by Mihir Dalal
Yet again, when they were asked, Kalyan and Sameer Nigam reaffirmed their opposition to Sachin’s nomination. It was a strange scenario. Sachin had co-founded Flipkart and had led the company as CEO for most of its existence. He had also ostensibly played the leading role in the negotiations with Walmart and Amazon. To any outsider, it would seem obvious that Kalyan and Sameer were lower than Sachin in the pecking order. It would even seem obvious that Sachin wielded more authority than them. But this wasn’t the case at all. This was Flipkart, a company that had always invented its rules. Paradoxically, it was Kalyan and Sameer who, in effect, had the power to choose their boss. They exercised that power without inhibition, and for the second time in months, Sachin’s candidature was rejected. Over the years, hundreds of people had found to their shock that titles were of little significance at Flipkart. It was now Sachin’s turn to learn this difficult truth.
IN APRIL 2018, Flipkart’s discussions with Walmart moved to the penultimate stage. Walmart’s audit of Flipkart’s financial records was nearly complete. Now Sachin made another attempt to revive the engagement with Amazon, at the prompting of Masa Son. The two companies restarted their parley in haste. Sachin was confident that his chances of becoming CEO were high if Amazon bought Flipkart. He believed that he had established a cordial rapport with Bezos, who saw Sachin as a visionary entrepreneur in his own image. Even publicly, Amazon’s previous antagonism towards Flipkart seemed to have ebbed. In a newspaper interview published that month, Amit Agarwal called the Bansals ‘missionary entrepreneurs’.9
But the biggest obstacle remained: Lee’s concerns about antitrust action against the proposed merger. By the middle of April, Flipkart had made its decision, bringing an end to the protracted auction. Lee had persuaded the other Flipkart investors to reject the Amazon proposal in favour of Walmart. A fellow Flipkart shareholder who was ambivalent about the choice, expressed his admiration at Lee’s ability to ‘win friends and influence people’. There was a hint of resentment. By now, Lee had also decided to retain a small holding in Flipkart. If Walmart ever took Flipkart public, the thought of being in the audience was too painful – this was his career’s most significant work.
In the third week of April, Lee and the Flipkart team were scheduled to visit Bentonville for one last round of talks to finalize the sale. Until now, there had been no major hiccups. There was no reason to believe that this meeting wouldn’t go well.
A few hours before the Flipkart team was to arrive, Sachin landed in Bentonville by himself. It was his final chance to make his case. He had decided to meet with Doug McMillon and Greg Penner to convince them that it was in Walmart’s best interests to allow him considerable leeway in running Flipkart. Though the Flipkart board had rejected his candidature, Sachin believed they had no authority to decide his future. Flipkart’s takeover was imminent; surely Walmart, in its capacity as the new owner, would want to have the final word on crucial matters such as this. After Sachin’s meeting with Doug and Greg, the respective teams were left to put together a final transaction agreement.
Sachin told the Walmart officials that he wanted contractual guarantees about his role at Flipkart. He insisted on one particular right: the privilege to appoint the CEOs of Flipkart, Myntra and PhonePe. It wasn’t that Sachin wanted to make any changes right now. But he believed he should certainly have the right to do so in the future. He had no doubt his demands were righteous. Not only had he founded and nurtured Flipkart, by doubling his ownership in the company he was proving his commitment to stay the course. There was no other individual who had more at stake. He was also the company’s executive chairman – if the position had any real meaning, he certainly deserved this right. Though Sachin had accepted that he lacked the support of the Flipkart team to become CEO at the moment, he believed that it was natural for him, as co-founder and chairman, to inherit this right from Binny, who was on his way out. In addition, Sachin asked for superior voting rights to be given to minority shareholders in the matters of strategy and related-party transactions. These rights would ensure that Walmart held lesser voting power than its numerical ownership represented. Given that Doug McMillon had seemed willing to let Sachin have the freedom to run Flipkart, Sachin was sure he could obtain these rights.
When Sachin expressed his demands, the Walmart officials were startled. These details hadn’t been part of the negotiations so far. They now referred the matter to Lee, Binny and the rest of the Flipkart team.
