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"I was close to shutting down Flipkart in 2012" Scripting his entrepreneurial journey, Bansal underwent his fair share of distress.

By Amrit Mann

Opinions expressed by Entrepreneur contributors are their own.

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In the world of e-commerce, Flipkart co-founder, Sachin Bansal is a force to reckon with. The success of Flipkart has increased by leaps and bounds and its growth story is alien to none.

Scripting his entrepreneurial journey, Bansal underwent his fair share of distress. It is hard to believe that a successful entrepreneur like him was once very close to shutting down the whole idea of Flipkart. Imagine how the e-commerce space would have looked like without Flipkart.

Sachin Bansal is not a worried man, at least when it comes to his company's valuation dip.

Sitting amongst entrepreneurs at the India Internet Day, organised by TiE-Delhi-NCR, the 34-year-old seemed unfazed by the mark-down in the valuation by Morgan Stanley and Mutual Fund T Rowe Price and said that it was a "theoretical exercise' and not based on any transaction.

In February 2016, days after Flipkart claimed it was valued at a whopping $15.2 billion, Morgan Stanley marked down its stake to a $103.97 a share. This was below the price of its last fund-raising round. In April, mutual fund T Rowe Price cut the online retailer's stake by 15 per cent.

Unfazed by the move, Bansal believes in execution despite all odds.

"There is no doubt in my mind that in three years, we will cross all projections."

Flipkart is currently valued at $11 billion even as it faces tough competition from e-commerce platforms like Amazon and Snapdeal, which are backed by Softbank and eBay. In December 2012, Flipkart raised $700 million.

Last June, the company was valued at $15 billion after it raised $700 million from Tiger Global Management and other investors.

What really happened in 2012?

2012 was the toughest year for Flipkart as it had to go for a "down round' of funding. "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," he said.

The company did not grow from the middle of 2012 till the end of the year. The "failure bug' was biting the company, when it decided to regroup and not panic. "We had to go back to the drawing board and regroup. We had to reduce cost and figure out ways to provide better customer experience."

Taking the next leap

An obvious decision for a company to grow is to take that "next leap'. Is it the right time? Will the plan backfire? Will it affect investor sentiment? It is important to understand need of the business rather than jumping on the "conventional bandwagon'.

Talking about the constant speculation of the company going public, Bansal says "The biggest reason for us to go public would be to tap into the public markets. Right now the markets are growing pretty fast and we do not need to raise funds. At present, we do not feel the need to go public. We will take a call at the right time; right now we don't need this."

He adds that the depths in private markets allow an entrepreneur to stay longer and he/she should take advantage of this and stay private longer.

"This is the trend across Internet companies across the world and I think it is a good thing. However, this is not a formula and depends from company-to-company. We do not need to raise funds and the need to tap public markets will be made at the right time when we need it."

Advice to entrepreneurs

Funds to a business are like what food is to the human body. You may survive with just some, but you need the right intake for a healthy growth.

"One advice that I would give to entrepreneurs is that you should raise funds when you can rather than when you have to. Raise funds when they are available and constantly improve. Do not get into a situation when you really need funds and you get into a situation where you have to look for investors."

According to Bansal, this was one of the major mistakes made by startups. This advice has its roots in 2012, a time when the company was going through a "down round' of funding phase – generally a make or break point for a startup.

Optimism is critical to quenching your entrepreneurial aspirations.

"It is important to remember good times do not last forever and bad times also do not last forever. From a business point of view, I think you should be focusing on quality of the business, amount of cash that the business is using, capital issues that the business is facing. You should be focusing on all these when things are good, not when things are bad. I think that the key is to constantly improve even when times are good," said Bansal.

Bansal, reinforced the saying that "customer is king'.

"As entrepreneurs we don't get emotionally attached to solutions; we get emotionally attached to the problem."

Negotiating with investors

"First round of funding varies from company, there is no set formula. If you are an early-stage company, focus on the market conditions and the team strength. Everyone knows that the business plan of a start-up will undergo change, so focus on the market opportunity and on how good your team is."

Boundaries are good

From a business perspective, people don't like boundaries but boundaries actually have innovation because they force you to think. If there are no boundaries people will make a lot more business mistakes.

The co-founder dilemma

It is often said that an entrepreneur is a one-man Army. But even a soldier cannot make it through war without a survival kit. That is exactly the role of a co-founder or a mentor.

"There is always a difference of opinions with co-founders. If you learn to manage them well, it is actually great for the company and for the business. It depends on how to deal with it. You need to have a mentor, to understand you and bring in a different mindset. It all helps you to grow."

On criticism

In 2014, Flipkart suffered a backlash for its Big Billion Day. Attempted as a new concept in the Indian e-commerce space, it had a few glitches. Servers giving away due to huge demands, products going out of stock by noon had derailed its success to an extent. However, the company took it in its stride and only learnt how to manage better.

"You need to have some goals, no matter at which stage you are. We never thought we would be so big 10 years ago, but we had a plan. Criticism is generally useful when it comes from folks passionate about the field. I always look for feedback."

Look at the larger picture

It sounds apt but is tough to adopt in a business model – taking failure in your stride.

"It is very important to stay on the path that you started. I think, we were thinking to shut down in less than a year since we had started. It could have been the worst decision ever, for us. The learning I take away from that is – to question yourself more, talk to more people who understand you have that perspective of the larger picture. Make sure you have people around who have trust in you, having a mentor at that point really helps."

Learning from competition

The man is confident, welcoming and grounded. Interestingly, he doesn't shop on Flipkart but on every competitor's website. He actively sends emails to his team on his learning from that. Kudos to this innovation in competitive spirit!

His everyday struggles range from keeping up Flipkart's quality standards to explaining his grandmother about "what he does for a living' till date.

The family man

Boardroom meetings, investors, capital worries, statistics, profit & loss – every entrepreneur is burdened and needs a break. Bansal, surely has learnt the art of unwinding. Apart from being the entrepreneur that he is, Bansal is also a doting father and enjoys every bit of it. "I have a six-year-old son, who keeps me busy at home. It's exciting to see him grow. He is at an amazing age right now. He is not really fully grown up so he is like a big baby."

Not only does he share his first name with a living legend, but has also managed to live up to it, truly so!

Amrit Mann

Former Staff

Senior Corresspondent at Entrepreneur India
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