What exactly the dumb dollars are?

Zerodha also hopes to lend money to people to buy more stocks using the existing shares as collateral.

As for the more important task of increasing the size of that pond, Kamath wants to create an ecosystem of startups that encourage people to invest in stocks. So it set up an incubator in 2015 called Rainmatter to invest in such fintech firms. So far it has invested Rs 14 crore out of its own profits into seven startups.

One of them is a small case. It helps people invest in trends instead of companies. While it benefits from Zerodha’s customers, it is not clear even to Kamath whether users who come to the small cases will adopt Zerodha.

Trying out different things

He is right now at a stage where he is throwing multiple darts onto a board hoping some will stick. And he doesn’t know which one will work.

But he does know what will not work.

One of them is Venture Capital.

In its early years, it would have been foolhardy to even approach VCs as the stock market was roiling. Also, Kamath felt that VCs were not convinced about the business.

And once Zerodha did get bigger, it was making money and Kamath felt that none of the VCs really had any experience in managing the broking business. He didn’t want to simply take “dumb dollars”.

“Advertising and marketing are not going to help because it will appeal only to that limited audience of five million,” Kamath says.

Being bootstrapped, the company rose to profitability making Rs 90 crore in profit last year on revenues of Rs 225 crore, according to Kamath.

And he is in a way thankful for not being funded.

“I will still be able to grow the company to double its size in four years if market conditions stay the same. But the kind of 10X growth that VCs expect, I won’t be able to do that,” says Kamath.

VCs, too, have largely stayed away from this space. According to startup database firm Tracxn, only two startups Upstox and Trading Bells have got VC funding. That too of just $4.2 million.

So coming back to what could work.

Given that he is the betting type, Kamath places his money on the increasing interest in the mutual funds. “People have lost interest in real estate. Gold as an investment option is not going anywhere. Also, fixed deposits interest rates will only go down further. So mutual funds are seeing a huge interest.”

In the last two years, Systematic Investment Plans (SIPs) in mutual funds have gone through the roof. Shenoy says the average monthly investments in SIPs have gone from Rs 1,000 crore to Rs 4,500 crore.

Given that one of the underlying reasons for a mutual fund’s success is equities, Kamath hopes it will draw people to investing in stocks.

But that could be a tall order

“Investing in mutual funds is a lot easier as it doesn’t need any Demat account and it is cheap to get into. But to start to trade in stock markets is cumbersome as one has to sign some 42 pages of documents and is time-consuming,” says Shenoy.

It is not just Zerodha. All those in the broking business are stuck in this quicksand but at different stages.

“We are not so worried about it now,” says Ravi Kumar, founder of Upstox, which got $4.5 million in funding from Kalaari. “We are focusing on building technology and also have plans to go international,” he says.

Going international is the backup plan for Kamath too.

But what all these companies are really wishing for is a few good years of the stock market. And 2017 has started on a promising note.

The 4-step guide to building a recruitment tech startup in India

Not a single one did.

The room at its Global Village campus had about 25 candidates applying for the job of a software developer with the company. They had been shortlisted by a recruitment agency commissioned by Mindtree.

Initialization of the recruitment

The reason the hiring manager (who requested anonymity because Mindtree does not allow him media interactions) asked the question was that he glanced through the resumes just before the recruitment process would kick-off.

“None of the candidates had the skill set required for the specific job,” he recalls.

It turned out the candidates were asked by the agency to come on over if they had even one matching coding skill. Suffice it to say none of the 25 candidates were selected.

To wit: It’s 2017. India is the IT services nerve-center of the world. Bangalore is “India’s Silicon Valley”. Thanks to slowing growth, IT jobs are both coveted and in short supply. And India has a surfeit of engineering talent.

And yet, even well-known IT companies are stuck in Chapter 101 of hiring.

Boomtown

The years 2014 and 2015 for the Indian startup ecosystem were marked by two features—massive funding and massive hiring.

Mega funding rounds from the likes of Flipkart, Ola, Snapdeal, Paytm, Practo, Stayzilla, InMobi and Zomato, among others, went on to create mega hiring sprees. This raised tech salaries dramatically with freshers earning as much as Rs 15 lakh per annum and those with 5-8 years experience, Rs 40 lakh per annum.

That, in turn, spurred another boom—“HR tech” startups, most of which were primarily focused on recruitment and talent assessment. According to Tracxn, there were over 200 HR tech startups in 2015 that had raised $49 million between them.

But over the last one and half years, more than a two dozen of these shut down while some got acquired. Only a lucky few are operational. None have been able to conclusively win over the recruitment market.

