Uber. Airbnb. LinkedIn. YouTube. Tesla Motors. Yelp. All seemingly large, yet primarily unrelated companies. What you may not know, though, is the uncommon thread connecting all these multi-billion dollar companies – they were all advised, funded, or founded by former PayPal employees, better known in today’s startup terminology as the “PayPal Mafia.” Today, we present a similar tale, of how a class of entrepreneurial legends and an entire ecosystem arose from who was once called India’s glorified bookseller, Flipkart and the various entrepreneurs, investors and startups it sprouted, The Flipkart Mafia.
The Mafia, the Mob, the Syndicate or, like the Italians like to call them, La Cosa Nostra (Our Thing), is the name of a secret, a criminal organisation which evolved in mid-19th century Sicily. Today, it has come to define a group of people wielding substantial (political, military, or economic) power for their own benefit.
Back in 2002, PayPal was acquired by eBay for $1.5 Bn and was touted as a “worthwhile investment for eBay.” One of the major reasons for the PayPal deal was eBay’s expedition to hit the $3 Bn revenue mark by 2005. Interestingly, it touched $4.5 Bn in revenues for the year 2005.
Update [March 2018]: Flipkart Plans 4.5 Mn Sq Ft State-Of-The-Art Logistics Park In Bengaluru
But analysts had mixed opinions on the acquisition. “This is good news for eBay, but bad news for PayPal,” opined Gwenn Bezard, an analyst with Celent Communications at that time. According to him, PayPal’s shareholders would have benefited more if the company remained independent. The criticism did not die down with time either as Eric Jackson, a Forbes contributor, termed the deal as “the worst tech decision in the last 10 years.” According to him, PayPal left too much value on the table by selling early.
However, the impact of a particular deal can’t be judged by the deal size or the value founders or investors get, but by how it impacted and helped in revitalising the overall ecosystem around it.
There has been enough written on the non-probabilistic number of prominent modern Goliaths that arose from the ashes of Paypal. There are articles aplenty on the web which talk about how PayPal changed the face of Silicon Valley. However, in the context of India’s nascent ecosystem, it’s much harder to trace the origin stories of today’s entrepreneurs, investors and startups. Today we delve into one such company, the poster boy of India’s startup ecosystem and currently the highest valued Indian tech company, Flipkart and the so-called Flipkart Mafia!
Present Day India
The Indian startup ecosystem is poised to grow 2.2X to reach over 10,500 startups by 2020, according to a report released by NASSCOM in collaboration with Zinnov, last year. India stands third globally, in the number of tech startups it hosts, warding off close competition from Israel and China.
What is fuelling this acceleration is not only rising exposure to the Internet, technology, favourable government policies, foreign funding, but also legacy businesses that are now a decade-old and nurturing entrepreneurship in the country.
What started with the redBus and Burrp Mafia years ago, is now much more widespread. While redBus’ and Burrp’s reach was limited to a certain extent, the current day Indian unicorns are now deep-rooted in most of the active startups in one way or the other.
Reading about redBus and Burrp, I was inspired to cover the Indian Startup Mafia in late 2015 and, with that goal in mind, our team started collating employee data for the Indian Unicorns namely, Flipkart, Ola, InMobi, Quikr, and Snapdeal. But after spending weeks doing research – we weren’t satisfied with the data gathered – no more than 30-40 good startups had spawned from a single startup and the employees too were not evolved enough to act as angels for budding entrepreneurs. As a result, the series was put on hold.
Fast-forward to one year later
I came across this article in an Indian English daily and was awestruck and surprised by how things had progressed. The headline read – Indian unicorns such as Flipkart, Snapdeal and Ola have spawned 700 startups…
And that’s how our hunt for the next big Indian Startup Mafia began!
We picked the top 10 Indian companies and began our research. Meanwhile, we also asked people on social media as to which Indian startup has built a network which is as strong as PayPal Mafia and boy, we were flooded with numerous responses.
Redbus, Burrp, Taxiforsure, Flipkart, and Zoho – were the top picks. There is no doubt that the founders and employees of these companies have further strengthened the Indian startup ecosystem, but if we talk about a Mafia as big as Paypal – we needed to look no further than the Indian startup ecosystem’s poster boy, Flipkart, which, incidentally, also completed 10 years of existence this year and managed to raise the largest venture capital round in India’s tech history – a whopping $1.4 Bn in funding and acquired eBay India. And has received in-principle approval from Softbank for a merger with Snapdeal under the leadership of the current CEO Kalyan Krishnamurthy.
Why Flipkart, You May Ask!
