How The Flipkart Mafia Flipped The Fate Of The Indian Startup Ecosystem
Uber. Airbnb. LinkedIn. YouTube. Tesla Motors. Yelp. All seemingly large, yet primarily unrelated companies. What you may not know, though, is the uncommon thread connecting all these multi-billion dollar companies — they were all advised, funded, or founded by former PayPal employees, better known in today’s startup terminology as the“PayPal Mafia.” Today, we present a similar tale, of how a class of entrepreneurial legends and an entire ecosystem arose from who was once called India’s glorified bookseller, Flipkart and the various entrepreneurs, investors and startups it sprouted, The Flipkart Mafia.
The Mafia, the Mob, the Syndicate or, like the Italians like to call them, La Cosa Nostra (Our Thing), is the name of a secret, a criminal organisation which evolved in mid-19th century Sicily. Today, it has come to define a group of people wielding substantial (political, military, or economic) power for their own benefit.
Back in 2002, PayPal was acquired by eBay for $1.5 Bn and was toutedas a “worthwhile investment for eBay.” One of the major reasons for the PayPal deal was eBay’s expedition to hit the $3 Bn revenue mark by 2005. Interestingly, it touched $4.5 Bn in revenues for the year 2005.
But analysts had mixed opinions on the acquisition. “This is good news for eBay, but bad news for PayPal,” opined Gwenn Bezard, an analyst with Celent Communications at that time. According to him, PayPal’s shareholders would have benefited more if the company remained independent. The criticism did not die down with time either as Eric Jackson, a Forbes contributor, termed the deal as “the worst tech decision in the last 10 years.” According to him, PayPal left too much value on the table by selling early.
However, the impact of a particular deal can’t be judged by the deal size or the value founders or investors get, but by how it impacted and helped in revitalising the overall ecosystem around it.
There has been enough written on the non-probabilistic number of prominent modern Goliaths that arose from the ashes of Paypal. There are articles aplenty on the web which talk about how PayPal changed the face of Silicon Valley. However, in the context of India’s nascent ecosystem, it’s much harder to trace the origin stories of today’s entrepreneurs, investors and startups. Today we delve into one such company, the poster boy of India’s startup ecosystem and currently the highest valued Indian tech company, Flipkart and the so-called Flipkart Mafia!
Present Day India
The Indian startup ecosystem is poised to grow 2.2X to reach over 10,500 startups by 2020, according to a report released by NASSCOM in collaboration with Zinnov, last year. India stands third globally, in the number of tech startups it hosts, warding off close competition from Israel and China.
What is fuelling this acceleration is not only rising exposure to the Internet, technology, favourable government policies, foreign funding, but also legacy businesses that are now a decade-old and nurturing entrepreneurship in the country.
What started with the redBus and Burrp Mafia years ago, is now much more widespread. While redBus’ and Burrp’s reach was limited to a certain extent, the current day Indian unicorns are now deep-rooted in most of the active startups in one way or the other.
Reading about redBus and Burrp, I was inspired to cover the Indian Startup Mafia in late 2015 and, with that goal in mind, our team started collating employee data for the Indian Unicorns namely, Flipkart, Ola, InMobi, Quikr, and Snapdeal. But after spending weeks doing research — we weren’t satisfied with the data gathered — no more than 30–40 good startups had spawned from a single startup and the employees too were not evolved enough to act as angels for budding entrepreneurs. As a result, the series was put on hold.
Fast-Forward To One Year Later
I came across this article in an Indian English daily and was awestruck and surprised by how things had progressed. The headline read — Indian unicorns such as Flipkart, Snapdeal and Ola have spawned 700 startups…
And That’s How Our Hunt For The Next Big Indian Startup Mafia Began!
We picked the top 10 Indian companies and began our research. Meanwhile, we also asked people on social media as to which Indian startup has built a network which is as strong as PayPal Mafia and boy, we were flooded with numerous responses.
Redbus, Burrp, Taxiforsure, Flipkart, and Zoho — were the top picks.There is no doubt that the founders and employees of these companies have further strengthened the Indian startup ecosystem, but if we talk about a Mafia as big as Paypal — we needed to look no further than the Indian startup ecosystem’s poster boy, Flipkart, which, incidentally, also completed 10 years of existence this year and managed to raise the largest venture capital round in India’s tech history — a whopping $1.4 Bn in funding and acquired eBay India. And has received in-principle approval from Softbank for a merger with Snapdeal under the leadership of the current CEO Kalyan Krishnamurthy.
Why Flipkart, You May Ask!
It all started with two former executives of the global ecommerce giant, Amazon — two IIT Delhi 2005 batchmates and Chandigarh natives, Sachin Bansal and Binny Bansal, began an online platform just for selling books in 2007. Starting from the first customer in October 2007, and being in business for 10 years, Flipkart has now become one of the biggest ecommerce marketplaces in India with a registered customer base of over 100 Mn, has more than 80 Mn products across 80+ categories, more than 1 Lakh + registered sellers, having raised over $4.55 Bn in combined funding and is now valued at about $11.2 Bn. These numbers show the trajectory of a company’s humble beginnings to its almost unprecedented success despite devaluations by investor and changes in leadership.
As per our findings, there are over 207 startups that have been founded by ex-employees of Flipkart. But it doesn’t stop there. Our data also shows that there are over 49 Indian startups that have been backed by Flipkart, Flipkart founders, and/or current and ex-employees. Almost three startups are added to the gang every month, taking the Flipkart Mafia’s strength to a massive 250+ startups.
