Why Mahesh Murthy is rightly wrong about Flipkart and Ola

Where do we go now.
Where do we go now.

Unless you were living in a cave, you should be aware of the state of affairs with Indian unicorns like Flipkart and Ola.
They are in a bit of shit and are now asking for govt protection against capital dumping by foreign competitors (Amazon and Uber respectively).
Mahesh Murthy has written a candid piece which is a pretty good roundup of the situation right now. While I agree with Mahesh (esp on take by Kalaari and Matrix – which is purely misguided), I think he is totally discounting the efforts Flipkart and Ola have put in creating the ecosystem.
Comparing just the numbers do not really help. Context matters.


“Flipkart took 9 years and US$3.5 billion to grow to where it is. It asked for a price of $15 billion to be acquired. Amazon did something smarter. It simply took less than $2 billion (about 1/10th of what was demanded) and built a larger and better-loved business in India than Flipkart that too in 1/3rd the time.
Ola went the same path. It raised $1.3 billion and spent a lot of that to build a business that it asked for $5 billion to sell. Uber didn’t take the bait, and like Amazon, just spent 1/10th that amount – i.e. around $500 million to build a larger and more loved business in India than Ola, once again, in 1/3rd of the time. Perhaps there’s a formula here.” [Mahesh]


Mahesh argument is quite flawed and misses out on the market creation part played by these two companies (i.e. Flipkart and Ola).
Flipkart, to its credit played a huge role in creating the ecommerce space in the country. If you are used to CoD – be thankful to Flipkart for executing CoD at scale.
Great customer service? 
Not a thing for most Indian companies till Flipkart came in and focused red-eyed on building a great customer service brand. It was the biggest USP of the company for a very long time.
Tech brands from the country? 
Well, it’s easy (and cool) to diss off every single accomplishment by Indian startups and call them copy/paste, but really difficult to respect them for what they have been through.
How many tech brands existed before Flipkart ? Surely if you consider Rediff as one.
Trusting online companies?
Rediff / Indiaplaza/ Indiatimes – they were all full of shit when it comes to ecommerce. Flipkart, to its full credit helped create that trust with easy returns policy, spend massively on TV ads et al.
Recommended Read : Evolution of Indian ecommerce through TV commercials.
Growing talent?
Where do you get product managers / online marketers / growth hackers / data scientists in the country? For a country where there was no product culture (do we have one now?), most of these startups have actually helped created that tech culture. Of course, Amazon and Uber who don’t need these operating roles in the country and when they do – they just poach. They don’t have the patience and the mandate to create and train such talent.
Pushing the envelope?
Be it Flipkart’s first big billion days or Ola’s city launches – these companies have paid the price for pushing the envelope. They did disrupt the existing food chain and that hasn’t gone well with folks (remember how offline retailers campaigned against Flipkart?), including government.
In a country full of chalta hai / ho jaayega / kal karenge attitude, these companies have tried (and still trying) to setup new standards for other startups to follow and you can’t take it away from them.
Right from hiring to creating and retaining talent, these startups have done a great job. Of course, that needs a huge investment unlike their foreign counterparts who have a playbook.
Hunter Vs Farmer
History has never been kind to farmers. Hunters take away everything – fame, revenue and the glory.
Flipkart and Ola were the farmers who proved to be extremely inefficient hunters and I can certainly hope that things change.
We can be original. We can innovate. But Mahesh – let’s also respect the innovation and originality these companies have shown* because if you don’t do that, you won’t see more originals coming from the country.
And just to share, Mahesh’s investment redBus DID NOT create any money for its employees (founders and investors made all the money). Flipkart has created an opportunity for a whole lot of employees (am not so sure about other unicorns).
Taking cue from the noted urban motorist and noted wildlife conservationist Salman Khan, here is what I expect from Flipkart and Olas of the world.

