The Idea of India. Farrar, Straus and Giroux.

  3. Shraddha Sharma. 2013. ‘Binny Bansal with YourStory in TechSparks2013’, available at https://www.youtube.com/watch?v=zPFptdATk_s

  4. Aditi Tandon, 2000, ‘Record number of city students make it to IIT’, Chandigarh Tribune, available at https://www.tribuneindia.com/2000/20000530/cth1.htm

  5. Chetan Bhagat. 2004.Five Point Someone. Rupa & Co.

  6. Anand Daniel. 2019. ‘Insights #22: Binny Bansal’, Soundcloud, available at https://soundcloud.com/insights-podcast-accel/binny-bansal-final-podcast

  7. Term used by Nicholas Carr in his book The Glass Cage. It refers to the philosophy of Frederic Winslow Taylor, a pioneer of the scientific management theory. Taylor was obsessed with improving the efficiency of labour and machines in factories and in industry overall.

  8. Shekhar Gupta. 2015. ‘Walk the Talk with the founders of Flipkart’, available at https://www.youtube.com/watch?v=ye2LLhZdHLM

  3 EXODUS FROM AMAZON

  1. Walter Isaacson. 2011. Steve Jobs. Simon & Schuster.

  2. Nick Bilton. 2013. Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal. Penguin.

  3. Ibid.

  4. Shekhar Gupta. 2015. ‘Walk the Talk with the founders of Flipkart’, available at https://www.youtube.com/watch?v=ye2LLhZdHLM

  5. Based on statements made in interviews to the author.

  Rachel Chitra, 2018. ‘Binny Bansal: Flipkart happened as Google rejected me twice’, The Times of India, 10 August, available at https://timesofindia.indiatimes.com/business/india-business/flipkart-happened-as-google-rejected-me-binny-bansal/articleshow/65346358.cms

  6. NextBigWhat. 2010. ‘Sachin Bansal: When Flipkart Was A Startup’, available at https://www.youtube.com/watch?v=sLvW_8xNXq8

  7. Based on statements made in interviews to the author.

  Binny Bansal. LinkedIn profile, available at https://www.linkedin.com/in/binnybansal/

  Neha Jain. 2018. ‘Working at Amazon was riskier than starting Flipkart – Binny Bansal’, YourStory, 10 August, available at https://yourstory.com/2018/08/working-amazon-riskier-starting-flipkart-binny-bansal

  8. Seattlepi.com. 2006. ‘Google hires Amazon’s search chief’, available at https://www.seattlepi.com/business/article/Google-hires-Amazon-s-search-chief-1195185.php

  9. Brennon Slattery. 2010. ‘Google Buys Jambool: Social Networking Battle Begins’, PCWorld, 16 August, available at https://www.pcworld.com/article/203335/google_buys_jambool_social_networking_battle_begins.html

  10. Krishna Motukuri. LinkedIn, available at https://www.linkedin.com/in/krishnamotukuri/

  11. Shraddha Sharma. 2013. ‘Binny Bansal with YourStory in TechSparks2013’, YourStory, available at https://www.youtube.com/watch?v=zPFptdATk_s

  12. Economic Times. 2018. ‘When Amazon got big fat bonus back from Flipkart’s Sachin Bansal’, 10 August, available at https://economictimes.indiatimes.com/news/company/corporate-trends/when-amazon-got-big-fat-bonus-back-from-flipkarts-sachin-bansal/articleshow/65352858.cms

  4 THE DESERTION

  1. NextBigWhat. 2010. ‘Sachin Bansal: When Flipkart Was A Startup’, available at https://www.youtube.com/watch?v=sLvW_8xNXq8

  2. Mihir Dalal and Shrutika Verma. 2016. ‘Flipkart’s Godfather in New York’, Livemint, 29 July, available at https://www.livemint.com/Companies/QD9B2wsY5WMMfYuLYi6jEM/Flipkarts-godfather-in-New-York.html

  3. Amazon annual report 2007.

  4. NextBigWhat. 2010. ‘Sachin Bansal: When Flipkart Was A Startup’, available at https://www.youtube.com/watch?v=sLvW_8xNXq8

