In early February 2014, at a flashy event in Delhi, the companies jointly announced the launch of the Moto G phone. Flipkart had also prepared a national advertising campaign, which included featuring the phone on the front pages of newspapers. At midnight, several hours before readers would discover the ads, Flipkart launched the Moto G sale. Within five minutes, the company had sold 10,000 units, the quantity it had expected to sell in a month. The deluge of customers was so strong that, within twenty minutes of the sale opening, the site crashed. Another 15,000 units had been sold. At the Flipkart office, Sandeep Karwa was alarmed. He immediately called his boss Amitesh and said, ‘There’s been an attack on the site. Something’s wrong.’6
The huge demand had a flip side: it seemed that Flipkart would soon run out of stock. People were going to wake up in the morning to Motorola’s ad campaign. Going to Flipkart’s website would be like walking into an empty store – a disaster for the company. Acting on instinct, Sandeep’s team created a banner on the site, ‘Thank you for the overwhelming response. We are out of stock.’ The sale would resume later in the day. Sandeep was breaking all kinds of rules within Flipkart – a banner like that had to be approved by many bosses. But this was important. And there was no time to check with anyone. If he didn’t act instantly, Flipkart’s brand would suffer serious damage, which would probably put his job on the line.
The rationing turned out to be a smart move. It saved Flipkart from public embarrassment. Many customers were able to place orders in the morning. By the end of the day, Flipkart had sold more than 100,000 Moto G phones. Its six-month target would be achieved in one week.7
The launch of the iPhone in 2007 had transformed Apple’s business. It was the 2009 launch of the ‘Like’ feature for Facebook. For Flipkart, which had seen so many highs already, it would be this Moto G sale.
In February 2014, Flipkart raked in gross sales of $1 billion on an annualized basis.8 The company had achieved its goal with a year to spare. When Sachin had announced the outrageous target in early 2011, Flipkart’s gross sales were barely around $10 million. In less than three years, the company had grown by a multiple of one hundred.
15
ANOTHER BANSAL JOINS THE FAMILY
By 2014, only a few e-commerce companies had displayed the ability and stamina to stay the course. One of these was Myntra, whose CEO, Mukesh Bansal, had remained on friendly terms with Sachin and Binny. They had started their companies around the same time. Even though Flipkart was now the bigger company by a great measure, Myntra was successful in its own right.
It was the largest online seller of fashion in the country. Its website, with a pleasing interface, was considered superior to other shopping sites and enjoyed a loyal following. Its order delivery was speedy and reliable. Myntra was growing fast, generating healthy margins and continuously improving its service. But in 2013, when Myntra hit the market to raise fresh capital, it found few takers. Investors were generally pessimistic about the Indian economy. They told Mukesh that they would wait until the results of the national elections next year before investing further in the country. They were also wary of financing a startup that was competing with Flipkart, which seemed to have an inexhaustible supply of capital. It was deeply frustrating for Mukesh. In his own words, ‘The feedback from most of the investors was: “We are interested and we like what you are doing, but not now.” But we needed money then so “not now” was not very helpful.’1 By the end of the year, the company had just a few more months’ worth of cash left. Finally, in early 2014, it persuaded Premji Invest, the family office of Wipro founder Azim Premji, to invest in the company. Myntra was saved from disaster, but for Mukesh the experience had been disconcerting.
By this time, Sachin Bansal had already reached out to Mukesh. Their common investors, Tiger Global and Accel Partners, had been encouraging Flipkart to buy Myntra. They reasoned that Flipkart’s war with Amazon, which had just begun, would be long and draining. It made little sense for the Flipkart investors to continue backing two companies doing similar things. But initially, Sachin wasn’t convinced. He said to the investors, ‘We will win in fashion regardless. Flipkart is a technology company. We don’t need acquisitions to grow our business.’
A few months later, Sachin came around to his investors’ proposal. By early 2014, a couple of Flipkart executives were championing it as well. Vaibhav Gupta, an IIT Delhi graduate who had become the seniormost finance leader under Kalyan Krishnamurthy, and Ankit Nagori, who had redeemed himself by developing Flipkart’s fashion business, separately made the case for the Myntra buyout. Flipkart’s fashion sales had multiplied in the last year. Still, Myntra had held its own and maintained its leadership position in the category. An alliance between the two would be formidable – perhaps essential – as fashion was a category that Flipkart simply had to win. Not only did fashion allow for the highest margins, many business analysts had predicted that it would become the largest category in e-commerce within a few years. And this was where Amazon was vulnerable – in the US and other international markets, fashion retailers had continued to thrive despite Amazon’s overall dominance.
The discussions between the two companies lasted nearly six months. Finally, in May 2014, the merger was finalized. At a press event in Bangalore, Mukesh went on stage to say that he had an ‘exciting’ announcement to make. After a pause, he added, ‘Let me introduce two colleagues of