It all started with two former executives of the global ecommerce giant, Amazon – two IIT Delhi 2005 batchmates and Chandigarh natives, Sachin Bansal and Binny Bansal, began an online platform just for selling books in 2007. Starting from the first customer in October 2007, and being in business for 10 years, Flipkart has now become one of the biggest ecommerce marketplaces in India with a registered customer base of over 100 Mn, has more than 80 Mn products across 80+ categories, more than 1 Lakh + registered sellers, having raised over $4.55 Bn in combined funding and is now valued at about $11.2 Bn. These numbers show the trajectory of a company’s humble beginnings to its almost unprecedented success despite devaluations by investor and changes in leadership.
There are over 207 startups that have been founded by ex-employees of Flipkart!
As per our findings, there are over 207 startups that have been founded by ex-employees of Flipkart. But it doesn’t stop there. Our data also shows that there are over 49 Indian startups that have been backed by Flipkart, Flipkart founders, and/or current and ex-employees. Almost three startups are added to the gang every month, taking the Flipkart Mafia’s strength to a massive 250+ startups.
Angel Investor, Ajeet Khurana, says, “The Indian startup “industry” is in its infancy. As a result, it needs its role models. For instance, a couple of years ago, when the angel network “Mumbai Angels” got its first major success – InMobi – everyone wanted to join as a member, and the waiting list was over a year long. In pretty much the same way, Flipkart has acted as a beacon for an entire generation of prospective founders. ‘If these two guys can set up a multi-billion dollar enterprise, then so can I’ became a slogan for everyone out there.”
Ajeet goes on to add that the ones that were influenced the most were the ones who had front row seats to the entire spectacle, namely the Flipkart Mafia. As co-charioteers in the Bansals’ journey, they took positions in what they would like to learn from Flipkart, and what they would like to unlearn. Entire enterprises were created from those lessons. “So, without necessarily intending to, Flipkart has done the Indian startup ecosystem a huge favor, and we should all be grateful for it.”
This kind of entrepreneurial reach is self-evident for a company that has been in business for as long as Flipkart has, employing thousands of people since its launch and which currently boasts a total employee strength of 27,000 – of which 8,000 are full-time employees, along with 19,000 delivery boys and others. This sprawling staff is spread across 300 cities and is vitally important for an emerging economy.
Another probable cause that aided the Flipkart Mafia Myth is the fact that the Flipkart team is full of employees who are IIT and IIM alums. They have played pivotal roles in product management, design, marketing and so on. Their expertise makes them capable of understanding entrepreneurship, hold problem-solving capabilities. All of this together enabled them to fearlessly start their own businesses.
Punit Soni, a former Googler who joined Flipkart in 2015 as Chief Product Officer and left last year to launch his own investor-backed venture – Learning Motors, further elaborates, “I think it’s pretty logical. Flipkart is one of the largest Internet companies to have been established. It has over 30,000 people working at this point in time and it attracts a particular kind of engineers and a particular kind of product person. You know, when they started it was the next generation of companies in the country, in both the kind and the number of people attracted. It has attracted the largest number of people and, hence, you can expect a large number of companies would come out.”
As cited by former Flipster, Mekin Maheshwari who joined the company as Head of Engineering in 2012 and later became Chief People Officer and investor in two startups founded by ex-Flipkart employees – the major push behind so many employees venturing out is the kind of people Flipkart hired as well as what they experienced and learnt at Flipkart.
Similar thoughts were echoed by Karthik Reddy of Blume Ventures – an investor in Exotel and Runnr, part of the Flipkart Mafia. He says, “Good ecosystems are built through cycles and we’re barely completing the first full cycle. The pre-2005 startups are the early champions but the pace and frenzy post-2010 is the pacesetter for the next decade. The larger companies or scaled startups are quite obviously the largest playgrounds and training grounds for new startups to emerge. And, so, am not surprised that Flipkart spawned a large number of startups.”
Funders And Founders
A quick overview of the data shows that there are over 233 former Flipsterswho are now founders of startups spread across India. And more than 12 current and former employees, besides Flipkart and its co-founders, who are actively investing in Indian startups. Also, the company has acquired/acqui-hired some 11 startups itself, which are now a part of the company (of these WeRead, Mime360, Chakpak and LetsBuy were shut down by the company).
These names include people like Punit Soni who recently founded Learning Motors and is an investor in a number of startups, Mukesh Bansal, the guy behind fashion and lifestyle company Myntra which was acquired by Flipkart, Ankit Nagori who co-founded Curefit along with Mukesh Bansal and raised $15 Mn funding and also an angel in Indian startups. Flipkart gave rise to Shivakumar Ganesan, founder, Exotel, Sameer Nigam and Rahul Chari, the co-founders of PhonePe which was acquired by Flipkart.
