Bengaluru: Starting early 2015, Binny Bansal and Sachin Bansal, co-founders of Flipkart, hired a new management team, replacing the online retailer’s homegrown leaders with experienced executives from big companies such as Google and McKinsey.
Two years later, Kalyan Krishnamurthy, Flipkart’s newly appointed chief executive, removed all of those leaders, dismantling the hierarchy the Bansals had tried to build and taking over the running of the company himself. Instead of having experienced hands run Flipkart, Krishnamurthy chose a small circle of hungry, talented junior managers who had proved their loyalty to him over the years.
Now, as Flipkart’s funding talks with Walmart progress, analysts are asking: For how long can Krishnamurthy steer Flipkart practically on his own with few other C-level leaders?
Ever since Krishnamurthy returned to Flipkart for his second stint in June 2016, Flipkart has lost as many as 12 senior leaders, many of them C-level executives, including logistics head Saikiran Krishnamurthy, chief financial officer Sanjay Baweja, product chief Surojit Chatterjee and, most controversially, chief operating officer Nitin Seth. Most of these executives were forced out after Krishnamurthy was elevated as CEO in January 2017.
For a year now, Flipkart has been saying it is looking for a group chief financial officer, a human resources head and a group general counsel. It has also held talks to hire a chief technology officer and a product head, three people familiar with the matter said.
An internal candidate is likely to take over the role of general counsel after Flipkart tried to hire an external candidate for more than a year, the people said, on condition of anonymity.
Flipkart, the most attractive and valuable internet start-up in the country, has taken an unusually long time to hire senior leaders.
“Flipkart made a lot of mistakes in hiring and integrating the big names it brought on in the past. It is taking its own time in hiring top executives because it doesn’t want to repeat past mistakes. But still, no matter what your standards are, one year is long enough to find people, especially after you’ve raised so much capital,” one of the people cited above said.
The lack of a senior leadership team at a company that employs more than 33,000 people (including part-time staffers) could be a worry for potential acquirers or new investors such as Walmart.
Mint reported on 16 February that American retailer Walmart Inc. may take a large stake in Flipkart Ltd at a price that could value India’s largest e-commerce firm between $20 billion and $23 billion. Walmart has expressed an interest in buying Flipkart, but a buyout is unlikely to go through as key Flipkart investor SoftBank Group Corp. is opposed to a sale, Mint reported then.
If the deal with Walmart goes through, the American retailer will have invested in a firm that has three big names—Krishnamurthy, Binny Bansal and Sachin Bansal—and then a bunch of junior managers with a conspicuously missing middle layer. The dynamics among the three are also continually changing. After a period in which they were almost completely removed from the running of Flipkart, Binny Bansal and Sachin Bansal are again trying to assert control over the firm, Mint reported in July 2017.
To be sure, the lack of senior leaders hasn’t hurt Flipkart’s business so far. Flipkart has maintained its slender lead over arch-rival Amazon India, cut losses and is in its strongest position since its heyday in 2014. It has also saved a few dozens of crores of rupees in compensation after it let go its senior management team. This, too, is in keeping with Krishnamurthy’s personality and management style, the three people cited above said. Indeed, Krishnamurthy’s reluctance to hire big names is the main reason Flipkart is taking so long to hire C-level executives, the three people cited above said.
As CEO, Krishnamurthy prefers playing a very active role in the day-to-day affairs as opposed to most top leaders who choose to focus on strategy and long-term affairs.
Currently, Krishnamurthy has dozens of people reporting directly and indirectly to him, far fewer than the number Binny Bansal or Sachin Bansal used to interact with when they were CEO, the people cited above said. Rather than hire experienced executives—like the Bansals did—Krishnamurthy prefers to work with and groom junior managers whom he can mould to his will, the people said.
Krishnamurthy’s inner circle includes senior directors Smrithi Ravichandran, Sandeep Karwa and Ayyappan R., and vice-presidents Amitesh Jha, Shoumyan Biswas and Manish Kumar. The 46-year-old CEO works directly with these managers and many others, instead of working through senior vice-presidents in most functions, the people said.
Yet, for a firm of its size, the lack of a senior management is a worrying characteristic, analysts said.
“While Kalyan has successfully steadied the ship over the past 18 months and ensured Flipkart has consolidated its leadership position against Amazon, not having a full-fledged senior management team at his disposal will take a toll in the long run. This model can’t go on forever and is simply unsustainable,” said a partner at a headhunting firm, which hires senior leaders for consumer internet start-ups and information technology firms, on condition of anonymity.
A Flipkart spokeswoman said the company is in the process of hiring people in some leadership.
“Our bar for leadership hiring is very high; yet, we receive a lot of interest from candidates because a career at Flipkart is among the most sought after opportunities in corporate India. Flipkart’s high-growth environment, entrepreneurial culture, and the chance to drive India’s e-commerce revolution is a powerful draw for top-notch talent. By and large, though, we have leaders in all important roles currently. We also place a lot of emphasis on developing in-house talent through the right mix of programmes and opportunities. In fact, many of our senior leaders have grown through the ranks after joining us at the initial stages of their career. Flipkart has been ranked the most sought after employer in India by several surveys, a testament of our consistent track record in developing and retaining talent,” the spokeswoman said in an email to Mint.