* : Couple of things.
1. I have no respect for the way Flipkart and Ola have spent on PR/marketing and lost track of the product (and consumer). I have been the most vocal on this.
2. I have no personal agenda/interest in these companies. FYI : I haven’t spoken to any of these founders in the last 2 years. They are well protected by their PR folks and I hardly give a shit to all this. Having said that, I do respect companies and founders for all they create.

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32 comments
  1. So are you suggesting any company fails to make a mark, got should be ready to help them just because they created the ecosystem?
    Guess you are missing the point, got and banks did the same with kingfisher and you know where they are.
    I dont see reasoning behind the term level playing field. Yes the competition should exist to avoid monopoly. But that should mean thinking innovatively rather than just copying a model.

  2. Sorry – but dont think you even read the piece. I am not even supporting these companies in asking for help from govt – but lets not undermine what they have achieved so far.

  3. The Growing Talent point is spot on, which most people tend to disregard. The experience I had with Flipkart helped me get into and pay tuition for an Ivy League University. For me, the culture and the kind of work I do at Twitter is not very much different than it was at Flipkart.
    Amazon has an amazing cash cow in AWS to keep bleeding in India for years. The other companies do not have this advantage and will have to cede long term. Having said that, India is a large enough market where even being the second biggest eCommerce company can deliver huge amount of value to the eCommerce ecosystem. This, however, seems to be a big ego blow for most players. Attitude like that Mahesh Murthy’s just makes that fact harder to swallow.

  4. Thank you for this piece. Its good to know that people don’t pass judgments without numbers but it’s great to see that people also have the capacity to put the numbers in context to form an informed opinion. Unlike our relentless armchair critics of Social media who insist on putting everything as black or white, it is articles like these which make you believe that people do have the capacity to look at nuances and accept that reality is often grey.

  5. The credit for building the category , almost from scratch can’t be taken away from both Flipkart & Ola. They did the dirty work burning way too much cash. Over time, especially in case of Flipkart, they started paying insane compensation for mediocre talent . Also started burning loads of cash on building non-critical infra. Guess, they got carried away by the “consultant” fixation. Contrary to popular perception within the consumer web space, it is actually not gameover situation yet. They both have enough time to get rid of flab and kick amazon/uber’s b**t.
    We do not have a history of a US orgs dominating transnational play. MMT/cleartrip ( and not expedia) rules Travel, Naukri ( and not monster) rules Jobs, Zomato rules food, Matrimony.com ( not Tinder) rules desi dating, Justdial ( not olx) leading local etc..
    Most important – One of the major reason why new age Indian consumer web orgs screw-up is that they get the hiring game wrong, unless the org is led by someone who tackled senior level responsibilities while employed. Infoedge, MMT et all have got this damn thing right.
    Ashish, Its not flipkart that started wealth sharing. In fact they are doing the wrong thing by paying huge compensation while bleeding cash, whereas Infoedge shared wealth with almost everyone who stayed with them. They paid nominal salaries , but shared wealth when they made money and went public.That is how you share wealth.

  6. It’s not actually a rebut to Mahesh’s article butt definitely provides insights into other dimensions. I am proud of Flipkart and Ola and RedBus as well. The challenge is that at some point, there isn’t any value differentiator among equals. Uber does what ola does what uber does. There is a limit to innovation driven growth for each product. And that is where the capital dumping starts hurting.
    In the Karma Bhoomi of Bharat, most debts get called for pretty soon. What our Unicorns did to the brick and mortar traders and taxi walahs the bigger firangs are doing to them. It is like stars competing with each other in who burns out first. All of them glow beautifully on investor money and all are hurtling towards earth. Aur hum…hum diwali dekh rahen hain.

  7. Ashish they built their fortunes on OPM + Luck…Other People’s Money…And what is so great about this ecosystem…No one is making profits… And if you were in any other industry you would have been sent home by now.
    Flipkart may take credit for starting the industry…But let’s face it…Where is there a business model in selling products at rates below MRP because you have rich godfather’s to line your pockets.
    Having worked in traditional industry and also in the ecom space… what this business has squandered in investor money is a result of this big fog called “startup ecosystem” where any kid walks out of college with the idea to strike it big…And the same is evaluated, funded and mentored by a bratpack with total work experience less than a secretary to an MD.
    Time for all to smell the coffee…It’s a free world out there and if you can’t stand up on your feet within 24 months…Shut shop and go home.

