Karthik, a genial, energetic PR executive, was excited by the prospect of the Forbes story. He thought it would be a nice way for him to begin his stint at Flipkart – a splash on the cover of a respected magazine. He convinced Sachin and Binny to grant full access to Rohin. Initially, the interviews went well. Over a few weeks, Rohin met Flipkart leaders including Mekin Maheshwari, Ravi Vora and the company’s CFO, Karandeep Singh. They declined to disclose exact details about Flipkart’s valuation, revenues and losses, as private companies do, but the interviews still covered a wide range of topics. When Rohin met Sachin, the line of questioning took a different turn altogether. Rohin challenged the Flipkart CEO about the company’s accounting practices, its exclusionary corporate culture, and the disproportionate influence of Sachin’s IIT Delhi mates. His interrogation would make it seem as if a litany of problems assailed Flipkart and the way it was run. Another meeting was arranged, this time between Rohin and Binny, who was accompanied by Karandeep Singh. That didn’t go well either. At the end of the interview, Karan told a colleague, ‘This guy has an agenda. He wasn’t interested in hearing out what [Binny] had to say.’
‘Can Flipkart Deliver?’ hit the stands in June 2012.2 The story turned out to be so outrageous that it shocked the Flipkart executives even though they had anticipated by now that it wouldn’t be an enitrely flattering piece. The article presented Flipkart as a sinister, unethical workplace run by a coterie of scheming IIT Delhi graduates. It painted the Bansals as megalomaniacal entrepreneurs for believing they could build a large e-commerce business in India in record time. Their ‘hubris and foolhardiness’ might drive the company to ruin, the article prophesied. It declared that Tiger Global’s investment practices were unscrupulous, its strategy dubious. It even implied that Flipkart was cooking its books. The photograph accompanying the piece showed four Flipkart executives sitting in a delivery van wearing grim, almost angry expressions. Forbes had taken several photographs; its final choice was revealing. Sachin was enraged. ‘Yeh kya bakwas hai! What the hell is this!’ he said to Karthik.
The story spread quickly on social media. Like a good conspiracy theory, it showed enough ‘research’ and ‘evidence’ to sound compelling. It was the talk of India’s startup world for months. Ironically, for a piece that later turned out to be laughably unrealistic, it was one of the last stories by a business magazine in India that would leave a profound impact on the subject it had covered.
At Flipkart, the entire senior management team got together to figure out how to respond. Ravi Vora, who was on vacation in Singapore, had to get on a conference call with his colleagues in Bangalore. Mostly, they vented their anger at the hatchet job. But the immediate danger facing Flipkart was that the story would put off the dozens of senior and middle managers that the company was in the process of hiring. Later, in an unusual move, Karthik convinced Sachin to fire off a long email to the Forbes editor protesting that Flipkart had been misrepresented. The email alleged that Forbes had published the piece because Homeshop18, a rival of Flipkart, was owned by Forbes’ parent firm. Sachin had requested that his email be published on the Forbes website, which the magazine did, followed by a rejoinder by the Forbes editor.3 The candidates Flipkart wanted to hire came to their interviews with the Forbes issue in hand, demanding to know why they should join a company with a tarnished name. Flipkart executives pointed to Sachin’s email on the Forbes website and the messages of support on social media from customers who continued to believe in the company. Despite their misgivings, many of these candidates agreed to join.
The company had averted immediate disaster, but the story would leave a deep scar. Flipkart, having only received positive coverage until that point, was in a state of shock for weeks. Flipkart leaders were forced to conduct all-employee meetings to restore calm. They pointed to the glowing customer reviews that were posted apparently in response to the company’s negative portrayal. It was a non-sequitur – problems related to corporate culture, business models and accounting have no direct link with customer satisfaction – but Flipkart needed its workforce to regain composure. For nearly eighteen months, its leaders had to field questions about its work culture from the candidates they interviewed. Several talented executives abided by Forbes’ portrait of Flipkart and refrained from joining the company.
BY THE MIDDLE of 2012, Flipkart decided to raise its next round of funds. Despite the General Atlantic setback, Flipkart’s sales had continued to rise rapidly. The company had launched many new categories such as fashion, large electronics and beauty products. But the emergency funds from Tiger Global and Accel Partners now needed to be supplemented. The next round of capital would have to be supplied by new investors – Tiger and Accel had invested far more than they had anticipated. Besides, Flipkart would need more cash injections in the future. It was essential to gather a consortium of investors.
Lee Fixel had introduced Sachin to Naspers, a South African media and internet conglomerate. Naspers had invested in internet companies in Africa, Asia, Europe and Latin America. Its best-known holding was Tencent, a large Chinese messaging and gaming startup. Lee was familiar with Naspers’ executives; the company had bought into a few Tiger Global-held companies such as Allegro, a Polish e-commerce business, and Mail.ru, a Russian internet conglomerate. Naspers also had some presence in India already. It owned an online travel company called Ibibo and another e-retail company, Tradus. It was eager to fund more startups in the country. (In 2008, when Flipkart was just a few months old, Ashish Kashyap, a Naspers representative, had met the Bansals in order to explore an investment. But after just one meeting, Naspers had decided against pursuing a deal at that