The HR recruitment problem might appear simple but is actually intricate and complex, given the number of processes involved.

The way “traditional” HR recruitment works is that large employers hire staffing companies whereas smaller ones may choose to work with job portals like Naukri, Monster or Shine. Regardless, and to this day, the process of screening and shortlisting candidates is still primarily manual.

That is people—recruiters—look at candidate profiles from multiple sources like databases provided by job portals, inbound emails, and referrals, and then zero down on candidates with the desired skill sets. Then they call them up to gauge their interest levels and finally arrange interviews.

Step 1—“Won’t you come into my parlor?”

In June 2015, hiring startup Hiree, which started off as mynoticeperiod.com and had managed to raise $3.3 million, began an outdoor campaign to attract job seekers to its platform. A year later, it got acquired by QuikrJobs (read our story on them, “The QuikrJobs hypothesis” for an undisclosed amount.

“Its cost of acquiring a (candidate) became so high that employers were not willing to pay that much money. And that is why Hiree went bust,” says Kiran Jonnalagadda, founder of Hasgeek, a Bengaluru-based organizer of tech events.

Worse, the pool of eligible and active jobseekers was nowhere near as big as startups imagined it might be. Or should be.

“You can only find someone a job when they are actually looking for a job. And they do it every two or three years,” says Jonnalagadda, who also runs Hasjob, a job board skewed towards tech hiring.

“They have not paid attention to the fact that candidates must be treated like consumers who will come back to you frequently even when they not looking for a job,” he explains. “Because if you don’t do that, you cannot acquire them when they are looking for a job. This is a big unsolved problem for a lot of them.”

 

What happens to FreeCharge?

At the time, this acquisition was celebrated. It was the largest deal in the consumer internet space in India. Bigger than Flipkart’s acquisition of Myntra ($300 million in stock and cash). Cheerleaders heralded the coming of a bigger, stronger Snapdeal plus FreeCharge e-commerce combination; one, which would in some parts take on Flipkart. In other parts, wallet players like Paytm and MobiKwik.

How important it is?

Two years is a blip in the universe. Absolutely insignificant. Another matter altogether that in India, in the consumer internet space, it seems like an eternity. One where fortunes are made and destroyed. And as far as stark reminders go, of our fragile ecosystem, the story of FreeCharge checks all boxes.

It is the story of how a seemingly good company, for no fault of its own is getting the can. And how the mighty have fallen. In August 2016, FreeCharge was close to a valuation of $1 billion. Today, buyers aren’t willing to shell out anything more than $70 million. Rider: the deal is still in the process of getting sewn.

Think about this. FreeCharge isn’t a desperate company, fumbling to find a business model. As things stand today, it is the second-largest wallet player in India. Behind Paytm. It employs close to about 400-500 people. In any business, the coming together of the No.1 and No.2 players has some semblance of an underlying strategy.

Either consolidation to create a larger enterprise or enter a new business or just plain and simple, kill the closest competitor. It is curious then that none of this holds true for FreeCharge. Its fate is tied to the names of its investors on the cap table. That’s all it takes to get the can; because some investors are juggling their portfolio. Read SoftBank.

The other thing to ponder about is the pointlessness about valuations. So much is made out of them. So much is just on paper.

The Ken emailed a detailed questionnaire to FreeCharge. There was no reply.

Revolving around the finance

Human existence and enterprise revolve around money. Need, access or the lack of it. Multiple current and former employees The Ken spoke with said that throughout last year, it was increasingly becoming clear that FreeCharge didn’t have enough money to fight a good fight.

A senior former employee of FreeCharge, who was privy to almost all decisions, said that one must not beat around the bush. “If you cut to the chase, you have to ask yourself a very simple question,” he said.

What?

“Remember last year, when there were so many news articles about PayPal and other players investing in FreeCharge?”

Yes. There’s one from Mint, which says PayPal is “set to buy a 25% stake in FreeCharge for around $200 million”. There’s another from VCCircle. “China’s Tencent close to investing more than $150 million in FreeCharge” The story adds: “The fresh funding will value Accelyst Solutions Pvt. Ltd, the firm behind FreeCharge, a little above $1 billion…This would mean Tencent is picking up a 10-15% stake in the firm.”

“What happened to that? Now, I can tell you for sure that everything was done. There was a term sheet from Paypal. It was a done deal but then it never materialized. You must find out what happened.”

We did.

