Binny Bansal and Sachin Bansal had a very successful 2018.
In May of last year, the 37-year-old entrepreneurs sold a majority stake in their Indian shopping site, Flipkart, to U.S. retail giant Walmart for a record-breaking $16 billion.
The deal, which marks the largest e-commerce acquisition in history, valued the business at $22 billion and amassed the two friends an estimated net worth of $1 billion each.
That’s not bad for a business that started just over a decade ago as a small online bookstore in India’s Bangalore. But it might not have been if it weren’t for three important attributes that set the young founders apart, Binny Bansal told CNBC’s Christine Tan in a recent episode of “Managing Asia.”
“I think there are too many things,” Bansal said, when asked to what he attributes Flipkart’s success. “(But) I’ll name a few.”
1. Laser focus
Firstly, and fundamentally, the duo were relentlessly focused on their business goal, Bansal told Tan.
“When we started Flipkart, we were really focusing on books, just one category and focusing on getting the customer experience right for our books,” said Bansal, whose business model has frequently been likened to Amazon’s.
That differed from the dominant approach in 2007, when the company started and several other businesses were trying to cash in on India’s growing appetite for e-commerce, he said. While competitors were trying to sell “each and every category under the sun,” Flipkart instead focused on mastering one product line.
“That really built a great brand for us from a customer service standpoint,” said Bansal.
Indeed, when Flipkart eventually ventured into other product lines in later years, its leaders learned the hard way that it required a whole new set of expertise.
“The mistake we made was that we thought selling electronics would be exactly like selling books,” said Bansal, noting that online shoppers in the early days were far more “risk-averse” when it came to purchasing high-value electronics versus low-value books.
As a result, the company has had to iterate and offer incentives as it has, over the years, expanded its offering to include electronics, fashion and digital payments, he said.
2. Technology first
Secondly, said Bansal, they built a company for the 21st century by putting technology at the heart of everything.
“I think the one takeaway for everybody was that technology is the way to scale,” said Bansal, who studied computer science engineering in Delhi before joining Amazon for a nine-month stint.
As such, Bansal and his co-founder Sachin, a fellow Amazon alumnus, implemented technology into all facets of the business, not just the website itself. That included building it into the marketing, supply chain and pricing sides, he said.
“If you’re not using technology to solve a problem, you won’t be able to solve it at 100 times or 1,000 times when you scale,” explained Bansal.
3. Search for talent
Finally, the pair focused on hiring great talent, Bansal said.
That meant being involved in almost every hire in the initial four or five years to ensure the “talent and culture were sustained,” he noted.
“The other thing we learned earlier on was that the only way to scale was to hire great talent,” said Bansal. “We made sure that the bar for talent at Flipkart was pretty high.”
That also meant “founder-proofing” the business, said Bansal. When Flipkart sold to Walmart, Sachin immediately stepped down, and Bansal stayed on as Group CEO until departing in November 2018.
Bansal today remains on Flipkart’s board to help with its “strategic direction.” However, even in the years prior to the deal, Bansal said he worked hard to implement a succession strategy.
“I had started sort of making the business a little founder-proof even since the middle of 2017 because I found my passion more in helping entrepreneurs and investing,” said Bansal, who earlier this year launched xto10x Technologies to help entrepreneurs start and scale their own internet companies.
“There was always a clear path that I wanted to follow and I wanted to make the business more sustainable and founder-proof. So, I had installed three CEOs in all our businesses — in Flipkart, Myntra and PhonePe. That’s worked out well because after the transition, business has continued.” he said.―CNBC