Then there is Ajinkya Malasane, Siddharth Mall and Akshay Lal – the founders of Playment which entered Y Combinator recently, Manish S Sugandhi, founder of GrabOnRent, Amod Malviya and Vaibhav Gupta – who recently co-founded Udaan which secured $10 Mn funding, and Mekin Maheshwari – who has funded more than five startups.
Flipkart is the mecca of startups in India.
As Exotel’s Shivku, who was VP Products and Technology at Flipkart until December 2009, rightly says, “Sachin and Binny are smart people with ambition and determination. The scale of what they’re trying to achieve in India is enough inspiration for anyone who wants to be an entrepreneur and follow their dreams. Flipkart is the mecca of startups in India. Yahoo! used to be that place years ago. Flipkart has become that place where you meet other startup enthusiasts that are willing to take risks and venture out to follow their dreams.”
Note: Usually acquired companies are not included as part of the mafia of a particular company, but in a bid to get a 360-degree view, we have taken acquisitions into consideration as well.
Ankit Nagori, who, apart from being a founder himself, has also invested in over six startups including Wooplr, GreedyGame and Blinge states, “If you give creative freedom to people, this is bound to happen. You know, this just shows that people are backing each other up, they have worked together in that entrepreneurial culture. There are so many ideas to pursue and everyone is trying to do that and while some would fail, some succeed, and some would try again and this is exactly what was needed and this is Flipkart’s biggest contribution to the startup ecosystem – giving inspiration to hundreds and thousands of entrepreneurs.”
The Ever Growing Flipkart Mafia: Looking For ‘Audacity’ In Employees And Entrepreneurs
Stating the reasons behind Flipsters going ahead to found companies, Flipkart’s COO Nitin Seth credits the hiring process and the qualities Flipkart looks for when onboarding someone new to the team. He says, “When we look into the profile of a candidate – we look for people who have a very high drive for action, execution, and high customer orientation. We look for a thing that we can call ‘audacity’ – they think they are very entrepreneurial and they are very good problem-solvers.”
He elaborates this by talking about the fact that ecommerce is an industry which requires firsthand problem-solving. So, employees need to have a ‘certain principal cause for per se problem-solving’ instead of having prior experience. “There is a certain DNA of people that we hire and that is a very big reason behind Flipkart’s success and those people are fundamentally entrepreneurs and, therefore, it’s no surprise that so many of them leave to go start their own ventures.”
The culture at Flipkart is not about the hierarchies or levels but it's about the data, doing the right thing for the company!
Nitin goes on to talk about the deep tech and product orientation aspect of the company. “The foundation of Flipkart is very, very deep engineering technology culture and the whole mission of the company is built on how to solve problems using technology. This comes in handy while running a tech startup. And the third is the culture, which is a very open culture – it’s not about the hierarchies or levels but it’s about the data, doing the right thing for the company. It’s not about how senior or old you are, it’s about what is the strength of the argument, logic, and idea. It’s a very open and empowering culture.”
Prior to Flipkart, Seth was the Managing Director and Country Head for Fidelity International in India and was responsible for the company’s offshore operations in India and Tunisia. Before that, he had also worked with McKinsey as Director of McKC, McKinsey’s global knowledge centre in India for eight years. Furthermore, he also founded ActiveKarma Ventures, a technology solutions company, whose primary focus was to leverage the Internet to offer innovative health and lifestyle solutions.
A quick look at the 207 startups founded by former Flipsters shows that most of these companies were formed from mid-2014 to 2016. One of the major reasons for the same can be Flipkart’s $1 Bn fundraise at an unprecedented valuation of about $7 Bn in July 2014 (some reports quoted this valuation as $5 Bn) which brought in a major surge in the funding environment for the startups in the country. As per Mohandas Pai, Infosys former CFO, Flipkart’s initial high valuation too has influenced many to venture out.
In 2014, over 29 companies were founded and the number rose to 82 in 2015. The number witnessed a fall in 2016, with only 59 companies coming out of Flipkart. The golden period was between mid-2015 and mid-2016 – a spike that can be attributed to the launch of Prime Minister Modi’s ambitious Start Up India Action Plan, which led to the launch of numerous startups across the nation.