The Flipkart officials were furious that Sachin had inserted new demands at this juncture when all that was leftto do was for the two companies to sign the agreement. They had even planned a celebratory dinner that night in anticipation of consummating the prolonged affair. Lee believed that Sachin’s demands could wreck the sale that had been so painstakingly put together over the past seven months. He was convinced that neither Walmart nor the Flipkart team was going to yield so much ground to Sachin. With victory so close, the great escape within his grasp, Lee sprang into action. He wouldn’t let anything ruin this buyout, even if it meant having to throw Sachin out of Flipkart. It would eventually have to be done in any case, as it was crucial that Kalyan continued to run the company. Lee was certain that only Kalyan could oversee Flipkart in a satisfactory manner. Sachin would have to be sacrificed. He had become too unreasonable.
But removing Sachin wouldn’t look good either, as he had been an active participant in the talks with Walmart. Walmart executives would surely be unsettled by the exit of both the Flipkart founders. To ease their doubts, Binny would have to abandon his desire to quit Flipkart, if need be. Binny had kept himself on the periphery of the merger negotiations for the past few months. Now, he was thrust back onto the battlefield. Like Sachin, Binny stood to make more than $1 billion from the Walmart sale. Just a few weeks more and this astounding wealth would be his, at least on paper. As he weighed his options, this became the most important consideration for Binny. Unlike Sachin, he had little inclination to toil for another decade or longer at Flipkart. He also truly believed that Sachin wasn’t equipped to run Flipkart as CEO. The debacle of 2015 had convinced Binny that Sachin lacked the discipline and rigour to run a company of Flipkart’s size. Binny had so far remained silent about Sachin’s demands; now he would have to reveal his stance. It was unavoidable, as Sachin was counting on the backing of his co-founder in his endeavour to extract the desired concessions from Walmart. When he had taken over as CEO in January 2016, Binny had surprised everyone who knew him by keeping Sachin out of the company’s affairs. Two and a half years later, he would reprise this act, even if it was with some reluctance.
Back at the Walmart offices, Lee, Sachin, Binny and the rest of the Flipkart team had assembled with the Walmart officials for one last discussion. It had become clear to everyone in the room that Sachin’s terms weren’t going to be met. It made no sense for Walmart to buy a majority stake and not secure equivalent voting rights. For Flipkart’s part, it was equally inconceivable that Kalyan would agree to Sachin being given the right to fire him. In exasperation, Lee urged Sachin to drop his demands, and accused him of putting the transaction at risk.
In the nine or so years that they had known each other, it was the first time that Lee had lost his temper with Sachin. After a moment’s shock, Sachin recovered and turned to Binny. He had been sure that Binny would support his claim. But Binny made it clear that he wasn’t on Sachin’s side either. Nevertheless, Sachin stood his ground and raged that Lee had been plotting to turn both Walmart and Flipkart teams against him.
Disturbed by this civil war between the seniormost officials of the company that was to be its biggest-ever acquisition, the Walmart team suspended the discussions. They told the Flipkart executives to get their act together and present one final list of terms agreed upon beforehand.
Towards the end of April 2018, the Flipkart team returned to Bangalore from Bentonville, unsure about the status of the sale.
Leaving Sachin out, the Flipkart board conferred o
ver a brief call. Everyone agreed on what had to be done. It was leftto three members of Flipkart’s board – one of whom was Binny Bansal – to inform Sachin that his demands weren’t being met and that he was being cut out of the deal altogether.
Sachin couldn’t believe that, in a matter of days, the transaction he had supposedly fronted for Flipkart was being summarily snatched away from him. It was hard to comprehend that Lee Fixel could banish him so coldly. He was in disbelief that his co-founder had deserted him. Most of all, he couldn’t come to terms with the reality of having to leave the company that he had thought of as his own.
In the last week of April, Flipkart officials informed their Walmart counterparts about Sachin’s departure. The news was jarring for the Walmart team. They asked for some time to consider this development.
While Walmart was weighing its next move, the Flipkart officials began to draw up a plan to announce Sachin’s exit. It would have to be handled delicately. Binny took Flipkart’s PR chief in confidence and began preparing a communication strategy. As they discussed the strategy in a small conference room at the Flipkart headquarters, Binny found that he couldn’t stop trembling.
