Flipkart is now known for being India’s most successful startup story — two young IIT graduates set up a company, raise large sums of money, kickstart the e-commerce revolution in India, and become billionaires in the process. But few people know that it would all not have happened had Infibeam had its way.
Flipkart founder Sachin Bansal and Binny Bansal had nearly sold off their company in 2008, a new book on Flipkart has revealed. Infibeam had offered to buy Flipkart, then barely a year old, and had offered that the founders move to Ahmedabad to work for Infibeam. Their salaries? Rs. 15,000 per month, each.
Infibeam, in many ways, was a peer of Flipkart’s. Like Flipkart, it had been founded in 2007, and like Flipkart, its founder had previously worked with Amazon, whose model both companies were trying to emulate in India. Infibeam founder Vishal Mehta had worked for Amazon in its acquisitions team in Seattle for five years, and had returned to India to set up his own e-commerce venture. But unlike the Bansal duo, Mehta came from a wealthy Gujarati family, and didn’t immediately need venture capital to get his company up and running.
Flipkart, meanwhile, wasn’t faring quite as well. It still hadn’t caught the eye of the investors, and was being regularly rejected by venture capitalists. Sachin and Binny Bansal were also having a tough time recruiting, and even their IIT batchmates weren’t keen on joining their fledgling startup either. It was at this point that Infibeam decided to buy out Flipkart. The Flipkart founders would get less than 5 percent of Infibeam as compensation in the form of Infibeam stock, and both founders would have moved to Ahmedabad and worked for Infibeam.
But Infibeam didn’t give a good enough offer to entice the Flipkart founders. “When he saw the employment letter, Sachin was shocked: Infibeam was offering him and Binny less than Rs 15,000 each as monthly salary,” says Mihir Dalal, author of Big Billion Startup — The Untold Flipkart Story. “It was a humiliating proposal. Sachin asked Vishal for a higher amount over the phone, only to be told haughtily that it was a fair offer. Now, Sachin was truly offended. He told Vishal that they would get back to him in a few days, and hung up,” he adds.
It’s not surprising that the Flipkart founders balked at the terms — Rs. 15,000 a month used to be the starting salary for companies such as TCS and Wipro in those days, and the Bansals were IIT graduates who’d spent time and effort building an e-commerce company. Even though their backs were to the wall, they decided to not take up Mehta’s offer.
It would turn out of to be the best decision the two young engineers would ever make. Flipkart eventually ended up raising some capital on its own. It grew its e-commerce business beyond books, brought about innovations in the e-commerce space such as cash on delivery, raised more capital, grew even bigger, and a decade later, was eventually sold to Walmart at a valuation of $21 billion. Sachin and Binny Bansal, by virtue of their stockholdings in the company they’d founded, both pocketed nearly $1 billion (Rs. 7000 crore each). Infibeam, of which they’d have got less than 5 percent of, is currently wholly valued at just $400 million (Rs. 2800 crore).
Sachin and Binny Bansal had a hunch that this might end up being a case even when they’d rejected the offer from Infibeam all the way back in 2008, and this conviction in their business might be one of the reasons why Flipkart ended up being so successful. A few weeks after rejecting Infibeam’s proposed buyout, Sachin Bansal had reportedly told a friend over beer, ‘Yaar, bach gaye (Mate, that was a close shave). Vishal had completely brainwashed us. What a crazy thing we were going to do!”