  8. It’s not like Redbus was the first booking platform in the world! The other companies he enshrines in the pantheon of greats – Paytm, Airtel, Bajaj have global comparables that came decades before it. He will never acknowledge any innovations coming out of non-portfolio startups because his salary depends on it.

  9. While I am an admirer of Ola and Flipkart , I always have more faith in Amazon and Uber ! Why? I got no idea , but they just seem so right . Why does India startups have to be a copy from West in most and many cases ? Do we have so much of brain drain to other countries that our country cannot come up with an only me unique startup ever which other copy !

  10. Very insightful. I am of the view that government should put a cap on foreign investment to help Indian startups. Ease help ola and flipkart. These are two great Indian startups of our times that have brought a change in our lives!!

  11. How does any of these things entitle them to ask for protection ?
    The rewards for all of these is the fact that they are in the market and competing with the likes of Uber and Amazon which none of their competitors (present and non existent) are able to do.
    Amazon is slugging it out with a much larger competitor, Walmart who have multiple X’s of whatever they can throw into the pitch, yet they are taking it on and remarkably well at it.
    Protectionism would only build complacency and a false sense of achievement akin to the pre 90’s Indian economy.

  12. Agree with you – but for creating category you have to create a winning proposition for the consumer. Price works to start off – the problem arises when it becomes the only proposition, which is the case now.

  13. It’s not about the brain drain, its about the First and third world or you can better say the developed and developing countries, they face any problem to create a business almost 4 to 5 years earlier, even some people form india came with great idea but those are not commercial viable and they have to wait till 4 to 5 years & for a startup or a new idea its huge time period. isn’t simple enough 🙂 so stop thinking in a way of brain drain, still Indian has more brain, what say, Alive and kicking in india only 🙂

  14. Very well, but fortunately or unfortunately; Amazon is doing a much better job with ALL the points you mentioned above NOW. No one really gives a damn about someone who started the vertical, Kodak pioneered the personal camera industry, look where they are now! I work at a large e-commerce company in India and I know how terrible the real numbers are in terms of EBITDA, and how better off Amazon is with those numbers.
    The entire model is questionable and the entire idea of how pricks like Vani are barking now is also questionable.

  15. India was uneasy with e commerce. But flipkart took around 5-6 years to make it a norm. After it became a norm, Flipkart started to get benefited from this. But Amazon was like a hunter who was waiting for the right time. Amazon used its Massive economics power in India to size that opportunity. Amazon didn’t made the norm of e commerce in India. Its all flipkart who gets the credit. So if they ask for govt help then there’s nothing wrong. Similar is the case with ola

  16. Agree – the entire model is questionable. Flipkart hasn’t really moved from ‘discount USP’ to product / loyalty. That’s where they screwed up big time.

  17. I re-call pitching to Mahesh 5 years ago for my e-comm venture. 2 of the founders had background with Flipkart and Myntra, and I could see Mahesh just cannot digest it. He was like, wait for 2 more years and you will see these companies vanish. This hate of his, is not due to today’s scenario but have been there since inception, I would say current scenario of FK/Ola just gives him a reason blabber and blog. We never turned up for follow on meetings after getting to know more about him.

  18. The brand positioning (in todays context of information and consumer engagement at multiple levels) has to be more of an invitation to explore it further rather than a ‘deal clincher’ …flipkart or ola for that matter do not occupy a distinctive place and value relative to their competitors ( the play of international lineage and the Indian consumer mindset gives amazon and uber the advantage) . It is never too late to go back to the basics and have a closer look at the brand foundation and the key aspect of brand promise vis -a-vis the delivery. The bottom line – it doesn’t matter where the idea comes from / or if it is copy whoever executes the best with the core target consumer and their needs and insights in mind wins !