Angel Investor, Ajeet Khurana, says, “The Indian startup “industry” is in its infancy. As a result, it needs its role models. For instance, a couple of years ago, when the angel network “Mumbai Angels” got its first major success — InMobi — everyone wanted to join as a member, and the waiting list was over a year long. In pretty much the same way, Flipkart has acted as a beacon for an entire generation of prospective founders. ‘If these two guys can set up a multi-billion dollar enterprise, then so can I’ became a slogan for everyone out there.”
Ajeet goes on to add that the ones that were influenced the most were the ones who had front row seats to the entire spectacle, namely the Flipkart Mafia. As co-charioteers in the Bansals’ journey, they took positions in what they would like to learn from Flipkart, and what they would like to unlearn. Entire enterprises were created from those lessons. “So, without necessarily intending to, Flipkart has done the Indian startup ecosystem a huge favor, and we should all be grateful for it.”
This kind of entrepreneurial reach is self-evident for a company that has been in business for as long as Flipkart has, employing thousands of people since its launch and which currently boasts a total employee strength of 27,000 — of which 8,000 are full-time employees, along with 19,000 delivery boys and others. This sprawling staff is spread across 300 cities and is vitally important for an emerging economy.
Another probable cause that aided the Flipkart Mafia Myth is the fact that the Flipkart team is full of employees who are IIT and IIM alums. They have played pivotal roles in product management, design, marketing and so on. Their expertise makes them capable of understanding entrepreneurship, hold problem-solving capabilities. All of this together enabled them to fearlessly start their own businesses.
Punit Soni, a former Googler who joined Flipkart in 2015 as Chief Product Officer and left last year to launch his own investor-backed venture — Learning Motors, further elaborates, “I think it’s pretty logical. Flipkart is one of the largest Internet companies to have been established. It has over 30,000 people working at this point in time and it attracts a particular kind of engineers and a particular kind of product person. You know, when they started it was the next generation of companies in the country, in both the kind and the number of people attracted. It has attracted the largest number of people and, hence, you can expect a large number of companies would come out.”
As cited by former Flipster, Mekin Maheshwari who joined the company as Head of Engineering in 2012 and later became Chief People Officer and investor in two startups founded by ex-Flipkart employees — the major push behind so many employees venturing out is the kind of people Flipkart hired as well as what they experienced and learnt at Flipkart.
Similar thoughts were echoed by Karthik Reddy of Blume Ventures — an investor in Exotel and Runnr, part of the Flipkart Mafia. He says, “Good ecosystems are built through cycles and we’re barely completing the first full cycle. The pre-2005 startups are the early champions but the pace and frenzy post-2010 is the pacesetter for the next decade. The larger companies or scaled startups are quite obviously the largest playgrounds and training grounds for new startups to emerge. And, so, am not surprised that Flipkart spawned a large number of startups.”
Funders And Founders
A quick overview of the data shows that there are over 233 former Flipsters who are now founders of startups spread across India. And more than 12 current and former employees, besides Flipkart and its co-founders, who are actively investing in Indian startups. Also, the company has acquired/acqui-hired some 11 startups itself, which are now a part of the company (of these WeRead, Mime360, Chakpak and LetsBuy were shut down by the company).
These names include people like Punit Soni who recently founded Learning Motors and is an investor in a number of startups, Mukesh Bansal, the guy behind fashion and lifestyle company Myntra which was acquired by Flipkart, Ankit Nagori who co-founded Curefit along with Mukesh Bansal and raised $15 Mn funding and also an angel in Indian startups. Flipkart gave rise to Shivakumar Ganesan, founder, Exotel, Sameer Nigam and Rahul Chari, the co-founders of PhonePe which was acquired by Flipkart.
Then there is Ajinkya Malasane, Siddharth Mall and Akshay Lal — the founders of Playment which entered Y Combinator recently, Manish S Sugandhi, founder of GrabOnRent, Amod Malviya and Vaibhav Gupta — who recently co-founded Udaan which secured $10 Mn funding, and Mekin Maheshwari — who has funded more than five startups.
As Exotel’s Shivku, who was VP Products and Technology at Flipkart until December 2009, rightly says, “Sachin and Binny are smart people with ambition and determination. The scale of what they’re trying to achieve in India is enough inspiration for anyone who wants to be an entrepreneur and follow their dreams. Flipkart is the mecca of startups in India. Yahoo! used to be that place years ago. Flipkart has become that place where you meet other startup enthusiasts that are willing to take risks and venture out to follow their dreams.”
Note: Usually acquired companies are not included as part of the mafia of a particular company, but in a bid to get a 360-degree view, we have taken acquisitions into consideration as well.
Ankit Nagori, who, apart from being a founder himself, has also invested in over six startups including Wooplr, GreedyGame and Blingestates, “If you give creative freedom to people, this is bound to happen. You know, this just shows that people are backing each other up, they have worked together in that entrepreneurial culture. There are so many ideas to pursue and everyone is trying to do that and while some would fail, some succeed, and some would try again and this is exactly what was needed and this is Flipkart’s biggest contribution to the startup ecosystem — giving inspiration to hundreds and thousands of entrepreneurs.”
The Ever Growing Flipkart Mafia: Looking For ‘Audacity’ In Employees And Entrepreneurs
Stating the reasons behind Flipsters going ahead to found companies, Flipkart’s COO Nitin Seth credits the hiring process and the qualities Flipkart looks for when onboarding someone new to the team. He says, “When we look into the profile of a candidate — we look for people who have a very high drive for action, execution, and high customer orientation. We look for a thing that we can call ‘audacity’ — they think they are very entrepreneurial and they are very good problem-solvers.”
