The other Bansal bites the dust as Tiger takes firm hold of Flipkart

The new man in the hot seat, Kalyan Krishnamurthy, now has the headache of battling a rampaging Amazon while building and sustaining consumer, investor, and employee confidence. He hasn't done too badly so far though.
Written by Rajiv Rao, Contributing Writer

What a year it has been for Flipkart.

Exactly one year ago, Flipkart co-founder Sachin Bansal stepped down as CEO of India's largest e-tailer Flipkart. He revealed, later on that year, that a series of missed targets cost him his job.

Today, his namesake and co-founder Binny Bansal, who stepped into Sachin's shoes as CEO last January, has done exactly the same thing, and you can be sure that the company's grand overseer, majority owner Tiger Global Management, has ousted him for pretty much the same reasons.

Replacing him as per the edicts of Lee Fixel -- grand poobah of Tiger who has apparently taken special interest in India -- is former Tiger executive Kalyan Krishnamurthy, who was injected into Flipkart around August last year along with the wonderfully cryptic title of Category Design Organisation.

Some say that the die was cast right then as Krishnamurthy began to call the shots in earnest pretty much from the get-go, effectively sidelining Binny, and piloting the chariot headlong into the most critical sales event of the year during which companies make or break their numbers -- namely, the holiday festival period of Diwali.

It was a critical period for the company that had been foundering badly on a number of fronts.

At the time of Krishnamurthy joining Flipkart, Amazon was eating the Indian e-tailer's lunch. It was the only company to have gobbled up market share in the preceding year while Flipkart ceded ground.

In what was a sizzling ecommerce market with huge headroom to grow, Flipkart's revenue growth had actually declined, while Amazon's was racing along at a 150 percent clip. None of this was helped by Amazon's announcement that Seattle was plonking another $3 billion into its Indian arm.

This was all simply more chilli rubbed into recent wounds. For one, Flipkart had received significant valuation "haircuts" of up to 40 percent, which was widely reported and commented upon in the press and social media. This further strangulated its efforts to raise money.

Somehow, everyone suddenly began to see that the emperor had no clothes; the company had been motoring along burning vast amounts of venture money in order to finance huge losses at the rate of tens of millions of dollars per month thanks to its sole reliance on gross merchandise value. Almost half of its goods sold were smartphones -- which meant that there was no attention paid to product diversity and therefore customer loyalty. Plus, in an act of sheer lunacy, it shut down its mobile and desktop website and put all its chips on an app-only strategy which it has now rescinded.

Meanwhile, half of its much ballyhooed recent senior hires from Silicon Valley and McKinsey abandoned ship. The icing on the rotten cake was a publicly criticized attempt to delay the start dates of new hires from the country's best business schools. There was much housecleaning to be done if there was any hope of competing with a rampaging Amazon, and Krishnamurthy, who formerly worked with Procter & Gamble in a supply chain capacity and with eBay in finance before joining Tiger, was the one chosen to do so.

Krishnamurthy's immediate and enormous challenge upon taking over was to best Amazon during the intense sales event of the year -- Diwali -- and he seemed to have delivered. Flipkart's sales of 15.5 million units outsold Amazon's 15 million units, generating gross sales of at least 3,000 crore rupees during its five-day flagship sale Big Billion Days (BBD), although it's anybody's guess as to who generated the greater net revenue, if at all.

According to Mint, however, Flipkart was, by and large, comfortably ahead of Amazon in terms of sales. Considering its past woes and so-far anemic challenge to the Great White Shark from Seattle, this was probably enough to generate widespread euphoria within the company and amongst its investors, profits be damned (which, frankly, is still an unrealistic expectation for ecommerce in India).

We will never probably know this anytime soon, but I imagine that both the co-founding Bansals are a little more than relieved to be handing over their baby to Tiger. Binny now becomes group chief executive -- although who knows what that really means since Krishnamurthy has sole operating control over the main company. Sachin remains executive chairman. Both Bansals should be proud that they successfully built Flipkart into the household name that it is today while making a gigantic pile of cash for themselves, which is no mean feat.

More importantly, preserving that valuation and keeping pace with the Great White Shark is somebody else's headache.

That somebody is now Krishnamurthy, who will soon find out how unforgiving oversights, slips, miscalculations, and errors can be in this cut-throat market, while his recent success has already become a faded, distant memory.

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