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What Next For Zilingo? Questions Linger Around Vacant CEO Post

What Next For Zilingo? Questions Linger Around Vacant CEO Post

The Singapore-headquartered company had roped in audit giant Deloitte to look into the harassment charges raised by cofounder and CEO Ankiti Bose

Dhruv Kapoor has also reached out to employees this week looking to put an end to some of the internal questions around harassment and culture

But one question still remains despite these steps, and that’s to do with who is leading the company through this tough time, something which Zilingo has not yet addressed directly 

Despite pressure from all corners to solve the crisis at Zilingo and within its leadership, Singapore-headquartered fashion startup has so far remained silent in the face of several allegations, including questions around who will lead Zilingo out of the current crisis.

Zilingo has roped in audit giant Deloitte to look into the harassment charges raised by cofounder and CEO Ankiti Bose, sources in India told Inc42. However, it is the lack of a CEO at a critical time, which is spooking some employees.

Besides this, the dismissal of Naushaba Salahuddin, the head of PR and communications as well as the Prevention Of Sexual Harassment (POSH) committee has also been questioned by some, since it comes amid sexual harassment allegations.

Even as it investigates the claims through Deloitte, Zilingo is looking to put an end to some of the internal questions from employees around harassment and culture. As per sources, cofounder and CTO Dhruv Kapoor decided to write a company-wide email addressing these allegations. But at the same time, officially, Zilingo has not spoken about how the company is being run and who will lead it into the next phase.

In the past we have seen CEOs such as ICICI’s Chanda Kochhar being suspended for irregularities and replaced soon after. Similarly, BharatPe underwent a leadership change with the exit of Ashneer Grover who was the managing director, amid a probe. Will the same fate befall Zilingo’s Bose?

Deloitte Leads Harassment Probe

As reported earlier, Zilingo’s board suspended CEO Bose on March 31 after a whistleblower allegation into discrepancies in the company’s accounting. Bose is said to have been suspended for fear of interference in the investigation process. The company has already appointed risk analysis and investigation firm Kroll to look into the financials.

In the wake of the suspension, sources indicated that clashes between Bose and Kapoor over the vision of the company and the cultural disparity between operations and technology led to many growth hurdles for Zilingo in the past few years.

Besides this, Bose’s relationship with Zilingo’s primary backer Sequoia is also said to have strained in 2021, in the lead up to her suspension following the whistleblower allegations. However, it is not yet clear what fraud or wilful mispractice is being investigated.

Even as she was suspended, Bose fought back with a legal notice around alleged harassment faced by her in 2021. And now Deloitte is joining in to probe reports about harassment raised by Bose. Bose had sent a legal notice to CTO Kapoor and chief operating officer Aadi Vaidya for not acting on the complaints raised in August last year.

Deloitte will be seeking all documents and emails pertaining to the harassment alleged by Bose, as per sources close to the company.

Cofounder Dhruv Kapoor Addresses Employees

CTO and cofounder Kapoor did not respond to requests to clarify issues in relation to Salahuddin’s dismissal and/or suspension, while questions about who is leading the company continue to remain unresolved.

Sources close to the current leadership told Inc42 that while a lot of issues have been dredged up amid the current controversy, many of these harassment allegations were investigated and acted on in a timely manner.

Addressing this further and alluding to reports about past incidents in relation to Zilingo, Kapoor told employees in the email which Inc42 has seen, “We’ve always had a culture that does not tolerate sexual harassment, workplace harassment, bullying or intimidation… In rare cases when workplace issues were reported, we’ve always followed due process and taken strict action.”

He also indicated that the current crisis has resulted in a media battle between all parties involved. “We’re troubled to see some people in the team act against the interests of the company, sometimes in a way that hurts Zilingo’s reputation or the reputation of various people in the organisation.”

Another problem is the unexplained suspension or dismissal of PR head Salahuddin. There’s no clarity yet on why she has been suspended or if at all dismissed.

Sources close to Zilingo have alleged that cofounder and chief technology officer Dhruv Kapoor is at the centre of Salahuddin’s reported dismissal. “Naushaba (Salahuddin) is very close to Ankiti (Bose), and as such, this is a clear attempt to remove any elements that are seen as close to Ankiti,” one source told us.

Zilingo did not respond to questions about the dismissal of Salahuddin. The company also declined to tell us who is currently carrying out the responsibilities of a chief executive officer since Bose remains suspended.

But Kapoor addressed the gender diversity in his email: “Zilingo not only has a nearly even gender ratio but also has a number of women in leadership roles. These include country managers and SVPs of our business orgs, many of our senior engineering leaders, our senior product managers, our data & UX leads, leaders in the HR, finance, and legal teams, and many more.”

Who’s Leading Zilingo & Will Ankiti Bose Return?

But one question still remains despite these steps, and that’s to do with who is leading the company through this tough time? Sequoia Capital India is the largest shareholder in Zilingo with over 26% stake in the company, while founders Ankiti Bose and Dhruv Kapoor hold 8.58% stake each.

In the past few weeks, names such as former Myntra CFO Ramesh Bafna have been reported to be in line to replace Bose at Zilingo. Bafna came on board as the CFO of Zilingo in  March 2022. A potential transition to a new CEO would not be easy if Bose continues to have an 8.58% stake and a board seat at the company. She is also likely to take steps to prevent her ousting from the company.

Zilingo Shareholding - Ankiti Bose, Dhruv Kapoor

As of now, there’s no official statement on what the fraud is.

Sources told us that as for day-to-day operations, Bose’s responsibilities are being fulfilled by other leaders in the company. While Kapoor continues to lead product and tech development, he’s also actively looking into other areas of the operations, along with COO Vaidya.

The other alternative besides getting in a new CEO is a distress sale or a hurried M&A deal at a lower valuation, which will impact employees — typically, quick transitions such as this involve layoffs before and after the acquisition.

So while Kapoor and the company are fighting multiple fires at once, the outlook is grim for the Sequoia-backed startup once considered a jewel in the VC’s crown.

There’s also no clarity on the future of Bose at the company, and even sources close to Kapoor said there’s no timeline given on the status of the investigation. According to earlier reports, Bose was suspended till May 5, 2022. Will the former CEO be back in the company later this week or will we hear from the board on a potential extension of the suspension or even a resolution to the investigation?

The startup and tech world is not a stranger to founders and CEOs being removed from their posts. The most famous example is perhaps Steve Jobs at Apple, while the likes of WeWork’s Adam Neumann and Uber’s Travis Kalanick are more recent examples. In India, the biggest recent instance has been the removal of Ashneer Grover from BharatPe amid a similar probe into financial irregularities.

While Grover had been replaced as CEO in August 2021 by Suhail Sameer, he continued to be counted as a cofounder and managing director till his removal in March this year.