Binny Bansal: Inside the Success of Flipkart

Hans Tung 02:08
So what is your favorite way to be introduced these days?

Binny Bansal 02:14
I guess, an entrepreneur who happens to invest.

Hans Tung 02:18
An entrepreneurs who happens to invest? So at your heart, you’re still a founder?

Binny Bansal 02:23
Yeah, absolutely.

Hans Tung 02:25
What is the venture that you’re most excited about these days? Can you share a bit of your own venture?

Binny Bansal 02:35
I think it’s hard to pic. I think there are three, four ventures, which I’m quite excited about. I think I have to pick one, there is a very early stage company, which is building an AI-based SaaS business in the legal space. And I think that’s what they can do. And their vision, I think, is pretty, pretty powerful. And I’m quite excited about our company,

Hans Tung 03:12
You also do something that will help other founders in India to scale. Can you tell us a bit more about that?

Binny Bansal 03:17
I’ve been helping founders in India since early 2014 and 2015. And doing a little bit of investing, as well, while I was still at Flipkart. And through that journey, given that we are sort of a still an emerging startup ecosystem, I basically realized that a lot of the founders were going through similar problems. So, there was sort of a set of problems, and different set of founders are going through some of the same problems. There were not too many people in this ecosystem for them to reach out to get help in those areas. So I basically said, Okay, I can personally help only 10 to 15 founders at a time. What if I created sort of a system which could scale and help 1,000s or 1,500 founders at a time, not just in India, but across all emerging ecosystems? I think outside of the valley, and probably China, there are so many other emerging startup ecosystem. That’s how the idea was born. We started this company called x to 10x. And it basically helps companies and founders after they hit a certain scale or after they’ve done product, such as after a series B or CVC. And then you start facing with early stage challenges, which is, how do you scale your business and when you found product market. So the areas where it sort of helps are multiple areas of starting from just prioritization and strategy. What is the sort of simple way to start to do so? How do you then link your design and architecture? How do you need to change your operating system of the company, as you now can’t do everything on your own and you need to sort of work with others in a larger organization. It’s been pretty exciting that in 2 to 3 years we’ve been fortunate to work with a lot of the best Indian startups, a couple of your companies as well. That was a good validation of their work from you guys. That’s been actually pretty exciting.

Hans Tung 06:26
We will ask you more questions about xto10x later on. Madhu will ask you a question about your experience at Flipkart first.

Madhu Yalamarthi 06:34
For people who did not know the Flipkart story, Binny and his college classmates Sachin worked at Amazon, early in the era before launching their own e-commerce site, Flipkart, which started as an online bookstore. Looking back, what were some milestones in your journey of Flipkart early in your time that defined Flipkart as we see today?

Binny Bansal 07:06
Back in 2007 when we were at Amazon, we started with books. I think the first focus really came from the first six months. We were just trying different things to get some GTM perspective. And we hadn’t raised any money. We had absolutely no budget for marketing. We were trying various tricks in groups. And then we got introduced to a couple of other founders who had figured out SEO in India, searching engine optimization. So we kind of learned from them and figured out good optimization for Flipkart. That was the first focus that we had and a very good one going with free marketing. CEO is the second focus that really came with our first couple of key hires. So we hired Sujeet Kumar, who’s the founder of an investing company. He joined us to do business development and operations. And he was a friend of Sachin, who also came from IIT Delhi. So they knew each other. And Malviya joined us as the first CTO. So I think with those two people coming on board, we could really hire and scale up the business 10 times or 20 times faster than what Sachin and I could do on our own. I guess that was the second big focus. The third one was really launching electronics, which was like a more mass category. Books in India is a very small market where you can’t really build a big business by selling books. But electronics was a very large category. So launching in late 2010 and scaling it in a couple of years, I think that was really the last one I guess, which would basically put us on a much bigger scaling track.

Madhu Yalamarthi 09:51
And each of the teams, like you, were the fastest growing teams. The fastest evolving teams in India, right? E-commerce war is one of the most fought over wars in India in the startup ecosystem. Everyday there’s a new company coming in, everyone is trying a new category, new approach, something new in logistics. Everyone is taking one or another approach. But your team is something that has evolved and stayed ahead of everyone. How did you create a culture? And how did you create that culture of learning and evolving?