Let’s deal with PayPal first. The talks did indeed go far. “One way of looking at it is that the deal needed more time, considering the funding environment of last year,” said a former Snapdeal official, who knew the contours of this deal and requested not to be named because he has moved on. “It wasn’t said in so many words but the drift was that SoftBank didn’t want to be in that position. Why do you think PayPal wanted to invest? Because it wanted to run the company. PayPal is not a passive investor.”

 

A hammer in search of a nail

How does this compare with, let’s say China? We are way, way behind.

According to the latest industry estimates, 80% of all movie tickets in China are sold online. And the market is dominated by three players. Alibaba Pictures’ platform called Taobao Movie. There’s Tencent. And Baidu’s ticket booking app called Nuomi.

Thanks to their deep pockets, each of these players are losing money, hand over fist. That’s because tickets are sold at a 50% discount or even lower. Then again, China is one extreme. In the United States of America, for instance, online accounts for only 30% of the total tickets sold.

Big Opportunity On The Cards

Circle back to India and here, a question must be asked. How big or significant is the opportunity? There’s one way to look at it. BookMyShow, the market leader, has been around in this business for more than a decade. As of March 2016, the company recorded total revenue from operations of around Rs 235 crore.

The company made a profit of Rs 3 crore. In the previous year, FY15, BookMyShow recorded a turnover of Rs 127 crore, with a loss of Rs 13 crore. While BookMyShow’s year-on-year growth is impressive; for a market leader, that’s not a lot of money. Both topline and bottom-line.

Sure, the number of people coming online to buy tickets will grow. From 10% to 20-30%. Perhaps over the next five years or sooner. Even if BookMyShow grows five times and sells 500 million tickets a year; the bottom-line contribution of this business doesn’t seem to be very high. Analysts The Ken spoke with were skeptical if the bottom-line contribution of this business, for a single player, would ever reach $100 million.

With a $2-3 billion overall box office collections, let’s take the 10% convenience fee. That comes to $200-300 million of the revenue pool. Even if 100% of tickets are sold online, with a gross margin of 40-50%, gross profit is just around $100-150 million. The bet is that box office collections will go up. Except, that’s not happening.

So, what’s the deal with Paytm? Why is it spending crores on this business? About Rs 150 crore or more, as per industry estimates. Earlier last year, Paytm signed a minimum guarantee deal with PVR Cinemas. That didn’t come cheap. According to sources, the minimum guarantee was for Rs 40 crore.

“It is going all out,” says a senior official of a media & entertainment company, who requested not to be named because he does business with Paytm. “BookMyShow didn’t have an exclusive deal with PVR. So that kind of left the door open. Anyone who can match the minimum guarantee can get in. That’s how Paytm got in.”

Building Trust

“I think this is one of the big things that has worked for it,” he continues. “It did about Rs 400 crore of GMV (gross merchandise value). I don’t know about other use cases but ticketing actually works in a wallet. And Paytm is like, there is this huge unfulfilled inventory. Let’s just get asses on seats. We can think about making money later.”

The ambition of any online transaction company is that people use the platform for as many use cases as possible. Because the longer the consumer is on the platform, the higher the spend. “The guiding principle here is engagement,” says Satish Meena, senior forecast analyst at Forrester Research Inc. “If the customer is more engaged on your platform he will end up spending more.”

A consumer who has spent five years on the platform, spends 4X the amount, compared to year one. Also, notice the growth in the number of orders.

As things stand today, Paytm claims that it has more than 200 million registered mobile wallet users. The 200 million marks was crossed in February. Just above 50% of them are active: 106 million. Paytm claims that in 2016, it carried out 1 billion transactions.

 

 

Can money be the new sticker that Hike wants?

Meanwhile, in Delhi, the clock gave way to the show: “We are going to bring some much-needed love for payments in this country, said Kavin Bharti Mittal, the chief executive of Hike. “So I’m very excited to announce that we are introducing,” he said with a small pause for effect, “the Hike Wallet.”

It didn’t stop there. He also said Hike, as part of redesigning the app with a host of new features, will launch payments using Unified Payments Interface (UPI). It will be supported by Yes Bank. Mittal said one can use Hike to send money using UPI even to non-Hike users. So, in effect, that makes it a UPI app, putting it in the league of government-run UPI app BHIM. It alone accounted for 42% of UPI transactions in May, with PhonePe having the second largest with 38%.

But Mittal says, its 100 million user base, will make Hike the largest UPI platform. Overnight.

That’s only partially true. Truecaller, the contact ID service, that launched UPI along with ICICI Bank in March, also claims 100 million users. But a senior banking executive from a rival bank who is privy to the data, says less than 1% of transactions happened via Truecaller.