This push from the government moved #StartupIndia from fringe to mainstream and put India’s nascent startup ecosystem on the global map. The period also saw an upsurge in the number of tech companies and international VC funds entering the Indian market, foreshadowing the golden period of investments that was pouring in across sectors – with the whole ecosystem abuzz with an unprecedented energy and newfound positive sentiment.
During the period starting January 2015 to December 2016, about $13.3 Bn was infused in 1,887 deals across Indian startup ecosystem.
According to Inc42 Datalabs, during the period starting January 2015 to December 2016, about $13.3 Bn was infused in 1,887 deals across Indian startup ecosystem. A majority of this funding was raised during 2015 (January-December) i.e. $8.5 Bn (907 deals) and the remaining $4.7 Bn (908 deals) was raised during 2016 (January-December).
Interestingly, funding data for 2015-2016 suggests that more than half of the total $13.3 Bn i.e. $8.1 Bn was raised from the second half of 2015 to the first half of 2016 – the golden funding period – and might have played an important role in the launch of new startups during that period.
The period also saw a considerable rise in the Seed funding scenario in India, as reported by Inc42 last year. Around $340 Mn was invested across 1047 deals in Seed funding between 2015-2016 (until October 2016) and saw the participation of about 1,200 unique investors. Though, more than 50% of the deals were less than $0.5 mn in ticket size, the role played by seed funders is crucial for a startup – since it’s a very early investment and is meant to support the business until it can generate cash of its own, or is ready for further investments. The rise of Seed funding has also led the way for numerous startups since it supports entrepreneurs and lowers the risk of bootstrapped startups running out of cash from the get go.
Another reason could be government efforts that have been undertaken to improve the ease of doing business by reducing the number of procedures and timeframe of incorporation. The Indian Government has taken numerous steps in this regard – for instance, the fee for incorporation (of the integrated e-Form SPICe /INC-32) has been reduced from INR 2,000 to INR 500. Efforts have also been made to reduce the average time taken for company incorporation along with getting PAN and TAN to 1.1 days.
As per a Mint Report, India is targeting an ambitious 40-notch jump in the World Bank’s Doing Business survey this year. Last year, India’s rank rose to 130 in the survey. According to an output-outcome framework document prepared by the government, India wants to reach number 90 in 2017-18 and rise to number 30 by 2020.
The Flipkart Mafia Founders’ Overview
Further analysis of the 233 Flipsters who were bitten by the entrepreneurial bug reveals that the majority of these former employees had worked at Flipkart for just around a year or even lesser. Our stats shows that about 44% of these founders stuck around in the company for a period of one year, about 8.62% for about three years, and just 7% stayed for more than three years. This can be credited to the high attrition rate witnessed commonly in startups, in general.
Gender Bender – Female Representation Needs To Improve
A quick breakdown of the numbers reveals that only asmall fraction of these founders are females i.e. 19, with the remaining 214 being male. Diversity and inclusion is a burning issue in tech startups and Flipkart is no different. As revealed by Flipkart COO, Nitin Seth, “Males comprise 70-80% of the total workforce.” In April 2017, the company, in order to start taking steps towards diversity inclusion, threw open the doors of the CEO’s cabin to a female employee, Padma Pagadala, as part of its Big 10 anniversary celebrations.
But a key reason for the lack of female founders can also be the existing gender gap when it comes to leadership positions in companies, both in the context of India and the world. According to a joint study released by NASSCOM and PricewaterhouseCooper, there is a far lower percentage of women than men in senior management roles. Additionally, as per a report released by National Sample Survey Organisation (NSSO) last year, no more than 14% of Indian businesses establishments are run by women entrepreneurs. The report further stated that there are over 58.5 Mn businesses in India, out of which only 8.05 Mn are managed by a woman, employing over 13.48 Mn people. These businesses range from corner shops to venture-funded startups to full blown corporates.
To give credit where it’s due, Flipkart has been trying to address this gender gap through friendlier policies for woman employees – its new Maternity Benefits Program includes a six-month paid leave for a new mother, flexible working hours post-return, among others. The policy also provides a Maternity Claim of INR 65,000 (Normal) -INR 80,000 (C-Section). As of June 10, 2016, over 50 employees have availed the maternity facility.
The company revealed recently in a blogpost that the percentage of women who resign from the company for maternity or motherhood reasons has also witnessed a decline in the last few years. “At Flipkart, we strive to create a work environment built on meritocracy. The challenge of fostering such a culture is as much about celebrating equality, talent, and diversity, as it is about empowering women with a level playing field at work,” says Ravi Garikipati, Chief Technology Officer at Flipkart.
