Once the company was willing to lower its asking price, discussions moved quickly. By the end of February 2017, Flipkart was confident that a deal was within its grasp. Talks with nearly half a dozen investors – all marquee firms like Google, Microsoft, Tencent and Paypal – had reached an advanced stage. By early April, the fund raise was finalized. Microsoft, Tencent as well as eBay had together agreed to invest $1.4 billion, valuing Flipkart at $11.6 billion.
Apart from Flipkart’s core business, the new investors had put a high value on the fashion platform Myntra, which was pulling off the rare feat of reducing losses while growing faster. They were also excited by the potential of PhonePe, which looked set to become a major player in the booming payments space. As part of the deal, Flipkart acquired the India business of eBay. It brought to an end a long struggle for the American company. Years before Amazon launched in India, eBay had kicked off in 2004, buying up a local startup called Bazee. Since then, however, eBay India had been tracking its parent company’s declining fortunes. Once considered superior even to Amazon, eBay was now – and had been for several years – seen as a second-rate company. In India, it had failed to get its act together despite the early start. EBay had considered buying Snapdeal twice but couldn’t summon the courage to move decisively. It now had to settle for a meagre price of $250 million for its India business.
But the funding round was primarily a vindication of Kalyan’s impact at Flipkart as well as a win for Nitin Seth, who had played a key role in formulating the pitch that the company made to investors. It was also a victory for the company’s founders. Sachin and Binny declared the round a ‘landmark deal’ for ‘Flipkart and for India’, and a ‘resounding acknowledgement that the homegrown tech ecosystem is indeed thriving’.19
Sachin, in particular, seemed energized by the deal. As soon as Kalyan had been promoted to CEO, Sachin had begun to assert himself again with force. He would demand specific data and business metrics from the sales, marketing and technology teams and comb through them for any signs of weakness. At a board meeting in early 2017, he found fault with Kalyan. ‘Sales from this set of customers has gone down. What’s the reason for it?’ he said to the CEO. The customer set Sachin referred to was small and its significance wasn’t apparent. Perplexed, Kalyan could give no answer.
Sachin would accuse Kalyan of not sharing data with him on a regular basis. He would also ask pointed questions to Nitin – whom he considered Kalyan’s proxy – about the rising attrition rate in the engineering team. It was an extension of his favourite theme: promoting technology. He admonished both Kalyan and Nitin, warning that Flipkart would lose its ‘innovation culture’ if it kept losing engineers.
But Nitin was confident that he was on safe ground. He had got off to a good start at Ekart, his primary responsibility at that point. When he had been given charge of the logistics service in January 2017, his mandate had been to reduce costs. He had accomplished this by abandoning wasteful automation efforts and cutting the share of orders that Flipkart outsourced to third-party couriers. He was looking forward to the board meeting at the end of April. Ever since he had joined the company, Nitin had been lauded by board members for his boldness and competence.
This time, though, instead of praise, what awaited him was censure. Lee started the inquisition, which turned into a barrage of criticism, knocking Nitin off his feet. ‘Our delivery times have gone down. Our service quality has deteriorated. What have you been doing?’ Lee demanded.
Others joined in. ‘Engineering attrition is high because of the rot in the culture.’ And it was Nitin who was responsible, they said.
Unprepared for this turn of events, Nitin had no comeback.
By the end of the meeting, Nitin had been informed that his role was being cut. He was asked to hand over Human Resources to his boss, Kalyan. This was yet another shock. Only last year the Bansals had resisted Kalyan’s return partly because they were worried about the influence it would have on the company’s ‘culture’. Now, they were fine with Kalyan taking charge of HR!
Nitin had no option but to agree. Still, the backlash against him continued. Even his equation with Kalyan seemed to change overnight. A few days after the board meeting, Kalyan advised him to resign. ‘The board has lost faith in you. You should leave,’ said Kalyan.
‘Have you gone mad!’ Nitin replied. He couldn’t understand what was happening. Only four months ago he had been promoted to COO, the second-most powerful position at the company. He had helped prepare the strategy for the critical fund raise and cut Ekart’s costs. He was in the process of moving his family – his wife and three children – to Bangalore from Gurgaon. He had enrolled his daughters in a new school. He had spent lakhs buying expensive furniture for the new house. Everything had been going so well. Then came this sudden thunderbolt.
Nitin refused to resign. He was a veteran corporate leader, well respected in the software business in India, had led organizations that employed thousands of people. And he was COO of Flipkart, where he had thrived. Even if somehow someone at Flipkart had decided that his performance hadn’t been satisfactory, no company would be insane enough to lose faith in its second-most powerful executive after just four months. He would fight for his job.
Over the next few days, Nitin tried
