Binny Bansal, co-founder and group chief executive of Flipkart, may exit the company once Walmart buys it, three independent sources have said.
Acquisition talks are at a final stage between India’s largest ecommerce company and the world’s largest retailer. Walmart is likely to pay anything between $8 billion (Rs 53,450 crore) and $12 billion (Rs 80,180 crore) to acquire majority control in multi-billion dollar company that began as a startup in an apartment Binny and his unrelated co-founder Sachin Bansal rented about a decade ago.
Both Binny and Sachin, who’s Flipkart’s executive chairman, are looking to sell their stake in the Walmart transaction, according to sources, though it is not confirmed whether it will be a partial or full sale.
“Sachin has plans to stay around, but Binny will leave… He might sell his entire stake and exit,” said a source in know of the development.
The Bansals are said to own 5.5% each in Flipkart. If the deal value is set at $20 billion, each will make $1.1 billion (or Rs 7,355 crore), assuming they sell all their shares.
Another source said, “It’s not yet final… but discussions are on, and there are many conjectures. Some of these things are can change at the last moment, but right now it (Binny’s exit) seems more likely.”
A third source, too, confirmed the second source’s version.
The Flipkart co-founder may yet stay around for some time, the second source added. “Usually, it is required for the founders to stay while the transition is still on,” said the source.
All three sources declined to be identified given the sensitive nature of the Walmart-Flipkart acquisition talks.
Flipkart did not respond to a request for comment sent late Wednesday evening.
Walmart buying into Flipkart will be the largest deal in ecommerce in India. Several of Flipkart’s shareholders, including Tiger Global, Naspers, Accel Partners, and the Bansals, among others, will make handsome returns. The other major Flipkart investor, Japan’s Softbank is yet to decide on its terms for sale to Walmart.
“We want to be the largest retailer (online and offline) in India, and it will be foolish to exit,” Binny told this reporter back in 2010. That was a different era, though. The Bansals were expecting Flipkart’s sales to cross Rs 100 crore. Today, the company’s sales by gross merchandise value is expected to be in excess of $6 billion.
Even if Binny and Sachin leave Flipkart they will always be credited for India’s largest ecommerce company that not just stayed ahead of a raft of startups and established brick-and-mortar players in the space but also stood up to a good fight with online retail leader Amazon.
Binny and Sachin come from middle-class backgrounds in Chandigarh before they moved to the Indian Institute of Technology, Delhi for their engineering degrees. Binny is the only son of an ex-bank chief manager father and a government employee mother. In 2016, Forbes magazine listed him among India’s richest with an estimated net worth of $1.2 billion.
But building Flipkart was not an easy task. Binny was rejected by Google twice and was finally hired by Amazon where he worked for nine months before starting Flipkart. Initially, Flipkart was supposed to be a comparison engine but the Bansals quickly spotted the opportunity in ecommerce.
In Flipkart’s formative years, getting funds wasn’t easy as ecommerce had not picked up yet. The delivery and logistics engines were broken. Digital payments barely existed. Flipkart literally build everything from scratch and Binny headed operations during most of his tenure at the company.
Flipkart pioneered cash-on-delivery in India, which many credit as Binny’s brainchild. It was also the first ecommerce company in the country to build its own logistics network. It went on to raise $7.3 billion in 18 rounds from some of the biggest venture capital firms in the world. Flipkart became so big that it was Amazon’s only significant competitor in India.
With time Binny even started talking like Jeff Bezos. “We have to execute relentlessly. Make sure customers are getting the right selection, experience and delivery speeds,” he told FactorDaily in a 2016 interview.
In the past couple years most of Flipkart’s day-to-day running has been handled by Kalyan Krishnamurthy, Flipkart’s CEO seconded by backer Tiger Global, while Binny is the group CEO. Besides Flipkart, the group has units such as Myntra, Jabong, PhonePe, eKart, among others.
As with any large acquisition, top leadership changes are likely after the deal. (Grapevine has it that Walmart will run operations of the company, say, a year down the line.) That is something that doesn’t go down well with most founders and Binny might not be an exception.
Raghu Viswanath, founder and managing director of management consultancy Vertebrand, is not surprised by Binny’s exit. “When a large international investor buys out a large stake, things change in terms of strategy and control. As a co-founder, one envisions running of the company in a certain manner. You cannot have two visionaries,” he said.
Others, too, echo the same belief. “It may have much to do with emotions. One who establishes a company… he gives in a lot of heart to the venture,” said Prabal Sen, a former professor of economics and founder chairperson of entrepreneur development at XLRI, a management school from Jamshedpur.
Binny’s time with Flipkart may come to an end soon but the online retailer will continue its journey. “The next nine years are going to be completely different,” Binny had told FactorDaily in the interview.
(Pictures and visuals: Rajesh Subramanian)