  19. This “level playing thing’ seems to be some kind of an epidemic… First Vani Kola and now, Airtel.. I agree with Ashish Sinha to the extent that we cannot be questioning the model in its entirety. However, the fact that is becoming indigestible to many is that “VCs are asking for protection!”. I mean, how absurd does it get? I mean these are the folks who are supposed to innovate, disrupt and break down protectionist eco-systems. Also Ms Kola’s appeal is a bit suspect since she has vested interests. In essence what she seems to be saying is ‘its ok for the funds to burn money, but not competitors in terms of companies’. That argument is a bit flawed. Would she be ok, if Amazon invested the money that it has by getting it from a VC? Would that make Ms Kola see a ‘level playing field’? Is the source of money the issue or the money itself? Again ‘Capital Dumping’ is another fancy term coined by the VC against these companies (Amazon, Uber) which defies logic. They have the money and see a potential and are spending. it is as simple as that. It is a business decision. Just because the VCs here dont have the potential or dont want to make those investments, doesnt make the investment by Amazon/ Uber ‘unfair’.
    Mahesh’s points, if seen limited the above, seem ok. The first mover also makes the most mistakes and Amazon has a knowledge base of having been there, done that, which they are exploiting.
    Vani Kola’s tirade is nothing but a gripe call.. nothing more and certainly, nothing less!

  20. So how is this scenario any different from the one 5 years back when there was an online vs offline debate? In a similar context the offline guys were the farmers and FK/Ola hunters.
    When they distruped the market and setup a new precedent of conducting business then how come suddenly they start saying that all of this happening is not right. When you were the lone racer you were enjoying the game and suddenly when you see the competition, you cry for protection!
    Also the primary fact still remains the same is that what had drawn people from shops to sites was convinience and better service.If you have used all four mentioned above you will understand why the ‘foreign’ two are leading the market.

  21. I’m sorry but some of your claims are just blatant assumptions. eBay was executing COD a scale while Flipkart was still teething. Yes, today it’s fallen way behind a lot of the newer players and we can keep arguing about how FK did it at a larger scale than eBay, but that doesn’t take away from the fact that scale was there with eBay.
    Secondly, your claim that Amazon & Uber don’t train but poach – how many of FK’s top management grew within the ranks? They poached as well! From Google and elsewhere. That’s just how corporates work, and none of them are any exception. And all three and more recruit from campuses and train talent at different levels.
    Trusting online companies – you completely underestimate what the online travel folks have done here. MMT, Yatra & the likes had already started the initiative a lot earlier and were (and continue to be) trustworthy.
    Customer service – agree, FK did this really well in their initial days and it was indeed one of their USPs. No longer is.
    Lastly, Amazon & Uber have a playbook and the local ones don’t? Let’s not kid ourselves – FK and Ola pretty much ripped off their entire business platforms from their global counterparts.

  22. Indiaplaza.com India’s first and failed e-commerce company did all the stuff well before flipkart.

  23. I did not even read your whole article (no use actually)…just glance through it…. Becuase In a way you are saying FK and ola should be protected because they were first movers and and lost that big advantage to others ? who terrible is that argument. I think amazon and uber understand India & business better!

  24. And how do we account for Rs 35 crore salaries for HR Head kind of roles? 🙂
    Flipkart simply let go the market dominant position they had, shows how much a startup has to be vigilant and on its toes all the time!!

  25. You are getting this completely wrong Monty. The post never mentioned about “protecting Flipkart and Ola”. The objective of this post, is to let folks know that it is actually Flipkart and Ola who brought E-commerce and cab booking respectively to the then obsolete-to-tech Indian masses. Please understand the context before you write.
    And yes, the Flipkart and Ola have handled their products, is certainly not right. And I guess the post does mention that towards the end.

  26. Please be aware of the fact that those salaries include ESOPs which matured over time. 35 Crores which you see, isn’t “salary”. Please read and research before you comment. And if you do read, read both sides of the argument.

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