A few weeks before the Big Billion Days sale in October 2016, Walmart, the world’s largest retailer and a bitter rival of Amazon, had approached Flipkart. In recent years, Walmart had considered the Indian market warily, unable to decide whether its promise was real or illusory. The company had already been burnt once when its joint venture with Bharti Enterprises had collapsed in 2013 because of corporate governance issues and poor performance.4 Besides, the biggest obstacle still seemed impregnable: the Indian laws preventing a foreign ‘multi-brand’ retailer like Walmart from entering on its own. But gradually, Walmart executives resumed their pursuit of opening shop here, encouraged by Narendra Modi’s eagerness to attract foreign investment.
At the same time, Walmart, in its home market, had assumed a new, aggressive approach to adapt to the force that threatened to upend its business: the internet. For many years Walmart had been criticized for lacking a sound e-commerce strategy even as Amazon was rapidly increasing its share of the retail market in America. While Walmart was still the far bigger company, every year the once-laughable idea that it could one day be overtaken by Amazon seemed less ridiculous. In 2016, Walmart significantly increased its online investments in the US and began an acquisition spree of internet startups. Its biggest deal came in August 2016 when it purchased Jet.com, an e-commerce firm started by Marc Lore, who was reputed to be one of the very few entrepreneurs with the will and ability to take on Jeff Bezos.5
In India, the combination of Flipkart’s remarkable rise and the seemingly everlasting promise of the market seemed attractive to Walmart. For now, the American firm was interested only in a minority investment in Flipkart. Senior executives from the two companies met at their respective headquarters in Bangalore and Bentonville, a small city in the southern American state of Arkansas. But the talks leftWalmart unimpressed by Flipkart’s sales growth, margins and other metrics. The meeting ended in disappointment.6
The rejection by Walmart, Alibaba and other investors was humbling for Flipkart, for Lee, and most of all, for the Bansals. Until the end of 2015, Flipkart had seemed destined to become a massive company. It had handpicked investors and set the terms of engagement. Now, while it wasn’t out begging for money, its aura had considerably diminished. As had the exhilarating pull of building the $100 billion enterprise.
At this juncture, it was all about survival. For Flipkart’s investors, especially Lee, it was about coming out unscathed. Since he first invested in Flipkart in early 2010, Lee had poured roughly $1 billion into the company, including some $600 million in the span of just one year starting in July 2014. This was an unconventional bet by any measure.7 Any venture capital firm typically invests large amounts of cash only in specific stages of a startup’s life to reduce its risk. But with Flipkart, Tiger Global had led a majority of all the funding rounds. Lee’s breaking with the norms of venture capital investing had been influenced by his conviction in the entrepreneurial genius of the Bansals, especially Sachin, and the evident promise of the e-commerce market in India. By the end of 2016, both these convictions were shaken. Not only had Sachin faltered, Lee had grossly underestimated the time and capital it would take to create a successful e-commerce business.
The $100 billion dream had primarily been Sachin’s; Lee had backed Sachin unequivocally because the former stood to be one of its biggest beneficiaries. But barely eighteen months after Sachin had first imagined a $100 billion company, his dream had died even though he didn’t know it at the time. In early 2016, after Lee had received alarming feedback about Sachin and the Flipkart management being out of their depth, and after those views had been corroborated by a shocking decline in Flipkart’s business, Lee had made up his mind: he had to secure an honourable exit.8 As soon as possible. His career, his reputation, his wealth, his dreams, rested on it.
In this environment, there was just one man who could deliver him from ruin: Kalyan. Unlike Sachin or Binny, Kalyan had no grand ideas about Flipkart. He simply wanted to turn it into an efficient, fast-growing retailer that consistently expanded its business and delivered higher valuations. It was this approach that was best suited to Lee’s plan of securing the fastest possible way out of Flipkart.
It was a happy coming together of two minds: Lee’s need to secure an exit and Kalyan’s burning desire to become the top man at Flipkart. It would be a stunning rise for Kalyan, from a little-known finance manager at eBay to the highest position at India’s premier startup. It would also be the harshest rebuke for Sachin, who detested Kalyan and had opposed his re-entry into Flipkart.
In early 2016, at a panel discussion, Sachin had passionately spoken about how important it was for entrepreneurs and their investors to be ‘aligned’. ‘If investors are not aligned with what you want to do, you will have a hard time ... You need to be very, very clear to them at the start itself that this is exactly what I’m going to do, this is my playbook, this is what I believe in, I don’t believe in this. If you like this, come in as an investor. [Or] you can find somebody else, I can find somebody else.’9
To use his own word, Sachin and Lee were no longer ‘aligned’. And Sachin was indeed having a hard time.
As he watched his company slip away from him, Sachin cut a desolate, sullen figure.
