While Sachin had always believed in the supremacy of technology, he did recognize – especially at the time Flipkart was founded – the importance of having a strong operations function. In a 2010 interview with the news website vccircle.com, he had emphatically stated that e-commerce was a ‘very execution-heavy’ business.6 What he meant was that success in e-commerce was determined to a large extent by a firm’s ability to instil discipline among its suppliers, run warehouses, operate a logistics fleet and other such labour-intensive tasks that had little to do with writing code. But by 2015, Sachin was so obsessed with making Flipkart a technology company that he displayed a revulsion towards most things real, or physical, that could not be governed by algorithms. To him, the sales team that had run the company for the last two years were now little more than ‘relationship managers’ with brands rather than executives with much-needed business acumen. Sachin wanted everyday decisions – which products should Flipkart buy, in what quantities and at what prices – that had earlier been taken by sales executives to be made the domain of the technology team. It was like asking literature graduates to become accountants.
The already-weak unity between the technology and sales teams now disintegrated. Punit’s role was perhaps decisive here. Sachin and Mukesh had given Punit and his team almost complete control of Flipkart. Punit was only too happy to take up the mission of converting a retailer into a technology firm with Silicon Valley mores. He had become the most important executive at Flipkart after the three Bansals and he ensured everyone knew that. Ever since he had joined Flipkart in March 2015, Punit had been eagerly expanding his turf. He introduced some of the rigorous technology practices and procedures of American technology companies at Flipkart. Borrowing a practice from his former employer, Google, Punit started a weekly beer rendezvous for Flipkart employees. He worked as per a strict regimen, and refused to entertain anyone on its outside. His time was precious, every minute of which had to be utilized productively. Colleagues couldn’t just walk into his office. Even senior leaders had to wait their turn to meet him. He rejected the timeless custom of Indian Standard Time. If someone was late for a meeting with him, he would openly admonish them, regardless of their position.
Colleagues who got to know him closely claim that Punit came across as a man with two diametrically opposite personalities. Outside the office, he was a warm, garrulous guy with whom one might enjoy getting a drink. At work, he was almost compulsively disagreeable, too enthusiastic about promoting himself, uncompromising in his dealings with the heads of other divisions. He was especially dismissive of the sales executives, whom he saw as neanderthals.
Taking their cue from Punit, his juniors in the technology team, too, would treat their sales counterparts with contempt. One senior sales executive recalls that product managers, many of whom had barely spent a few months at the company, would openly insult sales officers. ‘The tech–product guys had almost stopped holding meetings with our team. And when the meetings would happen, we would come back demotivated,’ he claims.
The disunity between the technology and sales teams gradually led to a mess. Decisions about new category launches would be delayed for months. If the sales team wanted to start a new category, they would ask the technology team to prepare the required infrastructure on the Flipkart app. Inevitably, the engineers would respond, ‘We’re following our own roadmap and we’ll only work according to that.’ Flipkart had prepared a plan to start selling groceries at the beginning of 2015. For nearly six months, the plan remained on paper, unimplemented.
In such an environment, the company’s sales strategy came to be defined by a comical lack of coherence. Sachin had promoted his new vision for Flipkart as one that would set up the company for long-term success. Astonishingly, one of Flipkart’s first moves that year had been to voluntarily forgo the books category, a move it knew would allow Amazon to dominate the category. This was actually a decision that Kalyan Krishnamurthy had made before returning to Tiger Global. For nearly two years, Kalyan had been pushing Flipkart to reduce its budget for books. He had been arguing that the category was a financial wasteland, that customers who bought books were too small in number and rarely ever purchased other goods from the company. Finally, at the end of 2014, his wish was granted by the Bansals. By April 2015, the company’s books sales, in real terms, had dropped by half. Other weak categories had also been marked as toxic: laptops, electronic storage devices, and so on. Flipkart lost cash on each order in these ‘non-strategic’ categories. Binny believed that in a few years’ time, laptops would become altogether redundant, replaced by large-screen phones and tablets. He didn’t care if Amazon came to monopolize laptop sales – soon the category itself would die. Accordingly, laptops and its ilk were wound down along with books.
Another instance of Flipkart’s disjointed approach was its sudden decision to prioritize sales volumes. Flipkart had earlier set out to achieve ₹3,000 crore in monthly sales by the end of 2015, which meant growing by more than two and a half times in one year. But sometime in the middle of 2015, the Bansals suddenly decided to focus on growing the number of orders instead of sales value. They reasoned that volume, not value, was a truer indicator of demand, and this would grow