On 26 April, less than two days after Sachin’s exit had been finalized, a reputed technology news website published an article which claimed that Binny may leave Flipkart after its sale to Walmart.10 For months, the media had been giving a blow-by-blow account of the Flipkart–Walmart–Amazon saga. Rumours about Binny’s supposed exit had been circulating amongst reporters, but the website factordaily.com was the first to publish a story on the subject. The irony, of course, was that the piece had come out just as Binny’s stay had been prolonged, perhaps indefinitely.
Binny woke up to the article the next morning. He had no appetite for appreciating the irony. He was already on edge, aware that the Flipkart PR chief was perceived to be Sachin’s man. Before the end of the day, Binny fired him.
A few days later, Walmart officials informed the Flipkart management that they would proceed with the deal on two conditions: one, Lee would have to continue on the company’s board for a few more years; and second, Binny would have to remain Group CEO as well as take on the role of Chairman.
THE PICTURE SAID IT ALL.
On 10 May 2018, Flipkart released an ostensibly warm blog post in which Binny bid farewell to Sachin. At the end of the post was a picture of Sachin, Binny and Kalyan.11
They were standing close together. But it was the position of the three that caught the eye, revelatory, like a Freudian slip. Sachin was on the left, Kalyan in the middle and Binny to his right with an arm around him. The supposed camaraderie brought to one’s mind how Kalyan had been installed by investors to replace Binny as CEO only last year. The photograph had actually been taken several months ago – it was inconceivable that Sachin would agree to such a photo after recent events – but it was an apt representation of how things had turned out between the Flipkart founders.
The day before the blog post was published, Walmart and Flipkart had announced the long-awaited deal. Walmart would pay $16 billion for a seventy-seven per cent stake in Flipkart, valuing the online retailer at $21 billion.12 It set all kinds of records: the largest-ever acquisition in India, the greatest sale in e-commerce worldwide, and Walmart’s biggest purchase. This transaction dwarfed the previous record acquisition in the Indian startup sector – Snapdeal’s $400 million buyout of a mobile recharge firm. The press statement announcing the Flipkart–Walmart deal was accompanied by a picture of Binny shaking hands with Doug McMillon. Completely missing from the statement was any mention of Sachin’s name.
It was true that, for the last two weeks, Sachin had been locked in negotiations with Flipkart as they finalized his exit agreement. The discussions had expectedly turned bitter. By the end, Sachin had extracted a very short non-compete clause. He was restricted from starting any business that directly or indirectly competed with Flipkart, but only for eighteen months.13
Sachin would earn more than $1 billion in cash after selling his approximately six per cent stake in Flipkart.14 But this didn’t help his acute sense of loss. He was distraught. Flipkart had been his life. He had few interests outside work. He couldn’t imagine life without the company.
There was just one man Sachin could turn to for solace, his old friend and Flipkart’s second employee: Tapas Rudrapatna. Tapas was perhaps the only Flipkart associate, former or present, with whom Sachin could still speak freely. Of all the people at Flipkart he had ever been close to, Tapas was perhaps the only one with whom his relationship with still intact. Since 2012, Tapas had maintained some distance from the company’s internal workings. Flipkart had grown too big, too noxious for his liking. Still, he had remained a friend to Sachin, maintaining an unwavering, selfless allegiance to him. Tapas would often work on his laptop under a tree outside Flipkart’s Koramangala office, across the road from a large park. His routine hadn’t changed much. He still loved his chai–sutta, he still ate little, and showed up at Sathya’s next to his small bungalow every other evening.
Sathya’s is one of those cheap, cosy bars frequented by both the rich and the middle class, men and women alike. It stands on one end of a long, tree-lined street in Koramangala with bungalows on each side interspersed with the odd office building. The blackboard at the entrance states that the bar opened in 1983. Since then, it has enjoyed great loyalty from its patrons.
