Tiger eats Flipkart: Funding always comes at a cost

We see it in the movies plenty of times. I'm referring to spy agencies calling on their best personnel on a dead or alive mission to save the world, without the world knowing about him/her (think James Bond or Vin Diesel in XXX). Nobody's saving the world here, but Tiger Global with a 35 percent stake, had to pull a few strings when co-founders Sachin and Binny Bansal did not seem to get the job done right. Recently appointed Flipkart CEO, Kalyan Krishnamurthy seems like that specialist, a guy who comes with his special set of skills from the Lee Pixel army and knows the ins and outs of e-commerce like nobody else. In short, Krishnamurthy also becomes the first professional to take over the reins of an Indian startup.

The Mint clearly points out how Tiger Global's one-man army rescued Flipkart not once, but twice. But then came Amazon, and as Flipkart co-founder Sachin Bansal made evidently clear, the Indian e-commerce giant along with others did feel threatened. Everyone's now looking at the government for support from foreign threats.

Funding can only take you so far. Keeping up with a giant like Amazon meant that Flipkart was bleeding money. It was laying off employees (which it denied) in the hundreds. Funds were soon marking down the Indian e-commerce company. Old habits die hard. This time, Flipkart needed a remedy and Krishnamurthy once again stepped into the arena fired top level executives and restored faith that the company can move on. In fact Flipkart did better than Amazon during the last festive season. A move that clearly showed that an Indian startup can out do an international player.

Image courtesy: Flipkart

Flipkart Co-founder Sachin Bansal will continue as executive chairman.

Krishnamurthy comes with plenty of experience. He comes into the picture from his former role as an eBay executive. Soon enough he was absorbed into Tiger Global Management and was then assigned strategic roles at Flipkart. After his last performance he delivered a knockout punch for Amazon with great sales figures, it was evident that the man of many faces, had to be pushed higher up and so it happened.

Former co-founder and CEO Binny Bansal has now moved over to monitor the bigger picture. In an email written to employees he wrote, "I will focus on building a portfolio of new high-growth businesses, capital allocation across group companies, IPO-readiness, and ensure each business of the group portfolio has a strong CEO in place,"

Right now it's hard to tell, whether this move by Tiger Global or Flipkart would be the first of many or whether we would see a ripple effect in the case of startups across the industry. But it does send across a strong message in the form of a wake-up call for all  startups in the country that funding always comes at cost.

Published Date: Jan 10, 2017 10:57 am | Updated Date: Jan 10, 2017 10:57 am