It’s not surprising why few people used apps like Truecaller to make UPI transactions. It is an app that helps find out a caller’s identity. So why would anyone use it for payments when there are many other apps around to pay peers and small businesses?

Well, a similar question can be asked of Hike as well.

Mittal said in media interviews that the company has been looking at payments for the last two years. But if it indeed wanted to make payments the big draw to bring more users to its app, it is late to the game that is getting intense by the day.

Ritesh Pai, digital banking head of Yes Bank, said that the bank issued a semi-closed wallet license to Hike based on the use case it wanted to build on top of the app. That is to enable mobile recharges, hailing a cab or ordering food from within the app. In other words, do what WeChat did in China. And Facebook is attempting in the United States.

But wallet companies like Paytm and MobiKwik have captured the digitally-savvy natives with cashbacks and made it a habit among those who use wallets. Hike, however, sees a different use case for its wallets.

Mittal believes its features like ‘blue packets’, through which Hike users ( who are mostly under the age of 24) can send money to each other’s wallets in quirky envelopes with fun messages.

“Money is the newsticker,” he said in an interview. Hike did not respond to questions sent by email.

The assistance of the seasonal greetings

That worked well in China, and for WeChat, especially thanks to seasonal greetings in the country. The idea, as narrated by a WeChat user, was that “whenever people weren’t checking their messages enough, the producer (of the WeChat group) would send a red envelope to the group, everyone would go crazy.”

But in India, save for personal greetings during occasions like marriages, or festivals, there is no concept of a ‘blue packet.’ Again offering a limited, occasional use case, and not an obsessive activity, as it is in China.

Also, Hike is, today, not where WeChat was when it introduced its own payments in 2014. Till then it was using third-party payment methods. For perspective, when WeChat launched the red envelopes during the Chinese New Year in January 2014, “the number of people using WeChat payments more than tripled from 30 million to 100 million.” If that was explosive enough, a year later, users sent each other more than 3.2 billion red envelopes.

 

Hello, India? This is Truecaller dialling

When UPI gained popularity post demonetization, payment companies around the world got the signal that standard was for real and had the government’s backing. A host of companies that would normally have balked at the complexity of India’s payment infrastructure, suddenly had firm plans, like WhatsApp, Google, and Truecaller. Of these names, Truecaller seems the least likely to have anything to do with payments. But it did.

Rise of an opportunity

India was its largest market with over 150 million users and it saw demonetization as an opportunity to step out of the shadows of being an app that ran only in the background. India became the first market where it launched a feature to make payments. This was powered by a software toolkit (it’s mandated) from India’s largest private sector bank, ICICI Bank.

“All payment transactions generally start with some sort of communication and we want to give our users the best user experience end to end as he or she transitions between communicating or transacting with contacts,” says Nami Zarringhalam, co-founder, Truecaller in an emailed response.

However, since its launch in March, the feature has seen only a few dozen transactions on its platform every month, said a senior banking executive from a rival bank. The feature is not even available for iOS users, yet.

Zarringhalam however disputed these numbers while not revealing actual ones.

On the Chillr deal, he said, “We don’t comment on speculation,” but added that Truecaller will remain invested around the opportunities India offers.

But if Truecaller’s ambition is to build a payment product, buying a UPI transfer product does seem like an option. And one made sweeter by the fact that venture capital firm Sequoia is an investor in both Chillr and Truecaller.

With a 36% stake in Chillr, according to documents from the Registrar of Companies, Sequoia has the opportunity to get a clean break from a space where valuations of payment companies in their portfolios could be under threat.

“One needs to watch out for shrinking valuations as Paytm continues its dominance and investors face mark-downs of their existing payment investments,” says Walia. Chillr’s post-funding valuation was over Rs 100 crore (appr. $15 million).

With investments in fintech companies like Capital Float, PineLabs, Freecharge, Mobikwik, and Walnut, among others, Sequoia might want to broker a deal between companies that have overlapping synergies. Like the time it engineered the merger of food delivery service Tiny Owl and hyperlocal delivery service Roadrunnr.

But many in the payments ecosystem have little faith that such a deal makes sense. “Tech-wise there is nothing that Chillr offers that Truecaller cannot build by itself. As for users, how will it be able to migrate users from one app to another?” asks the co-founder of a rival payments company.

A partnership of unequals

Launching a payment product with India’s biggest private bank as a partner is a big deal for any fintech startup. So, when Chillr launched in 2015 with HDFC Bank, it was its moment in the sun.