Binny Bansal 10:30
If I look back it was really the team and the culture that got created. I don’t think we put in a lot of thought into really designing it and at that time. I think it was more of an evolution. If you look back at it, I think there were a few things that we just did right instinctively. Maybe we got some of the things wrong, but we got some the very important things right. To put things in context of India, at the time, there was basically no talent available, talents who had experience of e-commerce. There was nobody who had been there done that before. And secondly, there was no talent for startups. All the startups were quite new. And the third was, I’ve never seen supply chains at scale in India. Instinctively, our strategy was to hire people with great potential and with intrinsic value and put them on the most difficult problems. It was kind of a sink or swim strategy, to put people where they did well. It is meritocratic. It’s sort of a system where nothing was created from a cultural perspective. Since e-commerce was a big market, everybody was doing it for the first time, nobody knew how to do it. It was constantly okay to take big bets and fail. But being audacious and thinking of changing the paradigm, you just couldn’t do things the way they were done traditionally, especially in the Indian business ecosystem. So the cultural things such as being audacious changing paradigm were very important tenets in Flipkart, and the most important was putting the customer at the center of the business. NPS was the most important metric across the company. At every meeting we started with reviewing NPS first and everything else later. Having some of those things, I think really created some of those principles and created a culture.

Hans Tung 13:09
From what I’ve seen, a lot of VCs or founders focus on not being perfect. It’s easy to pick problems, problems are everywhere. Problems are normal, problems are expected. But problems are not rocket science, it is to figure out what are the most important issues and get it right to make the venture still work. So if you haven’t reviewed sort of problems in the early years, what were some of the key decisions or key people in the key roles that ended up working out right, to give you a chance to make a breakout and stay ahead of competition?

Binny Bansal 13:48
I think that’s right. Building a startup is a very messy business. There are going to be thousands of problems all the time. You have to pick the right thing to focus on and put your best people behind those. When we launched electronics after books, we faced a big problem. There were a lot of early adopters of books and books are very cheap in India. A book is about $8 to $10, so people are okay to pay online. Those early adopters are okay to pay online, and it was much easier to go from 0 to 100 in book industry. But when it came to electronics, we were trying to appeal to a much larger crowd. A lot of them could not be online or did not want to be online. They did not want to pay you $100 to $200 before getting the product in hand. The problem had really changed for us. It firstly took us about six months to realize that this is a different problem. And then once we realized that it was a different problem, that’s when we went back to the starting point and we created a very different solution for it. It was clear to us that we had to the best server, we had to build a brand and build the trust in that brand. So that people could trust us and pay $100 to $200, also pay cash on delivery. Those are the few things we did. And we also came up with a 30-day no questions asked replacement policy, which was also first of a kind in India. This is now a norm but back in India in 2010 or 2011, the norm in the retail market was there was no such policy. A 30-day no questions asked replacement policy was a big step.

For building the brand. Obviously, we had no idea how to build a brand. So, we hired somebody who knew how to do that. Thankfully, that was an area where there was talent, unlike other areas. We hired somebody from Unilever, who sort of have experience in building brands. And that worked out pretty well for us.

Hans Tung 16:34
It is easy to be a genius in hindsight, but it is so hard to identify what the problems are and solve them.

Binny Bansal 16:57
Identifying the problem, and then hiring people who could solve some of them. So that was also hired for the brand, then we also put in a couple of our best people on the supply chain and put cash on delivery and reverse logistics. Those were basically our best engineers and leaders. We identified those problems, and nobody has put solid supply chain valves in that at scale. And it took us a couple of years to really build the right model. Once it worked, it worked really well.

Madhu Yalamarthi 17:30
You’ve done many innovations at the same time, like cash on delivery, reverse logistics, getting the right categories, getting the right phones. You’re bringing all of it together to the big billion day and doing it to an unprecedented scale. You did it with a lot of smart people, bringing them on at the right time. And in periods of rapid growth and time, you have a ton of smart people. It’s tough to coordinate with everybody who wants to be entrepreneurial, either on themselves or do more on the organization itself. How did you focus in those periods of maniac growth on getting everyone on same page and giving enough room for everyone to grow, letting everyone grow in one direction? Frankly, I think a key competition for you is having good talent, and they were attracting enough amount of other talent and similar copying, so lots of stuff happen. How did you keep it all in one go?

