Sachin, on the contrary, receded from the daily administration at Flipkart. As much as the General Atlantic pullout had shocked Flipkart’s investors, Sachin took it the hardest. It was his first big failure, a blunder that could have brought about the end of Flipkart. While he could blame General Atlantic, the responsibility for the fiasco would still have to be borne by the CEO. There was no escaping the reality that Flipkart had been on the brink. It was now painfully clear to Sachin that despite his company’s substantial achievements, it was ultimately at the mercy of investors – outsiders to Flipkart. His dream of fetching the $1 billion seemed to have been crushed. His confidence was shot, his stature diminished. He continued to be the face of the company and to lead the fundraising discussions. But it wasn’t until the end of 2014 that he would recover his former influence over Flipkart’s everyday affairs. It was evident to those who worked closely with Sachin that he had taken the blunder personally. ‘He was crushed,’ recalls a former Flipkart employee. ‘Who had seen that kind of success so quickly before? And then suddenly to come so close to seeing it all collapse ... he couldn’t deal with it.’
In 2016, Sachin referred to the chastening experience at a panel on entrepreneurship at IIT Bombay: ‘One [piece of] advice I would give to [entrepreneurs] is that you should raise funds when you can rather than when you have to. Which means that you don’t get into a situation where your business needs funds and you have to really look for investors. Don’t push the company to that point. Raise funds when you can.’2
At General Atlantic, history would repeat itself. In the mid-nineties, the firm had lost out on investing in Amazon before the American online retailer listed its shares. Amazon had chosen an upcoming venture capital firm in Silicon Valley over General Atlantic.3 It turned out to be a costly miss for the fund: Amazon’s shares vaulted after the company went public a few months later. This time, with Flipkart, it was General Atlantic that had chosen to stay out, and the miss wouldn’t look any better for it.
AFTER SUPPLYING THE emergency funds to Flipkart, Tiger Global and Accel Partners began to reduce their risk elsewhere. By now, these two firms had invested in many e-commerce startups. One of these was Letsbuy, a website that sold electronics goods. Letsbuy had rapidly established a large business mostly by luring customers with heavy discounts. Occasionally, the company was even generating higher monthly sales than Flipkart’s electronics category. BusinessWorld magazine had decided to profile the company for its cover story.
Since Letsbuy had burned a lot of cash, its founders Amanpreet Bajaj and Hitesh Dhingra needed the next round of capital to carry on. Lee Fixel had told them he would back the company. After talks with Lee, the Letsbuy founders pulled out of discussions with other investors. But suddenly in January, Lee told them that he had changed his mind.
While Letsbuy was showing impressive growth, it had major flaws. Its logistics and warehousing systems were a mess. Its technology platforms were substandard. Some employees had even complained to its board of directors that the company was badly run. Lee and the other Letsbuy shareholders suggested to the founders that they sell the company to Flipkart. With little cash leftand no new investors on hand, they had no real choice. Flipkart bought Letsbuy in a distress sale in February 2012.4 BusinessWorld had to pull its cover on deadline day. Within a few months, Flipkart promptly shut down the Letsbuy business.5
By early 2012, e-commerce in India had become a crowded space. There was eBay, and even though it was flailing, continually changing its strategy and leadership team to little effect, it was still a big name. Over the past eighteen months, a large number of domestic e-commerce startups had entered the fray. But most of these startups lacked the sincerity, ability and resources to last. None had built the kind of sturdy infrastructure of warehousing, logistics and technology that Flipkart had developed. They kept only one weapon in their arsenal: discounts. Every month a new website, fresh from receiving a dose of capital, sprouted up, bearing goods at massive discounts, only to collapse as soon as the money ran out. One could argue that this was like a self-fulfilling prophecy. But during a funding boom, when investors move in a herd, logic is swept aside by the momentum of the crowd; whatever investors and startups decide in the moment is right – until it’s not. It was Flipkart’s takeover of Letsbuy and its ensuing shutdown that suddenly made investing in e-commerce startups a questionable gamble. Over the next two years, dozens more e-commerce startups would fold up.6
Few survived the capital famine. Among the ones that came through were Infibeam, Snapdeal, Shopclues, BigBasket, Myntra and the Rocket Internet group.
Infibeam, whose founder Vishal Mehta had come so close to convincing the Bansals to give up their dreams for a pittance, were now far behind in the game. The Ahmedabad-based firm was only a fraction of Flipkart’s size.
It was Snapdeal that was emerging as a serious rival to Flipkart. Snapdeal was founded by Kunal Bahl, its CEO, and Rohit Bansal, the COO. Of the two, Kunal was the face of the company. Born into a business family, Kunal had studied at the Delhi Public School. He had met Rohit when they were teenagers. Kunal, who exuded the easy confidence born of a privileged upbringing, came across as a charismatic man. Rohit, a small-town boy, was awed by him. Soon, Kunal converted the vegetarian Rohit into a meat-eater. Kunal
