Okay. First thing first – Forbes has a cover story on Flipkart’s epic (expected) fall and while there are a few opinion pieces running all over Facebook and Twitter, I decided to put forth a few important perspective regarding Flipkart.
Well, VCs are known to pass startups for several reasons. At one point in time, not a lot of VCs were ready to invest in InMobi too!
What about Flipkart? Well, let me share a context here.
Circa 2008 (or was it early 2009? I do not recall), I met this VC firm which was willing to invest in Flipkart (I used to/and still advise funds on a pro-bono basis, mostly over coffee/beer). The firm had one major challenge – they liked Flipkart a lot (and I really mean A LOT), but the company was looking for only $1mn or so.
The fund (at that point in time) only used to invest a minimum of $5mn and hence, they decided not to go ahead with Flipkart.
I again met this fund in 2011 and over a casual conversation, the person did say that not investing in Flipkart was their biggest mistake. In fact, the fund later started investing lesser than $1mn in startups and I believe, Flipkart episode did make them rethink their $5mn strategy.
Lesson learnt : VC will pass you for 100 more reasons that you can even imagine. And General Atlantic not investing in Flipkart for valuation etc reasons (which we already shared on Pluggd.in) doesn’t really build a strong correlation regarding Flipkart’s fall.
Most of them will be reasons as frivolous as above. A VC passing over an investment has absolutely no correlation to the core business viability – even VCs know that.
#2: Employee/Management Issue/Old-boys-club.
Forbes mentions that there is just too much of IIT D (same-hostel) club in Flipkart and apart from that, Flipkart has management issues in scaling up etc etc.
Anybody who has ever read ‘The Animal Farm’ will appreciate that there will and always be hierarchy in an organization and there will always be known-boys-club (or girls-club if you may like) in any organization.
Is that good for the org? My question is who are we to decide? Apple, Google, Microsoft, Amazon, Reliance, Tatas – they all are known to have a ‘clique of decision makers’ and getting an entry in that closed group is considered a BIG deal. The only big company (I know of) that doesn’t really has that clique culture is Yahoo and we all know how strong are they at decision making!
You don’t build great companies on democracy, after all.
More importantly, Forbes’ conclusion that a clique is not good for the business betrays a certain lack of knowledge and experience in “running” (not reporting about) companies.
My point is that closed groups are okay if that fits the *need of the company*. Yes, it will piss off people, but then organization is much bigger than a few individuals. And more importantly nobody cares a damn if it is adding value to stakeholders and delighting customers.
Long story short, we are nobody to decide whether a IIT D club is good or bad for a company. These are management issues and let company figure it out (eventually).
As far as management issues in scaling up is concerned, tell me which company isn’t going through this challenge? The sad truth is that journalists often look at ‘keywords’ and end up generalizing things and finding causal behavior, which is dangerous.
Infact, totally agree withMukund that startups are great on the outside, messy in the inside.
#3: Flipkart is obsessed with customer service – hence is pricey. And hence will fall.
Okay. A reverse correlation is that since Forbes is growing (am assuming so), they aren’t obsessed with customer service?
Well, Forbes started it!
In Management 101, it is taught that Customer is King. And not without a reason. Almost everyone remembers the first time they ordered books from Flipkart and the beautiful package which arrived. This is apart from exemplary call center service and follow ups. Compared with a Letsbuy or DealsandYou – they are heads and shoulders above peers and rivals.
Yes, they have issues, but that doesn’t really mean that obsession towards customer service will result in an epic fall. Again, no direct correlation.
#4: LetsBuy acquisition
Well, enough has been said about it – and like we precisely said,LetsBuy could have turned into a distraction for Flipkart – so shutting the site was probably a good business decision (?). In fact, Flipkart just managed to not turn itself into a Flopkart by shutting down LetsBuy.
Was acquisition forced by investor? Maybe (we have asked this question number of times). But how is this related to the (expected) epic fall?
The bigger problem with Journalism
The biggest problem with journalism is lack of context. Most of the journos are looking for ‘stories’ – they have a brief and they just want to break anything that comes their way. The same journo, tomorrow will do a story on healthcare or even any damn i-don’t-care business. Most of the journalists are detached from the realms of business and tend to create stories around a decided framework – and the framework has only two options.
1. Depict RISE
2. Depict FALL
With 1 intent : Drive SALES/PageViews.
The underlying hypothesis (and the truth) is that people need *masala* (crunch) and business masala always comes in either sharp rise (i.e. heroes) or a sudden fall (i.e. villain) of companies. Anything in between isn’t worth covering.
Will Flipkart Fall ?
Well, your guess is as good as mine and while we all can do a good job of armchair analysts, let’s look at what Flipkart needs to fix? Customer service? Pricing ? Share your suggestions (in the comment section).
Long story short, the point I am trying to make here is that Forbes might have its own hypothesis regarding Flipkart’s (expected) fall, but the reasons mentioned for Flipkart’s fall are mediocre and does not depict the reporting standard one would expect from Forbes.
– Read our ecommerce plus insights.
[With contribution from Sameer Shisodia and Pratyush Prasanna. The title is ofcourse, *inspired* by Forbes article on Flipkart.]