One of India’s most iconic homegrown tech ventures has now become the first prominent firm in the sector operating without any founder at its helm.
On Nov. 13, e-commerce major Flipkart’s co-founder and group CEO, Binny Bansal, resigned from the company in the wake of a probe into “serious personal misconduct.” Soon after its acquisition by Walmart in May, the online marketplace’s other co-founder, Sachin Bansal, had exited the firm.
While Sachin Bansal sold all his stake in the company and pocketed an estimated $800 million, Binny Bansal has held on to his shares and got a board position. However, he will not have much operational say in the company that the Bansal duo started as an online bookseller in 2007 from the living room of an apartment in Bengaluru.
While non-founding CEOs run several large firms in Silicon Valley, India has not seen many such examples. All of India’s tech unicorns are currently headed by their founders.
Why just young companies? Several legacy Indian tech firms also continue to be headed by their founders even after decades. For example, Infosys, India’s second-largest IT outsourcing company, was led by one co-founder after another for nearly three decades, till most of them reached the mandatory retirement age.
“Founders tend to hang on. They like to believe they are the best for the company,” said Harish HV, an independent consultant who tracks the Indian startup sector. “Having built a company, they become attached and, sometimes, they even outlive their capability.”
Changing hands
Much like Infosys’s co-founders, Flipkart’s played musical chairs before investors pulled them out.
For the first nine years since the company’s inception, Sachin Bansal served as the CEO while Binny Bansal was chief technology officer. In 2016, Binny Bansal took charge while his partner became the executive chairman.
Last January, Flipkart elevated Kalyan Krishnamurthy, then category design organisation chief, as its CEO, making him the first non-founder to be at the helm. Binny Bansal was then made CEO of the Flipkart Group Organisation, a newly formed entity.
This had left many Indian entrepreneurs anguished as the Bansal duo was emblematic of India’s new-age entrepreneurship. Many feared that external CEOs would now become a trend in the Indian tech world.
Growing up
Analysts, however, believe the founders’ exit will only work in Flipkart’s favour.
“I think it’s better for Walmart. Now they have a cleaner slate,” said Yugal Joshi, vice-president of Texas-based consulting and research firm Everest Group. “Though continuity of leadership is an asset in an acquisition, if it doesn’t work, it’s not Earth-shattering.”
In any case, Krishnamurthy has been primed to carry out his role.
For the American retail giant Walmart, which already has a presence in India’s Rs6,800 crore wholesale sector, not having founders involved in merger-related decisions may be a blessing in disguise as it fights for the pole position in the country’s $38 billion e-commerce industry. Emotions will take a backseat and business sense will prevail, experts say.
“I am quite positive at this point that Walmart would focus on harnessing synergies through the merger as the Indian consumer story is growing leaps and bounds,” said Vidhya Shankar, executive director at advisory firm Grant Thornton.
The new leadership, though, has some big challenges to face.
Flipkart is witnessing a bloodbath as it locks horns with the behemoth e-tailer Amazon and faces stiff competition from digital payments major Paytm, and Alibaba. On the supply side, the e-tailer has to make massive investments to overcome poor logistics and infrastructure, and fight counterfeits.
Within Flipkart, too, there are ample areas Walmart needs to pump more resources into, including “back-end tech transformation for efficiency gains and adopting advanced artificial intelligence and machine learning technologies to better engage and understand customers,” said Everest Group’s Joshi.