Big Billion Startup: The Untold Flipkart Story Page 10

  The Bansals had formed a ‘Core Team’ that consisted of themselves, Mekin, Sujeet and Tapas. The five of them would meet for dinner every Wednesday to discuss the week’s events and make plans for bigger strategic moves. In 2010, the core team spent much of their time interviewing prospective candidates for a variety of new positions at the company. Within a few months Flipkart had added more than two dozen senior and middle managers. Finance, marketing and human resources departments were set up and the existing sales, operations, customer support and technology functions were expanded. This concept of the Core Team was one more peculiarity the Bansals had adopted from Amazon, apart from the principles of customer obsession, thinking big, and bias for action.2

  Just like Amazon, even at that early stage, Flipkart instituted a high standard when it came to recruitment. All candidates who applied for jobs in the technology department were made to take tests and quizzes. They were asked to apply their technical skills to solve real problems that Flipkart was facing. But the company didn’t hire only from the IITs; engineers from Delhi College of Engineering, Punjab Engineering College, colleges in Tamil Nadu and other states were all welcomed. Mekin, who had devised the hiring process, was open to recruiting anyone who cleared the interviews, regardless of the candidates’ pedigree. The candidates would be posed technical questions, but these were mostly designed to test the engineers’ problem-solving abilities.

  For the other departments, the company hired experienced professionals, entry-level workers, generalists, specialists – anyone and everyone who suited their needs and met its standards. Flipkart was an unknown internet company operating in an environment where startups were seen as career graveyards. But the Bansals knew they would need to attract highly capable people in order to succeed. More importantly, the people they hired would need to adopt Flipkart’s cause completely, become warriors for the company. Flipkart was creating a new industry from nearly nothing. Its employees would have to put the company at the centre of their lives – long hours, working weekends, fulfilling different roles at different times, relocation, and constant volatility would be the features of their lives. In return, Flipkart wasn’t even willing to offer exorbitant salaries. Understandably, many of the people Flipkart hired at that time were men and women who hadn’t experienced much professional success, felt a keen sense of insecurity, were desperate to prove themselves and discover their self-worth, not too different from Sachin’s situation when he joined Amazon, or Sujeet’s when he agreed to work for his former IIT juniors. At Flipkart, the prototype of the ideal hire was Ankit Nagori.

  Ankit was born in Bokaro, a small town in Jharkhand, where his father ran a steel trading business. He had moved to Delhi with his family when he was five years old. A graduate of IIT Guwahati, Ankit had wound up his startup Youthpad, a social media platform, in early 2010. He was lost. A keen reader, Ankit visited a New Delhi book fair in March 2010, and found a stall with a sign that read Flipkart. Curious, Ankit looked up the company and realized that it was an emerging internet firm. Although his venture had failed, Ankit was keen to continue working at a startup. He emailed Binny, asking for a job. Some days later, Ankit interviewed with Sujeet and Anuj Chowdhary, Flipkart’s sales head. They were impressed by Ankit’s energy and the eagerness his fresh, clean-shaven face seemed to exude, and agreed to hire him. Ankit was to steer the launch of CDs and DVDs, what Flipkart referred to as ‘media’, another adoption from the Amazon playbook. At twenty-four years, Ankit was young even by Flipkart standards. He was a category head for all practical purposes but his formal position was at the lowest level of the hierarchy. It didn’t matter; as soon as he joined, Ankit completely bought into Flipkart’s mission. Flipkart hired many other executives in the coming weeks and months. They included Anuj Rathi, who headed product and worked closely with Sachin; Marcus Terry, who oversaw customer support; Vaibhav Pandey, who oversaw electronics; and Vipul Bathwal, who launched the mobile phones category.

