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Founders run the company, not investors: Flipkart CEO
Flipkart, the poster boy of Indian e-commerce, hit a new high by raising $1 billion (about Rs 6,000 crore) in the latest funding round, led by existing investors Tiger Global Management and Naspers.
The company's co-founder and CEO Sachin Bansal talks to Business Standard about the promoters’ shareholding in Flipkart, the sudden decision to raise funds and the now-on now-off plans for an Initial Public Offer.
Edited excerpts:
A few months ago, you had said there were no plans to raise funds. How did that decision change?
I was very serious when I said we were not looking to raise funds.
We did not have any need for raising funds and we were not looking at it either.
It just so happened that this opportunity came our way and we evaluated the merits and demerits of doing it.
After the evaluation, we thought it would be rather wise to go ahead and raise the funds.
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Founders run the company, not investors: Flipkart CEO
Your stake in Flipkart is diluting with each fund raising. Could there be a stage where you and Binny Bansal (co-founder) are only operational heads with no stake?
We are the founders of the company and we will continue to be that. Beyond that, I don't think the amount of stake we have decides our passion towards the business or the organisation.
There are enough examples of founders having lower stake and being as passionate about the business.
Alibaba's Jack Ma or Apple's Steve Jobs had single-digit stakes in their companies.
So it is not really about how much stake we hold and we are less driven by that.
What drives us is making a difference, and, as a result of that, there should be wealth creation.
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Founders run the company, not investors: Flipkart CEO
Are investors influencing the day-to-day functioning of Flipkart?
We don’t talk about our board composition, but I can assure you that it is the founders and the management who are running the company and not the investors.
After this funding, what are the plans for going for an IPO?
We are learning more stuff about our business as we are developing it.
While IPO was an option we had always kept open, right now, we are not even thinking about it.
I think, we will look at an IPO only when we feel that we are ready for it as a company, the market is ready for us, and our business model has stabilised.
Right now, Flipkart's business model itself is evolving and it's happening very fast.
There is a lot of internal influence on the business model itself.
So I don't know where the media reports about an IPO came from; internally, we were never strongly heading towards an IPO.
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Founders run the company, not investors: Flipkart CEO
Don’t you feel an IPO would have given Flipkart more benefits vis-a-vis a private funding?
I think the quality of investors we have is unmatched.
They are all high-quality investors with good reputation.
So we don’t really need to go public for reasons such as credibility and visibility.
I don't see any reasons to go public as of now.
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Founders run the company, not investors: Flipkart CEO
With your war chest much stronger now, could we hear something on the acquisition front soon?
We are pretty broadminded about acquisitions and strategic investments.
We are looking at all areas such as payments, logistics, technology, cataloging and packaging.
I can't say more about it right now.
In your personal capacity, are you and Binny looking at making any angel investments into start-ups that Flipkart could benefit from?
I have invested in a start-up, but the motive behind such angel investments is not to derive strategic benefits.
Such an investment is more focused on helping another entrepreneur and investing in the development of the ecosystem.
I recently invested in a news-related application, which has nothing to do with Flipkart. So if we need to invest in something that would benefit Flipkart, we will do it through the company and not personally.
Disclaimer: Rediff.com also has an e-commerce business which competes in some areas with Flipkart.