Binny Bansal 18:34
I think talent was one of the top reasons. Talent engine was really superior to any other tournament data in the country. So I think that was really the secret sauce. As for how we managed to keep them moving in the right direction, I think it was just because of the sheer energy and willpower. And I think we were a bit lucky because we were scaling very rapidly, and new problems were emerging every 6 to 12 months. So, when we launch electronics, new problems emerge from building the brand and building the supply chain and cash on delivery. After that started scaling, new problems emerged, and the next big thing is fashion. Fashion is going to be the biggest category, both from top line and from bottom line perspective. Fashion became the new obsession and then again, a lot of people who have seen being successful in books or in electronics now moved over to fashion side. We also tried our hand at payments a couple of times. It didn’t work for the first couple of times. Some of our leaders also focused on those. I think as Hans just said, figuring out maybe three or five problems at a point at a time, and putting your best people or allocating your best people to those, and letting them be entrepreneurial.

Hans Tung 20:39
I think Xiaomi really benefited from having you as a partner to be able to sell their phones online, as the primary channel to work in India. Without you as a partner, there’s no way that they could have scaled so quickly.

Binny Bansal 20:55
I think it works really well for both sides. That was a big innovation in India. I think Xiaomi had done that in China in parallel. We had done that first with Motorola in India. And then when Xiaomi came in, we did that with them as well. That was a big lift off point for us in 2013 and 2014.

Hans Tung 21:29
Speaking of having talent, or DNA. But Xiaomi told me that they really clicked well with you guys. Because startups try anything to care about customer experience, fix very quickly, and have fast iterations. You mentioned that when you guys started to Flipkart, there were not many people doing tech startups. Internet startups in India is hard from variety of places. We look at hiring talents fresh from school, versus people who have worked in the offline world. They used to do things the offline way but have more experience in general. How do you balance the two? And what type of talent is proven to be more productive in a tech startup setting?

Binny Bansal 22:14
I think those are only two options, which was true for us. At that time, nobody had startup experience. What I have actually seen in hiring either the fresh out of college, or people who have graduated for three or four years and have done different things in life, but not really have had a straitjacketed career, that kind worked out much better in general. However, in specific areas, like in building a brand, or in accounting, it’s the area where knowledge and experience are more important, you still need to get in people with experience and help them adjust to the messy startup environment. But in other areas, like product and supply chain operations, the fresh talent with very high potential worked out much better.

Hans Tung 23:27
It is the similar experience that we saw with Alibaba in China initially, that you’re actually better off hiring people who are inexperienced, but they can learn.

Binny Bansal 23:37
But today, there is a third option. Thanks to the evolution of the ecosystem, there are people who have seen this kind of startup journey in various ways. So, I think today, the first option would be to find somebody to serve from a startup perspective, then to find somebody who was sort of fresh and had high potential. The third would be to find somebody who only had corporate experience, no startup experience, but can be flexible enough to intimacy environment.

Hans Tung 24:15
With any emerging ecosystem, the first 10 years is tough, because you need to gather enough people to go through the first fight and be successful. Once that happens, the second 10 years go much faster, because more people will get to spread the gospel, share and deepen it.

Binny Bansal 24:30
That’s what I’m seeing with my eyes. In the second 10-year cycle, companies are able to scale much faster. We’re trying to accelerate with xto10x as well.

Madhu Yalamarthi 24:45
Hans, you’ve seen e-commerce wars around the world, in China, in the US, and in other geographies as well. You’ve also seen several other intense wars in mobility, EdTech in other sectors as well. From your vintage point, what made Flipkart successful? And where do you see India’s journey now in that term?

Hans Tung 25:10
Having that first batch of executives, not just the founders, but at each functional level, who has seen success and who can help companies scale is incredibly important. And in the first 10 years, a lot of success can be led by having superior operations, even executing better. You can manage supply chain better, you can sell better, you can manage the market better, you can build a brand better. In the second 10 years, now we have people who have done that, and you have more users who are online. The next phase has come from product led growth. It has to be the product itself is well designed that the users want to use it. You can iterate changes very quickly, so users can feel that you’re moving faster with superior design and experience. That is different from operational led growth. Product led growth in favor of someone who has done a once and someone who has a product management background. And then you still need them to be able to operate as well. But the leverage comes from having a superior product. So, I think what we’re excited about Indian startup ecosystem is, now you have people like Binny and teams who can share their experience. Now you have more successful executives. And now there are more product managers who are trained in a variety of places to be able to apply what they know to the Indian market. They now have more users. Now you have a base to build unicorn, a much quicker pace than that in the first 10 years. We think that some of the best Indian startup will have a chance to build a global product. Now, that will take time, maybe in five years, but it will be faster. So this is about within the next five years, it is super exciting.