Senior And Junior Job Profiles: The Qualities That Make Up Flipkart Mafia
The roles these former employees played in the company is spread across different levels – from Directors to Vice Presidents to Managers of a particular category to being Analysts to even Trainees or Interns.
Over 13.79% of these founders were analysts, 10% were software developers and about 9% of these were interns or trainees during their tenure at the company.
Employees who performed the roles of analyst, director and software engineers have a natural predilection to become founders of startups. The KRA (Key Result Areas) of the roles – Analyst & Director – emphasises a complete grasp of nuances of the market and product. This equips them to understand the key to running a successful business. Furthermore, the position of Software Developer essentially enables them with an in-depth understanding of the technologies used to build a scalable product that could address the essential use cases in the ecosystem.
But, the most interesting yet expected data point to be extrapolated from our research was the IIT/IIM tag!
Over 34% of these founders are IITians, about 8% are IIM alums, and 2% are both IIMs and IITs. This number speaks to the current prevailing trend in the ecosystem – that the IITian stereotype still persists in Indian startups. As reported last year by TOI, “Broadly, over the last two years, Flipkart has been hiring 200-250 students combined from IITs and IIMs each year.”
But after Flipkart and a few other startups deferred offer letters of a number of students last year during the so-called funding crunch, there have been some major changes in hiring activities at the campus level of these institutions. The institutes have now become more cautious about inviting startups for hiring and one major development last year was the blacklisting of 31 startups by IITs. Another was Flipkart giving a miss to IIT and IIM placement last year, as it first wanted to absorb the students hired from previous batches.
Experience Beats The College Founder Stereotype
The percentage of founders whose first job was at Flipkart is somewhere around 39%, followed by 20% people who had more than six years of experience before they joined Flipkart. Another interesting fact is, about 90 founders (66%) worked with corporates before or after joining Flipkart, while 24 founders have tasted the work life at both startups and corporates prior to their Flipkart stint, debunking the college founder myth.
On analysing the founder demographics by age, we found that over 87 founders currently lie in the age bracket of 26-30 years, while 82 founders are under the 25 years bracket.
About 127 founders started their companies when they were less than 25 years of age!
Yet another fact that we discovered was – over 127 founders started their companies when they were less than 25 years of age, followed by 60 founders who were between 26-30 when they started. And, just 18% of the founders were over 30 when they launched their startup. As per Flipkart, the current median age of the employees is around 29 years.
A more noteworthy point is that most of the companies are founded by single founders – the number is somewhere around 123, and over 42 companies are founded by a trio, followed by 10 companies founded by four co-founders.
We also found that there are over 41 founders who have founded more than one company and about seven who have founded more than two companies.
Learnings Matter: When Flipsters Reveal What Makes Them Tick
For most of the founders, one of the key learnings or takeaways from the Flipkart experience was the ownership mindset. Shivku of Exotel, says, “Flipkart has a “go-and-grab it” attitude that is necessary for successful entrepreneurs. It drives home the point that success is not guaranteed, we should not sit and wait for success.”
For Aravind Sanka, who joined Flipkart as Management Trainee and later became Supply Chain Finance Business Partner and post his depart co-founded two startups i.e. Rapido and TheKarrier after leaving Flipkart, one of the key learnings for him, apart from understanding customers, was the mindset of taking up initiatives that add value for one’s stakeholders. Yet Another one, “Trust your employees and they will do wonders.”
While, for former Senior Business Analyst at Flipkart,Siddharth Mall, founder of Playment which got into YCombinator this year, the key takeaways from his time at Flipkart was, “The power of hustle. It is incredible how much one can achieve by travelling that extra mile. In fact, that is what separates the winners. And secondly, the importance of being customer focussed. We often forget how important it is to constantly talk to your users, see if you are adding value to their daily lives if the product is really having its intended impact and then iterate and improve.
So when did the entrepreneurial bug really bite these founders?
Data shows that over 97 founders launched their company within one year of leaving Flipkart while over 59 launched after a year and the rest after two years or more.
A Deep Dive Into The Workings Of Flipkart Mafia
A quick look into the markets that these startups are targeting, reveals that the past experience of working in a Consumer Internet company has played a vital role in choosing their next venture.
Over 47.09% of the Flipkart Mafia startups operate in the Consumer Internet space!
Our research also shows that over 47.09% of the Flipkart Mafia startups operate in Consumer Internet space, with about 13% companies in the ecommerce space, followed by 9% and 7% in hyperlocal and logistics, respectively.
