Bahl Flipped the Kart with 100 Slides. How Founders Snapped Back in Place

The Economic Times - - Disruption: Startups & Tech - Biswarup.Gooptu @times­group.com

New Delhi: It was a lengthy Pow­erPoint pre­sen­ta­tion with more than 100 slides and in­un­dated with pie charts, line graphs, col­umn charts, scat­ter graphs and data points. That was the ear­li­est pro­to­type of Snapdeal 2.0, a stripped-down, bare-bones ver­sion of the mar­ket­place that till last year con­sid­ered it­self a con­tender along­side Flip­kart and Ama­zon to grab the pole po­si­tion in In­dia’s bur­geon­ing ecom­merce sec­tor.

Very few peo­ple within the firm knew about the ex­is­tence of this blue­print, which is be­lieved to have been pre­pared in April. Apart from CEO Ku­nal Bahl, COO Ro­hit Bansal and chief in­vest­ment of­fi­cer Ja­son Kothari, who had come on board only in Jan­uary, only a hand­ful of oth­ers, at best, knew of this plan. It took three months and con­tin­ued in­fight­ing be­tween an in­creas­ingly frac­tious board for Bahl to put his vi­sion of Snapdeal 2.0 as an al­ter­na­tive op­tion to a sale. But many who mat­tered, while not re­ally dis­miss­ing it, didn’t re­ally take much cog­nizance of it, said peo­ple fa­mil­iar with th­ese de­vel­op­ments, de­clin­ing to be iden­ti­fied.

In­stead, they were all about selling Snapdeal to Flip­kart, trust­ing the larger mar­ket­place would be the best home for a com­pany that was, by con­sen­sus, past its sell-by date. Ad­di­tion­ally, the trans­ac­tion, once closed, would see Ja­pan’s SoftBank in­vest in In­dia’s largest do­mes­tic on­line re­tailer that was not only tak­ing on Ama­zon but keep­ing it at bay. Both Bahl andBansal­w­ere­set­toear­na­pay­outof about $30 mil­lion that would see them hand over con­trol of the com­pany they had started in 2010, and walk away. Both founders had ini­tially agreed to those terms, even if some­what re­luc­tantly. But as SoftBank tried to or­ches­trate the sale, it was be­com­ing clear that a num­ber of share­hold­ers weren’t go­ing to walk in lock-step with the in­vestor. Th­ese share­hold­ers had likely an­tic­i­pated re­turn­sof 20-30times­their ini­tial in­vest­ments in Snapdeal but that seemed un­likely un­der the terms be­ing ne­go­ti­ated. Flip­kart, too, was play­ing hard­ball. The com­pany had added clauses that re­quired 100% ap­proval from Snapdeal stake­hold­ers for them to go ahead with the trans­ac­tion. Ad­di­tion­ally, the Bengaluru-head­quar­tered on­line re­tail gi­ant had in­serted in­dem­nity clauses re­lat­ing to Snapdeal’s fi­nan­cials, pro­jec­tions and rep­re­sen­ta­tions made to them.

Even as the mi­nor­ity stake­hold­ers in the com­pany started ex­press­ing grave reser­va­tions to the spe­cial pay­outs to early Snapdeal in­vestors Kalaari Cap­i­tal and Nexus Ven­ture Part­ners, the ac­qui­si­tion, which could have changed the In­dian startup land­scape, started grind­ing to a halt. With myr­iad fac­tors seem­ingly stalling the deal, it was the op­por­tu­nity Bahl had been look­ing for to po­si­tion Snapdeal 2.0 as the only vi­able op­tion. The Whar­ton grad­u­ate, along with his co­founder Bansal, said they were now com­pletely against the sale of the com­pany and were will­ing to re­lin­quish the pay­out ear­lier agreed upon. The FreeCharge sale by Snapdeal’s par­ent com­pany Jasper In­fotech to Axis Bank last week for ₹ 385 crore gave Bahl more am­mu­ni­tion to press his case for an in­de­pen­dent Snapdeal.

The founders said they did not re­quire more money from their in­vestors to run the com­pany go­ing for­ward. Snapdeal 2.0 will see more lay­offs, with some es­ti­mat­ing re­trench­ments to num­ber more than 1,000 over the next week, dec­i­mat­ing, in the process, a firm that at one point had a staff count of al­most 10,000. Snapdeal presently has about 1,300 staff. The seven-month dog­fight has seen Bahl take on and face down not just the world’s big­gest tech-fo­cused in­vestor, but also In­dia’s largest ecom­merce com­pany. But the real fight to sur­vive in In­dia’s cut-throat ecom­merce sec­tor has, once again, just be­gun.

It took three months and con­tin­ued in­fight­ing for Bahl to put Snapdeal 2.0 as al­ter­na­tive op­tion

ZAHID

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