Madhu Yalamarthi 27:04
Binny, would you like to add anything to that?

Binny Bansal 27:07
I think I agree with what Hans said. I would just say probably Indian companies go global can happen sooner. I think it has already started happening in the SaaS area. One of my invested companies is also an early pioneer that started in India in 2011. And now 90% of the business is outside, actually in the West, not in India I think we’ve seen some successful stories there. I think it’s accelerating very fast.

Hans Tung 27:44
Sometimes companies go global. And then Musical.ly came out in 2015, then TikTok started in 2017. It does take some time. That’s already fast. But in Indian, the best startups will go abroad in the next five years, maybe even three years, we’d love to be a part of that.

Binny Bansal 28:03
I think the main difference in China and India is that the Chinese market itself is so big that probably the entrepreneurs don’t really need to think outside of China that much. I think in India, you have enough land but is still growing slower than China. You have enough entrepreneurs, who are thinking about the global market. Today, accessing the global market is much easier than it was when China’s startup was evolving, setting up certain set of defenses, which are in favor of this happening faster in India than in China.

Hans Tung 28:36
If something is to appear, somebody is to make it work. They realized that the startup is unattainable. But TikTok did it, then everyone else has a shot to do it. That’s the beauty of the startup ecosystem. Be the first to make it through. And then everyone else will be moving on a much faster pace, which is super exciting.

Madhu Yalamarthi 28:58
A few more questions on the Flipkart journey. You wrote the playbook for M&As in the Indian startup ecosystem; you’ve had a very successful integration with Myntra. Even today, it’s been a huge value creation of Flipkart journey. How did you approach M&As and how did you go about integrating that value into the organization?

Binny Bansal 29:25
Yeah, I think we used M&As very strategically. I think the strategy is the big priority which always comes first. So, our first acquisition was actually a company called Mime360, which was a B2B platform for music in India. At that time, we just launched, so we had become very big in books. The next step was to win video and music. We started selling CDs and DVDs at that time. Digital music was also an interesting category in hindsight, it was too early at that time. But that’s why we bought this company. The founders of the company is the person who founded PhonePe, which ultimately worked out pretty well. The first acquisition actually did not work. It was too early and digital music just did not take off at that time, but some played different leadership roles in the company. The next important acquisition was Myntra, at that time it was clear to us that winning fashion was the most important thing for the company. We had known Mukesh, who was the cofounder of Myntra for five years, we had the same investors. Before we started fashion, we had no strategy of acquiring Myntra, we had no idea what it takes to win fashion. Basically, our strategy was to first do it on our own and see how it works. What is fashion all about? What is the category all about? And after a year and a half of doing it on our own, we had a good appreciation for where Myntra was similar to and where it was different from what we were doing at Flipkart. Flipkart was more horizontal player, our core value was really about efficiency, scale, technology, etc. Whereas Myntra serves as a fashion first company, so it has a strong fashion DNA, and it is appealing to much more fashion-conscious customers, while Flipkart was much for mass customers. So, there were enough differences for us to acquire the company and keep them independent, and not merge with them. If they were very similar to us, we wouldn’t have done the acquisition. Since we were getting scaled much faster, we are able to just become much bigger than them in a couple years. But they were doing something very unique. That was a reason to acquire. That’s why it has worked as well. We’ve had more than two thirds of the online shares of the fashion industry now for the last six to seven years since we’ve made the acquisition. And that hasn’t changed.

Madhu Yalamarthi 33:08
You make it sound easy, but both Mukesh want you guys to speak in front of the publicity. Everyone’s looking up to you. I understand the logic that you outlined, it is the logic that most M&A say, but very few of them work out on paper. So how did you keep those emotions out? And how did you make it work?

