The story of how two young men grew a small online bookstore called Flipkart into an ecommerce giant is one that Indian entrepreneurs will remember for years.
They had a great understanding of the people in India, their needs and budget, yet it took them 11 years to build Flipkart. They were doing fairly well, until the e-commerce giant Amazon began giving them tough competition. In fact, Amazon offered to buy Flipkart!
And to our amazement, the founders of Flipkart, Sachin Bansal and Binny Bansal had quit their jobs at Amazon to create Flipkart. But now, the tables have turned. The Walmart Flipkart deal is done.
Walmart has acquired 77% stake in Flipkart; Sachin Bansal, Tencent, Microsoft, Naspers and Softbank have exited from Flipkart; total valuation of Flipkart becomes $21 billion; Amazon is planning its strategies, and the world looks fairly happy.
We want to ask the Tatas, Birlas, Ambanis, Mahindras, and other Indian Billionaires, how did you not see the elephant in the room?
The country’s largest conglomerates possibly are not regretting missing out on it. They don’t even care if Indian dreams, like this one belonging to Sachin Bansal and Binny Bansal get auctioned and purchased by American lads.
Walmart’s $16-billion deal for acquisition of a 77% stake in India’s largest online marketplace (Flipkart) is the world’s biggest e-commerce deal, but it is a scar on the country’s startup ecosystem.
While this proves that Indian businesses are capable of offering stellar invites to investors, it also shows that the country does not lives up to retain its corporate champions. The disheartening part of it all was that no local corporate house (with billions of capital) came to fund this type of deal.
Why didn’t they see that with Walmart taking such a big bet, the Indian Startups have become vulnerable to international giants?
Walmart, the largest retail chain, which already has its stores under the name ‘Best Price’ in 9 Indian states has made a great entry into India with this deal. It is going to impact the Indian retail considerably, with the help of Flipkart.
The underlying pain can be felt only by the present-day entrepreneurs or aspiring start-ups, who have become vulnerable to foreign investors because Indian capitalists don’t come to their rescue. We keep listening to Modi Ji’s digital India dream but we keep our capital safe from saving a company that was heading towards it.
What sort of savings are these? This kind of acquisition of an Indian startup is a death note to companies seeking investment. Be it Ola or be it Paytm, which also have huge foreign investments, must now combat this threat. As they grow, they must strengthen.
The foreign investors will try doing this again with other start-ups, because they look deeper into India’s internet ecosystem and the untapped online market. But we have to prevent handing over Indian start-ups to foreign giants.
Should we take this up as a big wake up call for large corporate houses in India?
Yes, we must. There was fault – they all stood on the side lines when they needed to act actively. Indian businessmen looked at the internet ecosystem, on which Flipkart, Ola, Paytm and other start-ups are based with scepticism. However, the foreigners saw value in it.
The Flipkart Walmart deal is an eye opener. Flipkart was born and nurtured in India. Its market and its employees are purely Indians. But its owners have changed. It’s like being subjugated once again.
So, the next seeds (start-ups) that are being sown on our land (India) must not be given to foreigners when it is time to reap the fruits. Now the two international e-commerce players, Amazon and Walmart will play in India.
And the Flipkart Fairy Tale will be one of the early startup success stories, bringing nostalgia to entrepreneurs.