Flipkart Co-Founder Binny Bansal quitting as Flipkart Group Chief Executive Officer after an investigation into alleged sexual assault is expected to make the transition easier for Walmart Inc.
The retail giant, which bought 77 percent stake in India’s largest online retailer for $16 billion in its biggest acquisition, can now speed up integration.
Binny’s exit will have zero impact as far as the daily operations are concerned, said Sanchit Vir Gogia, founder and CEO at Greyhound Research. “It will work more in Walmart’s favour with all the founders out. They (Walmart) can strengthen their control.”
The investigation against Binny, according to two people privy to the matter, stemmed from a former employee’s letter to Walmart CEO Doug McMillon in July this year alleging sexual assault in 2016. Binny quit after Walmart and Flipkart, according to their statements, didn’t find evidence to corroborate allegations but the probe revealed lapses in judgment, particularly lack of transparency, in how he responded to the situation.
His exit comes months after co-founder Sachin Bansal (not related) left Flipkart in May following Walmart’s acquisition. While the deal made them billionaires, they had no real control for some time now.
The Indian Institute of Technology-Delhi graduates quit Amazon Web Services in 2007 and pooled in Rs 4 lakh to start Flipkart as an online bookseller from a two-bedroom flat in Koramangala, Bengaluru. Sachin was its designated leader and public face, and Binny, the operations chief. Investors, including Tiger Global Management, Accel India, Morgan Stanley, DST Global and Naspers, trooped in betting on growing consumption and online sales.
Then, Jeff Bezos launched Amazon in India in 2013, and promised to invest $5 billion. As Flipkart faced competition and suffered multiple markdowns in valuation, Binny in 2016 took over as CEO replacing Sachin, who moved on to the role of executive chairman. The decision was largely seen to be pushed by the company’s board and its largest investor then – Tiger Global.
In just a year, former Tiger Global executive Kalyan Krishnamurthy replaced Binny as the CEO, months after he was brought in to head category management. Over the last two years, he not only took the major decisions but reported directly to the board, one of the Flipkart executives said on the condition of anonymity. He took care of all day-to-day operations.
“Flipkart has been managed by the board for many years now, and even after Walmart’s acquisition, the leadership remained with the professional CEO Kalyan,” said Arvind Singhal, chairman of retail consultant Technopak. Binny’s exit has only compressed the transition by a couple of quarters, he said. “As far as employees are concerned, they know it’s a Walmart company now.”
Binny did not respond to calls and text messages seeking a comment. Emailed queries to Walmart and Flipkart remain unanswered.
“Walmart culturally is a professional-run organisation,” said Kunal Khattar, founding partner at early-stage venture firm advantEdge. “Earlier, there were multiple power centres within the organisation. Now, with Binny out, it can easily duplicate its culture.”
Walmart consolidated its control after completing the acquisition. In September, it brought four of its senior leaders to Flipkart. Its M&A head Emily McNeal was named senior vice president and group chief financial officer; Daniel De La Garza came on board as vice president and chief ethics & compliance officer; Grant Coad as general counsel; and Dawn Ptak as vice president and group controller.
Then, this month, the Bentonville, Arkansas-based retailer elevated a key India executive Rajneesh Kumar as its chief corporate affairs officer for Flipkart.
Even Myntra and Jabong, which earlier operated independently, have now been rolled into Flipkart, according to Walmart’s filing with the US Securities and Exchange Commission on 13 November. CEO Ananth Narayanan will now report directly to Krishnamurthy.
The retail giant would have anyway asked Binny to leave sooner or later, K Ganesh, serial entrepreneur and promoter of venture building platform Growth Story, said. The retailer, however, could have handled the situation better for all the parties involved, he said. “The statement is pretty damaging [for the founder].”
(The article was originally published on BloombergQuint)
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