Binny Bansal 33:34
I would give a lot of credit to Mukesh. I think he had clear vision and thought process on how to make it work, especially on the people side, on how will we keep the teams motivated, especially on the mental side, and how it will work. I think on our side, we could probably keep our emotions out from saying that we are better or bigger, or I think we will clear why we acquire Myntra. And I think the best decision we made was not integrating it. Their office was five to six kilometers away from ours, so nobody go and hassel them at all. Our traffic is pretty bad. I think we’ve been quite consistent with what we’re doing and what we have thought or said.

Madhu Yalamarthi 34:39
How did you grow as an individual in that period?

Binny Bansal 34:50
I think individual personal growth only comes when things are not working. So, when things are going great, there is absolutely no growth, because you just feel you’re on top of the world in everything. And there’s nothing to learn. But thankfully, things are awful all the time. So you get to reflect and you try and see what do you need to change while things aren’t working? And I think those are the moments when there are things that you don’t understand, or you don’t know what you’re doing, you’re not in the right way. I think that’s where we’re, at least for me, having sort of personal growth. And I think once that happened, it became a little bit of a habit to be pausing keep reflecting once in a while, even if you were doing well. I think making that a habit has worked out for me pretty well.

Hans Tung 36:05
As you were learning, you look at models, things that have worked in China and the US. A lot of people think that something is x or something else. That’s rarely the case. There’s a learning that can be borrowed or inspired by. But a lot of local innovations, or micro innovations have to happen more to make the model work. What are some of the things along the way that you thought were specific to India? And if we’re looking at models in the US and China, what were some of the things that were relevant? Or some things that are not enough?

Binny Basal 36:46
I think on the broad scale, there are some relevant things. I think the local context, especially in a business context, e-commerce is so different and how you execute in China and in the US is so different. For example, in India, we had a very low spend on direct digital marketing on Google or Facebook. Our customer acquisition came by building a brand and getting people directly onto Flipkart, not getting customers from performance marketing. Whereas in the US, building a brand is probably too expensive, it is not the way companies generally sort of going to the market. So, it is very different. Secondly, in India, we had no partner for supply chain. Nobody has done things at scale. So, we had to do everything on our own. You have to really do full stack, from end to end on your own around everything. Whereas in China, Alibaba was more of a marketplace, never in supply chain for the first 10 or 15 years. And there was a manufacturing base and strong supply chain. In the US, there were UPS FedEx, with care for the last mile as well. They have some similarities, but more differences. That’s how I got it.

Hans Tung 38:31
Looking from afar is easy to make sort of analogy. But in reality, it is often very different rather than similar. Let’s move on to xto10x. I heard about the framework that you guys laid out, it is quite interesting. It is different from Alibaba university or Tencent university that I have seen. It’s very practical for India. It really helps founders to get a sense of what it takes to go from x to 10x. What are some of the interesting anecdotes that you can share? Or some of the Aha moments that you saw that resonated with the founders that you guys were working with?

Binny Bansal 39:19
A lot of the companies were in that same transition going from the early adopters to a mass market explorer, and they need to look at a very different market segment to scale. And the same market segment doesn’t offer the scale, which depends on the product. I think that realization itself, and then thinking of the segment and designing the go -to-market strategy, maybe tweaking the product. That whole process was a big Aha moment for us. For some of the companies in the cohorts, I think a lot of them were struggling with hiring experienced people and trying to make it work over and over again. I think there’s the framework of trying to hire people who have the startup series, or just putting your best leaders in your biggest problems, and only hire experienced, non-startup people in very specific roles. That would create a lot of clarity for them on how to hire for the leadership teams and organize people around for them. I guess a third one is the company operating system, as companies scale from 50 people to 200 or 300 people. Converting that strategy or the practice into execution and getting work done become a challenge as well. Using a system like OKR, or something similar to that. I think that’s very helpful for the founders.

Hans Tung 41:56
How fast the team can learn, how the executives or founders can learn make such a huge, huge difference.

Binny Bansal 42:06
And it compounds exponentially. I think it’s just amazing to see how it compounds. I mean, once they get it, they just execute so fast. I remember we had a conversation with a founder on Saturday, about how we could think about our design and etc. By Monday, he wrote to us and say that I made all these changes. I’ve completely changed rows of these people, and he was done like when he did get it on Saturday after a one-hour chat. And one day he is executed.