To this, Seth opines, “I think these can be because of two things – ecommerce in India is the biggest opportunity this country has to offer entrepreneurs. So if you are an entrepreneur, it’s a very natural space to look at. The second thing is that Flipkart is a pioneer in the space so, as a pioneer, we are exploring and shaping the ecommerce space. Being in Flipkart really gives an employee an outstanding education in how ecommerce is developing, how the industry is getting shaped.”
For Mohandas Pai, “The right exposure helps as they know the business, have insights and can avoid pitfalls. Being insiders they can spot opportunities for startup.”
Similar thoughts were presented by Karthik Reddy of Blume. “There are no rules, there are just probabilities. Consumer Internet disruptions can happen from consumer and customer insights that are very different from businesses. If one adds younger consumers, this is even truer. So, Flipkart would’ve been a great playground for engineers and product managers and business folks to learn these insights and apply them to how customers are changing behaviour and adapting to the Internet.”
He further talks about how probabilities increase dramatically when exposed to the customers’ behaviour – whether in an enterprise or through customers themselves. “It may not be necessary to have learnt that inside Flipkart or a large startup – it could’ve come from a college campus, as we’ve seen from many examples in recent history.”
Funding Overview Of The Flipkart Mafia Startups
Of the total 207 startups, over 55 startups are currently funded – 38 have raised Seed Funding, 7 have gone on to raise Pre-Series A, while 10 of them have raised a Series A round. The startups have raised about $217.8 Mn in combined funding, to date. The remaining 152 startups are bootstrapped or are yet to raise any external funding.
Commenting on the role working for a previous company plays for a founder when s/he goes for funding, Reddy says, “Not necessarily – fundraising is a different skill – it requires mentoring if you haven’t done it before – and each stage of raise needs a skill upgrade. Most founders are over-optimistic about capital raising and the market and the media feeds into that optimism incorrectly. If they’ve been in the position of a co-founder, it may be a little easier the second time around – otherwise, it’s still a tough learning curve. Fundraising is also driven more by personality traits and the ability to sell a vision with a large dose of reality, most times.”
Past experience of a founder does play an important role when it comes to funding!
However, Mohandas Pai is of the view that the past experience of a founder does play an important role when it comes to funding.
The mafia companies have been combinedly backed by about 31 angels and 25 VCs. The companies have also been funded by corporates and angel networks.
The ex-Flipsters are backed by almost all the marquee investors currently active in India including the likes of IDG Ventures, SAIF Partners, Accel Partners, Blume Ventures, Sequoia Capital, Lightspeed Ventures among others.
Our research also shows that the maximum number of companies are currently in the initial stages of starting up. These startups employ (or used to employ, in the case of a shutdown or on being acquired) about 5-10 employees i.e. 58%, while 33% employ (or used to employ) about 11-50 employees. Only 9% of these companies employ more than 50 people.
Just like Flipkart, the base of most of these companies is Bengaluru i.e. 59% of all the Flipkart Mafia companies are based in Bengaluru, followed by 15% in Delhi-NCR.
Where The Flipkart Mafia Is Right Now
Of the total number of companies, about eight startups have already been acquired. Significant deals include Flipkart itself acquiring PhonePe, Capillary Technologies acquiring Sellerworx, Indonesia’s Go-Jek acquiring Pianta, Stayglad acquired by Quikr, among others.
While 207 sounds like a huge number, it is to be noted that around 59 of these startups have already shut shop. And, out of these, just 10 startups were funded.
Around 59 of these startups have already shut shop!
Seth defends this failure rate by pointing that a number cannot speak to the value Flipkart and its ecosystem holds. “The core point is commerce and ecommerce companies are still in the early stages. With 2% penetration, if you look at most categories, they are still very decent.” He also adds that there is a process of discovery involved in this and that it is the bigger companies who are making these discoveries – either through employees or employees starting up. “They are experimenting and I am not surprised at all because that is the nature of this company.”
However, one could point out here that the failure rate is much lower than the well-known failure rate of 90% across the startup world and argue that founder experience could have possibly contributed towards this.
A Culture That Matters
“Defining the DNA of a startup’s work culture is a lot like choosing parents for a designer baby. It’s not merely about whose nose or whose eyes it would inherit, but about selecting the core personality traits that would propel it to greatness and then be passed down its flawless bloodline. Flipkart’s early leaders and their decisions defined the Flipkart culture,” reads a recent blog on Flipkart Stories.
