Amazon launched its India website in the first week of June. On 4 June 2013, the pricing team at Flipkart worked through the night. It was worth the effort. Amazon launched at midnight, and by 4 a.m. Flipkart was matching its prices. The next day, Flipkart executives noted with satisfaction the tweets from users pointing to the pricing parity between the two sites.
Flipkart had ensured Amazon’s launch was rather subdued. But this was just the start. Amazon was here to stay. It was going to be a long war.
IN 2013, INDIA’S economy was struggling. After overseeing the country’s most prosperous period in its first five-year term beginning in 2004, the Congress-led government under Manmohan Singh was mired in corruption scandals. In the final phase of its second term, it had run out of ideas; its end couldn’t come fast enough. The rupee had slumped, inflation was high and economic growth had slowed down. The expansion of the economy in the previous decade seemed like a fleeting surge out of a morass, only for it to be dragged back in when its limited energy was exhausted. The government’s combative taxation moves had put off businesses, which had also been complaining about a ‘policy paralysis’ for years.2 Investments by companies, many of which were also plagued with internal problems, dropped. Big business was recovering from the excesses of the 2000s. IT and telecom companies, the standout performers of the previous decade, showed lacklustre performance. Narayana Murthy had returned to Infosys, but he couldn’t seem to halt the company’s slide into mediocrity.3
E-commerce was no different. Out of the fifty-three e-commerce firms that had received venture capital since 2010, less than a dozen managed to raise more money.4 Soon, many would vanish, either forced shut or sold at fire-sale prices.
Out of this gloom, a new corporate star was emerging: Flipkart. By the middle of 2013, its sales had nearly doubled in just six months. Its finances were improving rapidly. Its service had recovered its earlier excellence. Customers seemed to love the brand again; lakhs of new users were signing up every month. Flipkart was now an established retail brand. It was no longer just a seller of books that happened to peddle other goods. In fact, books now contributed to less than a fifth of the company’s sales by value. The diversity in the business greatly enhanced the company’s standing with investors, as did its improving finances.
In July 2013, Flipkart raised a new round of capital, pulling in as much as $200 million. Its existing investors Tiger Global, Naspers, Accel Partners and Iconiq Capital, all chipped in. There was a party at Shaktipeeth. Senior leaders, including Kalyan, danced. In an emphatic statement, Sachin declared, ‘It’s a big validation of Flipkart and Indian e-commerce. There have recently been a lot of sceptics in the media and in business circles who have questioned – rightly so – whether e-commerce is healthy and whether Flipkart is running the way it should be, whether it has the right strategy. This event should put those questions to rest.’5
Three months later, the number of sceptics would reduce further. In October, Flipkart announced another injection of cash – this time it had raised $160 million from four new investors, Dragoneer Investment, Morgan Stanley Investment Management, Sofina and Vulcan Capital Management.6 By the close of financial year 2012–13, Flipkart’s losses had soared to ₹644.37 crore. But investors were taken by the growth in revenues, which now stood at ₹1,163.1 crore.7
Finally, Flipkart’s valuation jumped to more than $1 billion. It was a monster in India’s tiny startup ecosystem. Earlier that year, Redbus, a startup that sold bus tickets, had been bought by Naspers. Redbus was one of the biggest and most successful startups in India. Its sale price was $135 million, only about a tenth of Flipkart’s valuation.8 Flipkart was in a league of its own. Its two recent funding rounds had been orchestrated by Lee Fixel – purveyor of legendary investment stories – and Sachin. Although, by this point, the Flipkart story was writing itself.
14
HELLO, MOTO
When temporarily stepping back from his role, Sachin Bansal had imagined he would return to the driver’s seat in the near future. But that wasn’t to be. He ended up spending much of 2013 outside Flipkart. The Enforcement Directorate’s inquiry proved to be demanding. It required him, as Flipkart’s representative, and Tapas Rudrapatna, as WS Retail’s delegate, to make several visits to Delhi. There, government officials grilled the two about the relationship between Flipkart and WS Retail. But by the end of the year, the inquiry was losing its intensity. Sachin gradually became convinced that the company would be let off. The structure Flipkart had created for itself and for WS Retail was a classic example of abiding by the ‘letter of the law rather than the spirit’.1
Apart from the ED’s inquiry, Sachin had also been preoccupied with the fundraising exercise that not only secured Flipkart’s immediate future but had also elevated it to the status of India’s most outstanding young company. The fund raise had also resulted in a tremendous increase in Sachin and Binny’s wealth. Back in Chandigarh, Sachin built a large house for his family and bought another Mercedes. The house was a statement of his prosperity, an indisputable mark of high status