  Hiring people was relatively easy, but it was impossible to know whether one had made the right choice. As early as 2010, a pattern emerged at Flipkart that would haunt the company for a long time. Many executives would quit soon after they were hired. Some left of their own accord, many were forced out. Flipkart had already lost its first product chief, Shivakumar Ganesan. The day Ankit joined, Anuj Chowdhary, one of his two interviewers, put in his papers. Anuj had been doing well as the head of sales. But he was torn between staying at Flipkart and taking up entrepreneurship. Finally, he leftin April 2010 to start his own venture. A few months later, Anuj’s replacement, Satyarth Priyedarshi, also left.

  As much as Flipkart encouraged its employees to operate independently, it seemed the company had little patience for those who didn’t fit in or perform well immediately. These people were either fired or sidelined ruthlessly, treated like pariahs. One can argue this is a more or less well-established characteristic of internet companies. Obsessed with frenetic growth, anyone or anything that proves to be an impediment to the company must be removed immediately. The ‘Move Fast and Break Things’3 creed made famous by Facebook captures how internet companies are often run. The merciless approach towards employees is an essential aspect of this culture, where workers are the means to an end. At Flipkart, corporate ruthlessness reared its head mostly at the senior level. In the company’s early years, its junior employees, who comprised a majority of Flipkart’s workforce, felt secure in their jobs, revelled in the company’s freewheeling culture, embracing the thrill of taking on important tasks they wouldn’t be allowed to come near at most other companies.

  A BIG ADVANTAGE Flipkart had over its rivals was its clever application of technology. It had divided its engineering teams loosely into two groups: demand and supply. In 2010, with a sizeable team of coders in place, Flipkart implemented its first set of major technological changes on both sides with the intention that this would complement the work of its sales and operations teams towards increasing revenue.

  The website especially saw major improvements. In April 2010, Flipkart’s technology chief, Mekin Maheshwari, had hired a senior engineer named Amod Malviya, who took over the engineering function of the website. Amod was a skinny, strong-headed twenty-nine-year-old, an IIT Kharagpur graduate who had spent most of his young career working at startups. He was both technically proficient and a skilful manager of people. He believed that technology was the Supreme Function, a view Sachin shared with him. But in his first week at Flipkart, Amod clashed with Sachin. The Flipkart CEO enjoyed working closely with engineers and would often issue instructions to them without consulting with their managers. To this, Amod objected: ‘Yaar, ya tum bolo ya hamey bol ne do – either you take over or let me do my job.’ Sachin sulked, but he also stood down, and over the next five years, forged a close relationship with Amod that was often volatile but rewarding for Flipkart. In his first year alone, Amod oversaw many of the developments on the website.

  The company’s plain, functional website had pleased users from the start. But the site, like all other e-commerce platforms in India, was dogged by transaction failures. For a customer, buying online was almost like playing the lottery – as much as forty per cent of all transactions fell through. This would happen due to technological glitches on the sites or on the part of their payment providers, or even because of inconsistent internet connectivity. No matter the reason, some customers who were victims of failed transactions would inevitably not return again. Amod had set up a ‘two pizza’ payments team under a subordinate, Santosh Dwivedi, that found a solution by experimenting with several payment gateways. By fusing the gateways with its systems, Flipkart could switch amongst them based on the success rates of the various gateways at any given point. By early 2011, the transaction success rate jumped to more than eighty-five per cent from less than sixty per cent. Many other e-commerce firms did not have the technological abilties or the imagination to pull off such a deep integration with several payment gateways; consequently their failure rates
remained high even as Flipkart’s dropped.

  Flipkart further simplified the checkout process for customers. At that time, many e-commerce companies would ask users to share unnecessary personal information, leading to long checkout times. Sachin was insistent that Flipkart should have the smoothest possible checkout process that required minimal information about customers.

  In 2010, Flipkart also developed many basic functions on the website that allowed it to showcase newer categories. The company introduced technology tools that made it possible for them to process refunds and returns within a few hours, a significant improvment from the previous days-long process. The search feature was also refined. On other sites, the search function was so poor that customers would often fail to locate products even though the company actually had them in stock. But even Flipkart’s superior search function would falter in the coming years as its product assortment multiplied at a brisk pace.

