Fifteen years is a long time in the life of a startup. According to US-based market intelligence company CB Insights, the longevity of 70 per cent of tech startups is estimated at 20 months after the first round of funding for a combination of reasons. Slicing and dicing information from more than 100 “post-mortems’’ based on startups that failed in the US since 2018, CB Insights narrowed down on several reasons as to why a startup is not able to survive. From lack of cash to flawed business models and regulatory challenges to disharmony among the team, a large number of startups typically cite these reasons while folding up.
In that background, Flipkart, which would have faced at least some of those roadblocks, can be a good case study. The original poster boy of Indian e-commerce will turn 15 soon. When Sachin Bansal and Binny Bansal (not related to each other) launched it in October 2007, they wouldn’t have known the course the company would take eventually, and the twists and turns it would witness.
Looking back, almost 15 years later, the road from Koramangala in Bengaluru to Bentonville in Arkansas (US) has been like none other in the startup universe. Starting as an online book store from a two-bedroom apartment, Flipkart is now majority-owned by Bentonville-headquartered Walmart. Here’s a look at what the journey of close to 15,000 km, from Bengaluru to Bentonville, entailed.
First, about Koramangala itself. While Flipkart made this south-eastern neighbourhood in Bengaluru—known for tree-lined avenues, rooftop cafes and upscale apartments —a startup destination, a lot has changed in recent years. High real estate cost and deteriorating infrastructure have sent startups packing to yet another locality, HSR Layout in the suburbs of Bengaluru, which has turned out to be a cheaper option. Flipkart too got a new address a few years ago at Embassy Tech Village, an IT park on the outskirts of the city. Quite a shift from the two-bedroom apartment, where it had all started, to a complex that has often been equated with 12 football fields.
The nature and scale of competition that Flipkart has faced over the last 15 years have been quite dramatic. In the early days, the Bansals-led company hardly had any competition. Then there were players such as Snapdeal, Myntra (subsequently merged with Flipkart), Jabong and a few others trying to match up.
In June 2013, Amazon went live in India, stepping up the level of competition for Flipkart. The following year, Amazon founder Jeff Bezos (dressed in a sherwani and holding dollars) made a statement of sorts while getting clicked atop a truck during his India visit. Amazon billboards on Diwali sale were cutting into what had been Flipkart’s domain so far. While Amazon and Flipkart sales figures are not given out, the American company seems to have clicked better with urban buyers, whereas Flipkart continues to be a mass online player. In the meantime, the Flipkart versus Amazon battle turned into a continuation of the American retail war between Amazon and Walmart, as it acquired the Bengaluru firm.
Perhaps the only constant in the online commerce space during these 15 years was the lack of clarity in policy and regulation. The e-commerce policy is still in the making and many drafts have gone into the bin. There have been guideline changes for foreign e-commerce players from time to time in the form of Press Note tweaks to keep the landscape safe for domestic players. There’s time still before a comprehensive policy can be introduced.
While the government is yet to get its act together on the policy front, the industry has made significant strides during the Flipkart years. Fintech has gained currency and being a unicorn is like a movement. India has crossed the 100-mark in unicorns—startups valued at $1 billion or more—and is on its way to the next 100.
But despite the unicorn rush, startups have taken a severe beating as funding has dried up. From the heady valuation days of Flipkart, when marquee investors were celebrated in the startup offices and in public events organised by the government, it’s time for a reality check now. It may not be as bad as the dotcom bust at the start of the century yet, but pink slips in startups, across categories, are a new normal. And so are stuck funding rounds. The startup initial public offerings (IPOs) have also come to a halt.
Flipkart, which is rarely listed as a startup or unicorn now, has also had to delay its IPO. The Koramangala startup may have outgrown such lists, but in many ways it still belongs to that world still.
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