For people who have worked at Flipkart in the past and who are still part of the company, the culture at Flipkart is more about freedom, ownership and responsibility. Mekin, who founded Udhyam post his stint at Flipkart, says, “People often shoulder responsibilities much larger than their titles and experience. This freedom and responsibility have nurtured a lot of talent. People become confident of their abilities to create value. Initiative-taking is recognised and rewarded. On Flipkart’s part – it has shared ownership with employees far more than Indian startups still do – so, this two-way ownership street is the core of Flipkart’s culture.” Mekin had joined Flipkart in 2009 as Head of Engineering and then became the Chief People Officer in 2013. He left the company in 2016 to begin his venture.
Another Flipster, Rajeev Tamhankar’s entrepreneurial journey started with INR 1 Lakh raised via crowdfunding, primarily from his colleagues at Flipkart. For him, the culture at Flipkart was somewhat like “Startups in a startup!” He says, “It’s a very upfront culture, a graduate like me got a chance to work on 35 different verticals. The team has been very supportive of fresh ideas. Many companies do not support an employee’s initiative but being at Flipkart was an exception.” He founded TBS Planet Comics and also wrote a book “Get Corporated Before You Get Fired.” Rajeev was Manager at Flipkart during July 2014 to July 2015.
Even former Manager – Digital Marketing at Flipkart Advaith Mohan who founded Wagr, post-leaving Flipkart shares that the heads and bosses he worked with, helped him in figuring out who he should approach startup, in general. “People like PMOs are really approachable and will talk to you even after you quit the company and are really appreciative of that.”
It’s a culture which lets people think big!
Ankit Nagori, who joined Flipkart in 2010, reveals the best thing about Flipkart’s culture for him. “Flipkart has a very strong entrepreneurial culture which lets people experiment and learns from their mistakes. It inspires them to think differently and that’s the reason so many people went on to start up.” To sum it all he says, “It’s a culture which lets people think big.”
Similar thoughts were opined by Aravind Sanka. As per him, Flipkart’s culture is very dynamic and aggressive and they always encourage in changing roles – if anyone wants to explore different skills to what he is doing, there is no resistance. “On a lighter note, though I was one of the important members of my team, when I said “I want to quit to start something”, my manager approved it immediately and also connected me to a few VCs.”
“Flipkart’s culture has been very important in shaping how I think today and what Playment’s culture has become,” says Siddharth. He discloses that they were usually thrown problem statements and not solutions. He recalls, “My manager and I were given the responsibility to start what finally became Flipkart Nearby. We built it from the ground-up – right from understanding the customer needs, to build the team internally, to finally launching. Although, it didn’t take off as we would have liked the whole experience was very critical in shaping my entrepreneurial journey.”
The Flipkart Founders And Funders: Giving Back To The Ecosystem
According to publically available data, there are about 14 current and former Flipsters who are or have been actively investing in startups. This is excluding Flipkart (as a company) and founders Sachin Bansal and Binny Bansal. In total, they have invested in about 49 companies.
As an entity, Flipkart has invested in about 8+ startups, till date, and most of these companies have now grown to reach a significant stage. For example, Blackbuck which recently closed a Series C round and has raised $100 Mn in funding to date and Ravi Gururaj founded Qikpod, Nestaway, Cub26 among others.
Speaking of the basic philosophy behind selecting startups for investment, Seth says, “We will look into the complementary edge and our ecommerce proposition, whether it is in the supply chain space or elsewhere.”
As far as Sachin and Binny Bansal are concerned, the duo is investors in Tracxn’s incubator, TracxnLabs, which funds startups as well. The founders have also invested in innovative companies like Pandorum Technologies, Team Indus, SigTuple among others. While Sachin has invested in over 16 companies, Binny has invested in 20.
In an earlier interaction with another news portal, Binny had revealed that, for him, investing in startups is a way of giving back. “I believe startups are going to be engines of change and job growth in India. My goal is to put more than 50% of my wealth into startups.”
While, for Sachin, the main objective is to help other companies with the knowledge they have gained and to keep themselves updated. “Flipkart is not the whole world, there are things happening in healthcare and education that one can learn a lot from and help Flipkart,” he was quoted as saying.
With more than a dozen investments underway, the duo has now formalised their investment process and – for the same – have on-boarded Sailesh Tulshan, founder at Tsai Shen Capital, a multi-family office and investment firm a while ago. Apart from looking for new startups to fund, Tulshan also overlooks future fundraising and growth of Bansal portfolio companies.
Though, usually, both Sachin and Binny co-invest, sometimes only one of them participates in the rounds due to different personal philosophies.
That’s the formal side of investments. Apparently, Binny is also an LP in four funds. One of them is the recently launched AI-focussed pi Ventures’ maiden fund founded by ex-LetsVenture founder Manish Singhal and Vimagino’s co-founder Umakant Soni.
