Snapdeal’s troubles aren’t just hurting its investors and its employees, but also founders of the companies it had acquired.
FreeCharge founder Kunal Shah has said that it pains him to see the app that he built not being kept in good shape. Shah had posted an update on Facebook recounting how his Passport Officer recognized him as FreeCharge’s founder, and proudly showed him the app on his phone. Shah described the experience as “priceless”, and several people agreed, saying it was the ultimate honour for a founder.
A social media user though cheekily asked Shah if the Passport Officer had also complained about a failed transaction. “App is terrible now,” he added.
Shah immediately replied to the comment. “Yeah. Have heard similar things. It pains to see this when app you cared for so much is not kept in good shape.
In 2015, FreeCharge had been acquired by Snapdeal for $400 million (Rs. 2,600 crore). This was — and is, to this day — the biggest deal ever in the Indian startup space. FreeCharge had been one of India’s premier wallets at that time, and had hoped that combining forces with the heavily-funded Snapdeal would help it increase its reach and influence.
But things didn’t quite work out as planned. Snapdeal quickly fell behind its bigger rivals, Flipkart and Amazon. Shah himself stepped away from the day-to-day running of FreeCharge in May 2016, and Govind Rajan took over as CEO. Snapdeal’s troubles mounted towards the beginning of 2017, with founders Kunal Bahl and Rohit Bansal announcing they’d take no salaries, and firing over 500 Snapdeal employees. FreeCharge, too, faced the brunt, with employees being laid off. CEO Govind Rajan resigned soon after.
And Paytm’s dominance didn’t help. FreeCharge’s biggest rival capitalized on the demonetization move, launching an offline push that lead to its widespread acceptance in stores across the country. Investors were pleased with its performance — it raised a mega $1.4 billion round just last month from Softbank. In comparison, Snapdeal is in the process of selling itself to Flipkart for $800 million.
Amidst all this, FreeCharge too has floundered. Once sold at $400 million, it’s now rumoured to be on sale for Paytm for a mere $50 million. And while FreeCharge’s current troubles shouldn’t concern Shah — he’s likely already made his millions from FreeCharge’s previous sale — the slow death of a company you founded still rankles.