No transparency on transparency: Binny Bansal's Flipkart exit reflects a new normal in corporate culture

The loud question rising above the noise of Bangalore's maddening traffic after the sudden exit of the co-founder of Flipkart , Binny Bansal, as group CEO, is this: Why would a rockstar co-founder leave one of India's hottest tech startups after an awe-inspiring global scale buyout when an allegation of misconduct against him did not lead to any evidence? And why would he stay on in the board in a transitional role while the reason cited for his exit is of a "lack of transparency" in the way he responded to a situation?

If all that sounds confusing, it reflects the ground reality.

The simple fact is that the statement  on the issue from US-based global retailer Walmart, which now owns 77 percent in the giant-sized e-commerce startup, is as lacking in transparency as the man in the middle of the muddle it accuses of lacking in transparency.

Was there some unspecified, undisclosed gold standard of disclosure or transparency on a personal matter that Binny Bansal was supposed to follow but did not? What was this and who set the standard and when?

Things would get curiouser and curiouser -- to use that famous expression from Alice in Wonderland -- if one were to consider that Binny's comrade co-founder and former CEO Sachin Bansal left Flipkart sulking after being virtually forced out in a game dominated by venture capitalists. Despite suggestions that one Bansal may not be like the other, there were reasons to believe that there were tensions between Walmart and the founders they made rich, as also large investors such as Softbank and Tiger Global.

File photo of Binny Bansal

File photo of Binny Bansal

In such a context, it became clear that both Sachin and Binny became what I have described as "employeepreneurs" -- entrepreneurs in name but employees in effect. Binny Bansal's exit on what seems like flimsy grounds for a high-profile departure proves that point further, but this one requires further explanation.

According to media reports, the 37-year-old's alleged misconduct relates to a sexual behaviour complaint by someone technically outside of Flipkart, a former employee. Walmart vaguely talks of "lapses in judgement" somewhere in the chain of actions and reactions involving days that pertain to events years ago. In the normal course of things, this would not figure as a professional irregularity, especially since Walmart is on record that the allegation has not been proved.

Yet, Binny's exit is a reflection of a changed, and charged atmosphere in global corporate culture in the aftermath of the #MeToo movement involving accusations and discussions of sexual misdemeanours. It has put corporate bosses on the defensive everywhere. In such a context, erring on the side of safety seems to be the preferred option for the powers-that-be who call the shots. To borrow another expression from Alice's Wonderland, "Off with his head" seems like a safe option where consequences can be dicey.

We could also call it the Google Effect. In the new normal scheme of things, boards of companies and the shareholders who put them there are not necessarily the prime stakeholders in large companies. Hordes of employees huddling in cyberspace over Internet messenger groups have become more powerful, especially in companies such as Google and Facebook that run on the fuel of intellectual property. Flipkart is certainly in that league. Bangalore's corporate culture increasingly reflects, mimics or aspires to emulate role models in Silicon Valley and Wall Street. To that extent, employee power has become critical.

Alphabet Inc-owned Google was forced on the backfoot this month to change its policies on sexual conduct that included a promise of greater transparency after the quiet exit of Android's co-founder Andy Rubin because he was given a handsome $90 million severance pay with no disclosure of the allegations against him. While employees in 50 cities worldwide walked out in protest, they had presumably set a precedent in a connected world on what angry employees could do. It seems no longer possible to tell hordes of talented knowledge workers that it is none of their business to interfere in high-level decisions.

On prime-time news after Binny Bansal's exit, an activist woman lawyer also not-so-gently pointed out that women were 50 percent of a company's customers. Corporate brands increasingly have to respond to potentially dangerous hashtags in social media -- be it from employees, customers or civil society activists. It is quite possible that Flipkart's majority stakeholders chose the most optimal middle path as they straddled two continents separated by oceans but united in the recognition of a new corporate morality.

In recent times, we have had hot Indian startups including The Viral Fever, AIB, Only Much Louder facing and suffering various degrees of complaints and consequences related to sexual misconduct. Millennial feminism and social media activism are the twin forces that are making startup gods develop feet of clay. Or at least, they lose their haloes. New gender equations are turning rockstars into tragic heroes in a dystopic landscape.

In such a backdrop, CXOs must walk a minefield beyond the expected ones involving investors, customers and partners. A few years ago, Hewlett Packard saw the exit of its CEO Mark Hurdover the details of his ties with an HP contractor, an "adult" movie actress and reality TV star "who was ostensibly hired to act as a hostess at HP client events." Hurd was fired not for harassment but because he had used HP's resources "inappropriately" and lied about the relationship.

More recently, advertising conglomerate WPP's global chairman, Sir Martin Sorrell, quit amid claims he had bullied junior employees and allegations that he was spotted entering an address in a London red-light district.

The case against Binny Bansal seems vague and his continuation on Flipkart's board in a transitional role is, if anything, an endorsement that he committed no big lapse. Yet, in the context of global events, the bosses at the Beast of Bentonville, as Walmart is called, seem to have played it safe.

For Binny Bansal, having survived the stresses of running a company fighting the might of Amazon and seeing his key co-founder walk out in a sulking mood, the exit from Flipkart could well be a blessing in disguise. In scale and culture, Flipkart already behaves like a listed company, not a startup. It is only a question of time before Binny Bansal would have lost whatever was left of his entrepreneurial verve if he were to continue.

On a quiet evening one of these days, Sachin and Binny Bansal may get nostalgic over a drink on the company they founded together while in their 20s. And then they may well heave a sigh of relief.

(The writer is a senior journalist and independent commentator. He tweets as @madversity)


Updated Date: Nov 14, 2018 15:55 PM

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