On Wednesday evening, US retail giant Walmart confirmed that it is acquiring 77 percent of Indian e-commerce startup Flipkart for $16 billion. The deal values Flipkart at $20 billion, making it one of the successful startups in the past decade.
Walmart was engaged in a race with e-commerce giant Amazon to acquire majority stake in Flipkart, and the two firms have been negotiating a deal for more than a year. While Walmart’s investment in Flipkart is a good sign for India’s startup ecosystem, it did come with one big surprise. Flipkart co-founder Sachin Bansal decided to leave the startup he co-founded with Binny Bansal in 2007. Bansal is selling his 5.5 percent stake for about $1 billion, and will exit the company.
Now, ET claims Bansal was deeply engaged in the negotiations with Walmart, and was even planning to buy more shares and not sell his stake. However, his exit seems to have been driven by the fact that Walmart did not see a role for both the co-founders on the board of the e-commerce startup.
“Sadly my work here is done and after 10 years, it’s time to hand over the baton and move on from Flipkart,” Sachin Bansal wrote in a Facebook post. “I’ll be taking some long time off and focus on finishing a few personal projects.”
The report also paints a picture that Bansal’s exit may not have been a graceful one. It cites insider sources claiming that Sachin was left “very disappointed” by the turn of events that ended up sidelining him from the company he co-founded, and turned into one of the most admired internet startups in the country.
At a town hall yesterday, Flipkart‘s second co-founder and group CEO Binny Bansal told employees that Sachin was “not part of the platform anymore.” He was joined by Doug McMillon, chief executive officer of Walmart Inc and Kalyan Krishnamurthy, the CEO of Flipkart. Sources tell the publication that Walmart and other investors see better stability under the leadership of Binny and Kalyan.
The last major reorganization within Flipkart came in early 2016 when Tiger Global brought in Binny Bansal as CEO and later reinstated Kalyan Krishnamurthy to the position. Sachin’s exit is, however, seen to be affecting Flipkart’s private label project named Billion, which sells branded smartphones, home appliances, and fashion products.
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People familiar with Sachin’s plan state that he will make a comeback with a new startup that will not compete in the e-commerce space. His exit is raising questions among other Indian tech entrepreneurs about their position when a larger company acquires controlling stake.