Apart from the two co-founders, some of the active Flipster investors include Mekin Maheshwari (6) and Ankit Nagori (6).
To this, Mekin says, “Given that a lot of Flipkart folks owe their success to the company’s meteoric rise, they are believers of startups – I would expect the angel investment trend to only continue and grow. As Flipkart’s success creates more value for its employees and founders – they will invest a good portion of that in startups.”
For Shivku too, this trend will continue unless the Indian consumer story defaults. He says, “These angels are the first people who have a good understanding of the propensity of the Indian consumer to spend. And I feel they make investments based on this knowledge.”
Although one might argue that the highly inflated salaries might have something to do with the number of Flipster turned angels!
In totality, these Flipkart and Flipster-backed startups have, till date, raised $390.62 Mn in funding. While most of these are currently in Seed stage, about 11 have closed Series A rounds and four have raised more than Series B round of funding.
Additionally, only four startups have closed down and just one has been acquired till date.
Culture Wars: Clash Of The Titans
In 2015, the New York Times did an expose on the global ecommerce giant, Amazon, wherein a harsh light was thrown on the workplace culture and practices of the company that is currently worth $292.6 Bn. Amazon along with China’s Alibaba are the frontrunners in the global ecommerce market.
The story highlighted the fate of the employees who were unfortunate enough to catch Jeff Bezos’ ire or ‘underperform’ in graphic detail. Firings, breakdowns and more were shown as part of the startup norm that was inculcated and encouraged at Amazon. While Amazon’s articles of faith also talk about ‘hiring and developing the best’ and ‘taking ownership’ at work, the story showed a brutal side to the scale hungry and otherwise frugal employer that Amazon is known to be.
Flipkart which, ironically was founded by two ex-Amazonians, has managed to turn the tide on its employee attrition rate. With a transparent evaluation process already in place, Flipkart has maintained a high bar when it comes to rewarding the top performers – the salaries of some of the top employees being just one example. Not only this, the team works closely with underperformers and help them achieve the desired progress in stipulated time period.
Flipkart has been the most important startup to influence the growth of the Indian startup saga!
“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” – John Quincy Adams. Flipkart is now ironically battling against the giant itself on its home turf, India. The outcome of this long drawn out war cannot be predicted for certain. But what can be said for certain is that has undoubtedly Flipkart been one of the most important startups to influence the growth of the Indian startup saga and spawned a formidable Mafia that continues to flourish.
To Infinity And Beyond
When we began this story, we spoke of the PayPal Mafia and how it has inexorably affected Silicon Valley – right from the way entrepreneurs did business and the confidence investors showed in their ventures to a lot more. The same can be argued for the homegrown unicorn.
With over $400 Mn in the capital that has been raised by Flipsters so far, there is no doubt on the kind of investor confidence Flipsters get. This again circles back to the core values instilled in Flipkart employee and ties into the lower rate of shutdowns experienced by these founders, as opposed to the 90-10 startup rule. While running a company requires more than handling finances to ensure burn rate is kept in check, in the wake of the Startup India and Digital India’s forward march – these entrepreneurs have also, in a way, helped push the idea of entrepreneurship into the mainstream.
This brings us to the most important legacy a company can leave behind.
JFK famously said, “Ask not what your country can do for you, but what you can do for your country?” In terms of numbers, maybe the Flipkart Mafia is yet to scale the heights achieved by its more illustrious global counterpart in Silicon Valley, but here is what it has, more importantly, achieved – instilling a sense of ownership in starting up and failing, understanding the value of synergy (giving back to those who came after them), and the importance of never giving up – be it in terms of innovation, funding or beating the obvious gender disparity.
The Flipkart Mafia’s impact will go down in the annals and Indian startup history... to infinity and beyond!
With so many of its employees and ex-employees going out into the world, armed with the knowledge of Indian ecommerce and consumer mindset, building companies at scale, strong ownership and problem-solving capabilities, it is no wonder that the company has managed to stand out as a beacon for the Indian startup ecosystem. Whether it began as ‘Our Thing’ or a syndicate of like-minded individuals determined to put their work ex to good use, it cannot be denied – the Flipkart Mafia’s impact will go down in the annals and Indian startup history… to infinity and beyond.
[Credits: Sukriti Thakur for Research, Ankan Das on Analysis, Ujjwal Paul for Illustrations, Anika Sharma for the Interactive Graphic, Aarti Venkatraman & Utkarsh Agarwal for Editing.]
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