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