We’ve all known Flipkart to be a successful e-commerce giant. However, the founder of Flipkart, Sachin Bansal didn’t have it easy at all points. His journey of building Flipkart into a successful venture was also etched with enough trials and tribulations which almost made him rethink his business plan. He almost lost faith in his idea and was close to shutting it down.
The Reason
The e-commerce site, Flipkart, faced a sharp dip when the company’s assets were evaluated. In TIE-Delhi-NCR, the confident yet unfazed 34-year old was quite disturbed by the valuation of his start-up by organ and Stanley and claimed that that Flipkart existed in theory and didn’t really have much transaction backing it up. In February ’16, Flipkart estimated its total value to be $15.2 billion. However, Morgan marked down at the stake of the company to a $109.37/share which was an all time low at the fund-raiser.
Bansal was unaffected by the move and still believed in execution despite all odds. He also claimed, “There is no doubt in my mind that in three years, we will cross all projections.”
Currently Flipkart was valued at $15 billion after it raised over $700 million from prestigious investors like Tiger Global Management.
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How 2012 Looked For Flipkart
2012 wasn’t a very good year for Flipkart as the e-commerce site had to avail a ‘down round’ of funding.
The founder, Sachin Bansal stated: “The delay in raising money on hopes of better valuations was a wrong business call. It was the toughest time for us. We were hoping that if we delay raising funds that was available, we’d be able to get a better valuation. However, Flipkart had to raise funds at valuations of $750 million compared to $1 billion in the round before it.”
The company didn’t show any records of growth till the end of the year. However, with the reputation of the company at stake, Sachin Bansal took it upon himself to go back to the board and regroup. He had ideas about reducing cost and wanted to figure out more ways to make the company more appealing to consumers.
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The Next Step
For any other company, the obvious decision would have been to take a giant step and go public. But, even under continuous speculation. Bansal decided that they’d not go public. H claimed that going public would mean tapping into more public domains which wasn’t really a requirement at that moment. Instead, he believed in the growing market and discarded the idea of raising funds altogether. He also made this decision as he believed that the depth and expansion in the private market currently should be taken advantage of instead of going public completely.
He also claimed that someday they’d need to go public but that wasn’t the correct time for venturing into the public market.
Lessons start-ups could learn from Bansal and his e-commerce venture Flipkart:
1. Tap funds when they’re readily available
The statement “Funds are absolutely essential for a start-up” isn’t foreign to any entrepreneur. Bansal also advises the budding entrepreneurs to raise funds for their business when they’re readily available rather than when they are necessary because that situation isn’t a very desirable one.
This advice was based on a decision taken in 2012 when the company was going through a ‘down round’ of funding phase. He claims that this point is a make or break point for a start-up.
2. Focus when things are going good
Bansal follows the mantra ‘Customer is the king’.
He also advices the budding entrepreneurs to focus on things when the business is good and not when things are going awry. From his standpoint, quality of business and capital issues faced by the business are the two things every entrepreneur should focus on. He also advices that improvement is a gradual process which should take place even when things are going good.
Bansal: “As entrepreneurs we don’t get emotionally attached to solutions; we get emotionally attached to the problem.”
3. The major focus areas
He believes that focus points for a start-up company should be the market conditions and building team strength. Business plan undergo numerous changes so a constant focus on the market opportunities and tapping them in time is crucial.
Related Post: Valuation of Flipkart slashed by two more investors
4. Boundaries are necessary
It may occur to a creative entrepreneur that boundaries are not necessary. But, having certain constraints and don’ts can actually save a start-up from making mistakes.
5. Take criticism with a pinch of salt
Flipkart has faced numerous issues on Big Billion day2014, because it servers shut down and refused to operate properly. However the company came out of that situation and took certain steps to improve in the future.
Also, feedback and criticism garnered from passionate people in the same field is always a good thing as it gives you a chance become better in the future.
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6. Always look out for the greater picture
It sounds repetitive but it is tough to adopt in a business model and at certain points, you’re bound to encounter failure. However, at those points, focus on the positives and the big picture (the sole reason why you started the company) and strive to become better.
7. Keep tabs of your competitors
Keeping tabs of your competitors is necessary as it could teach you about a lot of things you might be doing wrong in your venture. Bansal shops on every other e-commerce site and sends mails to his team regarding areas they could actually improve upon. This is entrepreneurship at its best!
8. Your personal and professional life are different
The life of an entrepreneur can be tough. In the professional space, he has to deal with investors, meetings, decisions and criticism. But once of that space, Bansal is the perfect family man. He has a doting six-year old son and he loves spending time with his son. Separating personal and professional life can have positive effects on your health as well.
Bansal has successfully earned the title of a successful entrepreneurship and deserves every bit of it. If his lessons are kept in mind, every entrepreneur will receive massive help from a man who almost shut down a billion dollar company.
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