  5. Based on statements made in interviews to the author.

  6. Neha Jain. 2018. ‘Working at Amazon was riskier than starting Flipkart

  - Binny Bansal’, YourStory, 10 August, available at https://yourstory.com/2018/08/working-amazon-riskier-starting-flipkart-binny-bansal

  5 UP, DOWN, HELLO, GOODBYE

  1. Bijoy Venugopal. 2015. ‘Flipping back pages with the first Flipkart customer’, Flipkart, 15 October, available at https://stories.flipkart.com/first-flipkart-customer/

  2. Aakar Patel. 2009. ‘When will the Brahmin-Bania hegemony end?’, Livemint, 28 August, available at https://www.livemint.com/Leisure/3u2QUPuXBEFPaBQXU2R8mJ/When-will-the-BrahminBania-hegemony-end.html

  Harsimran Julka and Radhika Nair. 2013. ‘Why young Aggarwals dominate India’s e-commerce start-ups’, Economic Times, 13 February, available at https://economictimes.indiatimes.com/tech/internet/why-young-aggarwals-dominate-indias-e-commerce-start-ups/articleshow/18454259.cms

  3. Archana Rai. 2010. ‘Flipkart: Country’s largest online bookstore’, Economic Times, 30 June, available at https://economictimes.indiatimes.com/flipkart-countrys-largest-online-bookstore/articleshow/6108317.cms

  4. Bijoy Venugopal. 2015. ‘Flipping back pages with the first Flipkart customer’, Flipkart, 15 October, available at https://stories.flipkart.com/first-flipkart-customer/

  Based on statements made in interviews to the author.

  5. Anand Daniel. 2019. ‘Insights #22: Binny Bansal’, Soundcloud, available at https://soundcloud.com/insights-podcast-accel/binny-bansal-final-podcast

  6. LetsVenture. 2018. ‘Story of Flipkart | Binny Bansal and Subrata Mitra at LI Bangalore’, available at https://www.youtube.com/watch?v=2LyLyV46vEo

  7. Based on statements made in interviews to the author.

  8. Binoy Venugopal. 2016. ‘Ambur Iyyappa – The Man Who Saw Tomorrow’, Flipkart, 11 January, available at https://stories.flipkart.com/ambur-iyyappa- human-erp/

  Based on statements made in interviews to the author.

  9. VCCircle. 2013. ‘Sachin Bansal on how Flipkart built a Rs 2,000 Cr business in 5 years’, 7 March, available at https://www.youtube.com/watch?v=Y70OZ6D4UPg&app=desktop

  6
THE KART GETS ROLLING

  1. Ministry of Corporate Affairs

  7 THE EYE OF THE TIGER

  1. Mihir Dalal and Anirban Sen. 2018. ‘Ashish Gupta, the angel who struck gold in Flipkart sale to Walmart’, Livemint, 11 May, https://www.livemint.com/Companies/J25VyjJIhvYZ8o7a5EMr0J/Ashish-Gupta-the-angel-who-struck-gold-in-Flipkart-sale-to.html

  2. Rohin Dharmakumar. 2012. ‘Can Flipkart Deliver?’, Forbes, available at http://www.forbesindia.com/article/boardroom/can-flipkart-deliver/33240/4

  3. Brian O’Keefe. 2008. ‘Tiger’s Julian Robertson roars again’, CNN, 29 January, available at https://money.cnn.com/2008/01/28/news/newsmakers/okeefe_tiger.fortune/index.htm

  4. Mihir Dalal and Shrutika Verma. 2016. ‘Flipkart’s Godfather in New York’, Livemint, 29 July, available at https://www.livemint.com/Companies/QD9B2wsY5WMMfYuLYi6jEM/Flipkarts-godfather-in-New-York.html

  8 ‘BINNY KE BATCH SE HO?’

  1. Harini Subramani, 2012. ‘Fund infusion values Flipkart at $850 million’, Livemint, 30 January, available at https://www.livemint.com/Companies/df5k5Pqn1h3UlB2PGhjyTM/Fund-infusion-values-Flipkart-at-850-million.html

  2. Amazon leadership principles which inspired the Bansals to institute similar ‘values’ at Flipkart.