  IN E-COMMERCE, PRODUCTS require specialized treatment, and success in one category is no guarantee of prosperity through others, as Flipkart discovered when it expanded beyond books. Mobile phones turned out to be a particularly tricky category. Flipkart’s first investor, Accel Partners, had warned the company about the problems it would face. The Accel VCs had told the Bansals, ‘Losing a phone isn’t like losing a book – you can lose a lot of money.’ But Sachin decided, ‘Screw it, we’ll do it.’ Flipkart’s mobile phones category went live in early 2010. The first order came in shortly: a customer had purchased a Samsung phone. At that time, Flipkart still followed its ‘just-in-time’ system. After a customer ordered a product, Flipkart would source it from a distributor or an offline retailer. The company did not hold its own stock yet, which was illegal as per Indian laws. And just as it had been with Flipkart’s first-ever order in October 2007, the Samsung phone could not be located anywhere. Finally, after three days of hunting, a single unit was found at a small retailer in Bangalore.

  While no one knew it at the time, this inauspicious start was a sign of things to come in the mobile phones business. Phone brands scoffed at Flipkart’s approach. Their message was the same as Accel’s warning: selling phones isn’t like selling books. ‘You can’t just stick a picture of a phone on your site and expect people to buy it,’ brands complained to Flipkart executives. Phone dealers set onerous conditions: no credit, upfront payment, low margins. For weeks, Flipkart executives pleaded for better terms but the dealers wouldn’t budge. Finally Sachin told his executives, ‘Just get it done. They will come around. I’ve seen the same thing happen with books.’ So, they gave in to the dealers who remained sceptical despite Flipkart’s acceptance of their steep terms. A large dealer of HTC phones proved to be especially frustrating. He had refused to return calls from Flipkart executives for weeks. When he finally met with them, he was contemptuous: ‘Chalo, ek phone bech kar bata do – let’s see if you sell even one phone.’ A month later, Flipkart sold about fifteen HTC phones. The next month it sold a few dozen, and soon a hundred. The dealer who had initially proven rather difficult was now begging Flipkart to buy more phones.

  This became the pattern with Flipkart and its suppliers. Just as Sachin had said to his employees, the suppliers would ultimately come around. When Flipkart had first started to woo them, publishers, distributors and brand custodians alike had treated Flipkart with ridicule. In 2010, this was the case even in the books category, the company’s mainstay at the time.

  INDRANIL DUTTA’S ANDHERI office was a set of two rooms, twelve feet by twelve feet in size. In one room, books were packaged, while in the other, a few white-collar employees worked at their computer desks. Indranil had hired a dozen people mostly to fulfil operations and sales roles. Every day he and his team went to meet distributors at their offices. There, the Flipkart executives would be kept waiting, sometimes for as long as an hour. It was done deliberately, to make them feel small.

  Distributors even struggled to get the company’s name right. They would say, ‘Flip-what?’

  ‘Flipkart.’

  ‘Flip-card?’

  ‘Flip-KART.’

  ‘Flip-kart? What’s a kart?’

  ‘Have you seen a shopping cart? Perhaps at Big Bazaar?’

  Conversations about the company’s name would often go like this. Indranil could hardly complain; his reaction had been no different. What exasperated him instead was the steadfast refusal of the books industry to see the benefits of e-commerce. Managers at publishing and distribution houses would seem set in their ways, refusing point-blank to even consider how e-commerce could transform their business. ‘Who are you and who is Flipkart?’ they would say with condescension.

  Indranil and his colleagues tackled this problem the old-fashioned way – by going to the top. They would reach out to a manager, then to their boss, and so on, until they could talk to the CEO. ‘Once the CEO is aligned ... everyone gets aligned,’ was Indranil’s belief. By early 2010, many large book distributors had signed up with Flipkart, and the remaining few would soon follow suit. But the company had still had no breakthroughs with publishers, local or international.