On several days during the summer of 2018, Tapas could be seen at Sathya’s, drinking with his friend and former boss who had just become astonishingly wealthy, a real billionaire, and had freshly been named India’s pioneering internet entrepreneur. Estranged from almost everyone he had known closely at his startup, Sachin Bansal had now returned to Sathya’s, the cheerful bar he used to frequent in Flipkart’s early years. In the fluorescent light of the bar, amid the buzz of conversation, Sachin sat quietly with his one real friend, as his former employees, associates and investors, in the Flipkart office just a few kilometres away, basked in the glory of a historic achievement.
EPILOGUE
Even under a new owner, Flipkart hasn’t lost its taste for volatility.
In August 2018, Walmart completed its acquisition of Flipkart after receiving approval from the Competition Commission of India.1 On 13 November 2018, Flipkart made a shocking announcement: Binny Bansal was resigning from the company as Group CEO and Chairman of the board. His resignation came in the aftermath of an internal investigation into an allegation of ‘serious personal misconduct’.2 While Flipkart didn’t specify the details of the allegation, various publications reported that it was a complaint of sexual harassment against Binny.3 It emerged that the complaint was lodged by a woman with whom Binny had had a consensual extramarital affair. This woman of unknown identity had once worked in Flipkart’s customer support team. The affair allegedly started sometime in 2016, long after she had leftthe company, and ended the same year. It is unclear why the woman filed her complaint with Walmart executives about two years later, in July 2018. Walmart is known to have hired a law firm to investigate the matter.
The months-long probe could not gather any evidence to support the allegation. But it did show ‘lapses in judgement’ on Binny’s part, Flipkart revealed in a press statement in November. The episode also revealed ‘a lack of transparency’ in how Binny had responded to the situation.4 In a goodbye email to Flipkart’s employees, Binny wrote, ‘The allegations left me stunned and I strongly deny them.’ But he admitted that the investigation did ‘bring to light lapses in judgement’.5 The company didn’t share the details of these lapses, but media reports indicated that they were linked to how Binny had handled the termination of the affair.6 Binny had been made aware of the matter only days before the announcement of his resignation. He had, in fact, made several public appearances in the months leading to his exit.
It was a tragic departure for the Flipkart co-founder. Walmart had asked him to stay back at the company as Sachin would no longer be a part of it. Binny l
eaving would also put Walmart in a tricky situation. Walmart had decided to go public after concluding it was too risky to hold back the details of a vexatious issue, especially in light of Binny’s ‘lapses’.
Binny continues to be a board member at Flipkart and holds more than three per cent stake in the company. In early 2019, he moved to Singapore with his family. He now serves as Executive Chairman at xto10x Technologies, a consultancy firm co-launched by him and former Flipkart executive Saikiran Krishnamurthy. Since 2015, Binny has also been a prolific investor in startups.
After Binny resigned from the company, Flipkart abolished the post of Group CEO. It consolidated all its e-commerce businesses under Kalyan, who was made the head of Myntra and Jabong, in addition to Flipkart. Kalyan’s ascension was followed by the exit of Myntra CEO Ananth Narayanan. For months, Kalyan had been making the case for running Flipkart and Myntra–Jabong in a more complementary manner. His wish was finally granted by Walmart in November 2018. Putting Myntra and Jabong under Kalyan’s charge immediately yielded cost savings for Flipkart. Whether the move will continue to benefit the company in the future is unclear. In the past, Flipkart had considered a separate listing of Myntra’s shares. That possibility is all but dead now.
Kalyan is no longer seen as an associate of Lee Fixel or a Tiger Global representative; he is a powerful CEO in his own right with the full backing of Walmart. The American retail giant has appointed several executives to important posts in Flipkart’s finance and legal functions, but Kalyan has been given considerable leeway to run the company as he sees fit.
So far, Kalyan has delivered fine results. In the one year or so after its takeover, Flipkart has increased its lead over Amazon. Surprisingly, after Walmart’s entry, Amazon’s competitive intensity seems to have reduced. The company is close to exhausting the $5 billion in capital it had pledged for expanding its India operations. How much more capital the company will commit towards India remains to be seen. It is becoming increasingly clear that Amazon will take longer to realize its stated objective of making India its second-biggest market after the US by 2025.7
