NEW DELHI | BENGALURU: Sachin Bansal, the group chairman of Flipkart who was deeply involved in the negotiations with Walmart till even a few weeks ago, has been left “very disappointed” by recent events that have left him on the sidelines as the company he cofounded a decade ago notched up its biggest milestone, according to people privy to the developments.
Sachin Bansal will sell his 5.5 per cent stake for about $1billion and exit the company he cofounded with IIT Delhi college mate Binny Bansal, leaving behind questions on his abrupt departure. “He (Sachin Bansal) was an integral part of the deal until a few weeks ago,” said a person aware of the developments. Even until the final leg of the discussions with Walmart, Bansal was expecting to “buy more shares and not sell his stake”, the sources said.
“Sadly my work here is done and after 10 years, it’s time to hand over the baton and move on from Flipkart,” Sachin Bansal wrote in a Facebook post, hours after it was publicly announced that Walmart would buy a 77% stake in Flipkart. He was conspicuous by his absence as the other leaders of Flipkart and Walmart gathered to announce the blockbuster deal on Wednesday.
Walmart Keen on Kalyan Krishnamurthy
In a bid to forestall the obvious queries, Flipkart group CEO Binny Bansal told employees at a town hall that Sachin was “not part of the platform anymore”. Arrayed beside him were Doug McMillon, chief executive officer of Walmart Inc, and Kalyan Krishnamurthy, the chief executive officer of Flipkart, among others.
Earlier, in an email to employees, Binny Bansal said Sachin and Flipkart are “parting ways”. “Over the last 11 years, Flipkart has grown to be one of the most recognised brands, and the No 1 ecommerce platform in India. None of this would have been possible without the vision and leadership of Sachin,” he wrote.
While Sachin Bansal has been away from the day-to-day operations of the company since he stepped down as CEO in January 2016, he had been deeply involved in discussions — along with Tiger Global’s Lee Fixel and group CEO Binny Bansal — aimed at bringing strategic investment into the company, and specifically in the protracted negotiations with Walmart. Company insiders, who spoke to ET on the condition of anonymity, said as the talks progressed, Walmart did not see a role for two cofounders on the board of the ten-year-old company.
But the American retail giant was clear about the one person they did want — Flipkart CEO Kalyan Krishnamurthy, the former Tiger Global executive who had a previous stint at eBay to his credit. Moreover, as the hands-on manager, Krishnamurthy has won the loyalty of the rank and file at Flipkart. Neither the company’s board nor Walmart was keen to upset this delicate balance.
STABILITY OF LEADERSHIP TEAM
“The stability of the leadership team under Binny and Kalyan has been very good, they have been driving better accountability,” said one person aware of the details.
A second source said Tiger Global, one of the earliest and biggest backers of the Bengaluru-based company, had drag-along and tagalong rights that could be invoked to force dissenting stakeholders to sell their stake. “Tiger Global did not exercise this right in Sachin Bansal’s case,” said one of the people cited above. Lee Fixel, who represents Tiger Global on the company’s board, had brought in Binny Bansal as CEO in early 2016 and followed it up with the reinstatement of Krishnamurthy, who took charge as CEO in 2017.
That management reshuffle, however, appeared to have been welltaken by Sachin Bansal, who famously told Flipkart employees at a town hall in 2016: “Look at the top level around you. Everyone has changed. In fact, even I am gone.” “Some of our targets have been missed and everyone, including the top management, has paid the price,” he had told the company’s employees then.
For Flipkart employees who worked with Sachin Bansal on a private label project — Billion — launched in July 2017, which included products such as smartphones, home appliances and fashion, his abrupt departure has left a void. Binny Bansal responded to their concerns at the town hall by confirming that the Billion project will continue under the new leadership. He did not share details.
SECOND INNINGS FOR SACHIN
As he makes his way out from the iconic startup that he seeded, Sachin Bansal is expected to make a comeback in a second innings, but “definitely not in the ecommerce space”, said people aware of the 36-year-old entrepreneur’s thinking. “Sachin thinks there is the unfinished business of building a billion-dollar company from India, a truly Indian one,” the person said. His sudden exit from a company he founded and nurtured has thrown up questions not just for Flipkart’s board but also for the Indian startup ecosystem on the nature of the investor-entrepreneur engagement.
“I cannot believe that India’s largest ecommerce company is being sold for $16 billion. That seems a little low for me. Amazon is making inroads. But I think it should have been a larger story,” said Shivakumar Ganesan, CEO of Exotel and a former Flipkart employee.
“He (Sachin Bansal) has done his job. If he was at the helm, maybe he would have stuck to his guns for a little while longer,” Ganesan said. In his Facebook post, Sachin Bansal exhorted “Flipsters” to continue doing a good good job and lauded the company which he said, “truly upheld audacity and customer centricity… and solved many complex problems for India”.
“I’ll be watching and cheering from the outside,” he wrote, adding that he would take time off to brush up on his “coding skills” and for “gaming”.