  Readers in India frequently wanted books from abroad. Either these books were not available here or would only be published after a delay. Binny had identified a handful of international publishers that controlled the supply of books that readers here might like. Binny cold-called – Flipkart had got international calling installed after being unable to call Tiger Global – and emailed executives at these publishing houses. He had arranged to meet some of them at BookExpo America, the biggest annual book fair in the US, in 2010. But he couldn’t get his visa in time and sent Mekin instead. At the book fair, one major publisher agreed to supply books to Flipkart. Over the next year, several other international publishers came on board. Every time Flipkart signed up with a new publisher, the orders shot up. More customers were able to find books they were looking for, which led to higher sales, benefiting the publisher in question, and leading to more publishers wanting to work with Flipkart.

  After this achievement, Flipkart began to make headway with domestic publishers, too. Just four months after he joined the company, Ankit Nagori was asked to lead the books category along with media. He had done well with launching CDs and DVDs. To his surprise, music labels were willing to work with Flipkart. It was the final phase of the era of analogue music. People were increasingly downloading pirated music and movies, but there were still enough people buying CDs and DVDs for Flipkart to feel interested in the category. Many customers bought their CDs from a handful of retailers such as Landmark, Crossword and Odyssey. Before launching the category, Ankit conducted market research – which were the most popular labels, who were the bestselling artists, and so on – by literally visiting these stores. When Flipkart launched the category, it simply offered the bestselling CDs at a lower price. That’s all it took for customers to switch their loyalties to Flipkart. Music products were similar to books: relatively inexpensive, standardized and easy to ship. A few years later, Flipkart’s rise would permanently damage Landmark, Crossword and Odyssey’s business.

  As head of the books category, one of Ankit’s immediate tasks was to build partnerships with domestic publishers. It was important to work with publishers in order to obtain pre-orders, develop relationships with authors and generally acquire influence in the books world. Together with Sujeet, who had become his mentor, Ankit set to work. Even though Flipkart had begun to make contact with publishers in early 2010, it would take the company more than eighteen months to convince the major publishing houses. Most were wary – their dealings with e-commerce companies hadn’t gone well. Publishing executives told Sujeet and Ankit that other companies like Flipkart had made similar promises but had ultimately just looted them and left. Their other concern was that Flipkart would recklessly resort to heavy discounting, which would hurt the publishers’ long-standing offline partners. But Sujeet and Ankit allayed their concerns, promising lucrative sales. ‘Sujeet had built amazing relations
hips in the books industry. He would know the CEOs, the sales heads. He made sure that we had a seat at the table with publishers. Once the relationships were built, I would keep following up and finalize the deals,’ says Ankit. In 2011, the company finally began working with the country’s major publishing houses, including Penguin India and HarperCollins India. Popular authors such as Chetan Bhagat soon began to patronize Flipkart, appearing at book events organized by the company, participating in social media chats it hosted, and promoting Flipkart in various other ways.

  As Flipkart’s books business expanded, local bookstores in Delhi would sometimes send email warnings to Ankit and Sujeet about Flipkart’s discounting practices. One retailer even sent a threat over email. This didn’t deter the company, which continued to cut prices. By 2011, Flipkart had also grown large enough to demand better credit terms from distributors. This helped them cut working capital, the cash needed to run the business.

  Apart from strengthening its supplier relationships, in 2010, Flipkart focused on further improving its delivery speed. Working with courier companies had proved to be a constant struggle. Flipkart executives would try a variety of approaches to coax better service out of them. They would plead, charm, harangue, and as a last resort, refuse to do business with repeat offenders. After increasing its order volumes and consolidating them with one courier company, Flipkart would suddenly move on to others. At the Bombay office, for instance, Indranil Dutta would stop using a courier service for a few days if it refused to fix persistent issues. Starved of orders, executives at the courier company would come running to him in ‘full panic’ mode.

  ‘Sir, kya ho gaya? Do din se order nahin aa rahe hai.’ Sir, what happened? You haven’t sent us orders for two days now.