Hans Tung 42:44
Those are the modes you live for as a teacher, or mentor, or an investor, because that makes everything worthy.

Binny Bansal 42:52
Yeah, I think that just makes sense.

Hans Tung 42:55
My last question to you is, what would be your definition of success? You already have a huge exit with Flipkart. You’re doing x to10x.

Binny Bansal 43:07
That’s the most difficult question and I’m still figuring that out. I think right now I will I’m in a phase where I’m doing things that I love to do. So x to10x is just helping entrepreneurs to scale. I just love working with entrepreneurs. That is something I love about investing in companies where I know there are people who are passionate about the space or the idea. Defining what success should mean is the most difficult question to answer.

Hans Tung 43:53
You did a lot in your short period of time to better others. So now your extra time. Tell people what the meaning of life is.

Hans Tung 44:07
What I’m seeing in China, if I look at Jack ma or Pony Ma, or Leijun who are really doing something, making an impact in society becomes their next mission and is not just about their success. Somehow, they make the society around them better.

Binny Bansal 44:29
That was a spirit behind xto10x as well. Just to make the ecosystem much better.

Hans Tung 44:36
I definitely see that connection. Making impact is the reason why we do this podcast. The excitement of the founders that they get something to start a company immediately. It reminds you that 5 or 15 years ago, someone else has been super successful did exactly the same thing.

Binny Bansal 45:01
I think these podcasts can be extremely valuable and inspiring. I remember we used to visit China every 12 or 18 months back in the days when we were building Flipkart. Every trip was so inspiring. China was maybe 10 years ahead of the Indian ecosystem. And you will just see the future of India which is happening here today. In five years, the same thing can happen in India. So, we just came back feeling very inspired every time

Hans Tung 45:30
When I go to Japan, Tokyo, or Osaka, or spending time in Stanford, Silicon Valley. It will make you feel inspired. You see somebody else along the way that gets there like, okay, China has been there, China has done that. Now, we spent time with India, you feel the same excitement that we saw 10 years ago, and it just makes life extremely interesting. You’re never willing to settle for less, because you see people working harder, and working smartly, and working extremely rigorously and systematically tried to be better.

Madhu Yalamarthi 46:11
I think the last question from my side is, you’ve been an inspiration for a generation of India and for generations to come. Certainly, for me when I was looking up for what to do after college, and over the last decade I have been following your journey and Flipkart. And today, almost all the leadership teams or the CEOs in whichever startup are from Flipkart. So, the last question from me is, as you reflect on your journey, what is your wisdom for the younger generation of people looking up to you, what are sort of the principles that you’d tell them?

Binny Bansal 47:01
I think I would say optimizing your decision making, especially in the early days. Focus on learning, rather than outcomes, financial outcomes, or positional outcomes. What are you going to learn? What are you going to work with? I think those are probably the two most important questions to answer when making career decisions, especially early in your career, because getting that right again can have an asymmetric outcome later. Solving that and also doing what you’re passionate about. People generally don’t know what they are passionate about when starting up early. But I think once you realize you’re not passionate about what you’re doing, you should probably find something else. Keep looking till you find something you really love. When you find something that you’re passionate about, you just don’t feel like work, it feels like something you would want to do 20 hours in a day. I think that’s the most important thing.

Madhu Yalamarthi 48:25
We have a bunch of rapid-fire questions. If you could spend one day in another person’s shoes, whose shoes would that be? And why?

Binny Bansal 48:37
It would be probably be something related to what I’m trying to learn today, it would probably be in the shoes of a vineyard owner because I’m just investing in a company which is building an operating system for vineyards. So I would want to spend a day in issues of wine. I don’t really understand what they go through day in and day out. But unfortunately, it’s not possible today. And because of COVID.

Hans Tung 49:09
What is something that you’ve read recently that you will recommend?

Binny Bansal 49:12
I’m currently reading a couple of books. I think one of them is Antifragile from Nassim Nicholas Taleb. A very interesting book. It just brings alive how the intuition we have as investors and founders and why sort of innovation really happens by tinkering and doing stuff rather than by sitting and theorizing. I think it’s a pretty amazing book.

Hans Tung 51:29
Thank you so much for a time. This is a fantastic podcast.