“There’s been no other better partnership with a bank for any FinTech startup. What we were able to accomplish is an example for other startups to follow,” said Sony Joy, the CEO of Chillr in an emailed response on Tuesday.

HDFC Bank too, wanting to showcase its digital savviness, marketed Chillr with gusto. “Chillr was meant to make peer-to-peer money transfer easy and it was for making social payments between family and friends, so we promoted it among our users,” says Nitin Chugh, digital banking country head for HDFC Bank.

Alas, the nub: even though Chillr didn’t earn anything from providing the service to HDFC Bank’s customers, it became widely perceived as an HDFC Bank product.

 

Unicorn raising the bars again

For now, this employee doesn’t know if that will happen. What he does know is the existence of a massive, legendary presentation on Snapdeal 2.0. Word is, this presentation is the next best thing since the invention of sliced bread. Enough ink has been spilled on Snapdeal 2.0, without actually getting into what secrets this presentation holds. We asked around. Here are a few salient points from it:

Is This The Way Ahead?

An open marketplace. This is the way forward. Snapdeal becomes just a platform where buyers and sellers can transact. Build a Taobao like a platform where sellers and buyers can chat and customize the order.
Costs have to be brought under control.

First, let go off about 900 people. Second, shut down warehouses. These will not be needed in an open marketplace. By doing this, you have capped expenses on two large heads.
Whatever it takes, Snapdeal has to become net margin positive, which means the company needs to make money before marketing and people cost.

The banner ads where sellers display their premium products and bring in about Rs 1 crore a month, should draw in more.

At current volume and with a reduced headcount, the company will break even in six months. Then Snapdeal should double the volume and then break even on that as well.

Find a way to make the Rs 500 crore sloshing around in the bank account to last two years and then do an IPO.
Any such plan must be taken with a huge pinch of salt. “This is a non-starter right away, but these guys are hell-bent on doing it,” says another Snapdeal senior official.

“People buy from Amazon, Flipkart, and Snapdeal in this country. They don’t buy from individual sellers. Trust is so low. Tech understanding among sellers is so low. Returns are complicated. Discounts are so important because they still drive a large part of the buying decision. You cannot just say that I will copy what’s happening in China.”

An Impressive Step

“Bringing cost down is all good. But one day someone is inspired by Taobao. Some other day it is like, look at DMart, it is so impressive. See how their pricing works. Another person has been asked to come up with a growth plan. Meanwhile, everyone is preparing the firing list. Then there is talk, okay, what will we be doing for Diwali? Because people will come to Snapdeal. If we don’t do anything then sellers will know there is no business here. Buyers will know there is nothing here. And the fall from that is pretty significant.”

These are all valid concerns. For now, Snapdeal has little to show for. More importantly, sources say, the top leadership, Kunal Bahl and Rohit Bansal are still exploring options for the company. Publicly, it is Snapdeal 2.0. But privately, behind the scenes, talks are on with two other Unicorns.

Ken reached out to Snapdeal for perspective. In an emailed reply, the company’s spokesperson said: “In our statement on 31st July 2017, we had stated categorically that we are terminating all strategic discussions and that we will pursue an independent path—Snapdeal 2.0. There is no change in that and none is planned or expected. With regard to your query we reiterate that we are not in discussion with anybody—any speculation to the contrary is without any basis.”

Contrary to this statement, it turns out that this speculation does have some basis. Multiple sources confirmed to The Ken that conversations between Snapdeal and Hike are afoot. Admittedly, these discussions are still at an early stage and have hitherto been informal but they have been initiated. Of course, the next question that should immediately spring to mind is, why would Snapdeal even talk to Hike? Prima facie, a horizontal e-commerce marketplace and a chat messenger have nothing in common and such a marriage would seem to make little sense.

 

Flipkart’s Four Billion — an entry, an exit, and a détente

“What can you do with $4 billion that you can’t do with 2.5?”

Money, money, money

When a startup raises funding and issues a press release, it is usually peppered with forward-looking statements detailing how it plans to use this largesse to disrupt, conquer, ding the world/universe or some part thereof.

On the other hand, the press statement that Flipkart put out on raising its latest funding round from Softbank focused primarily on one point—“We now have more than $4 billion in our kitty”. That is a lot of money for sure. In fact, enough to make Flipkart the third-highest funded startup ever globally.

The ~$7 billion in funding that Flipkart has raised in total so far is probably more than the total funding ever raised by every other Indian startup put together.

Why does one startup need so much money?

If you believe the pundits, this is needed to stave off its behemoth competitor, Amazon and “win” the Indian e-commerce sweepstakes. The broad belief is that Flipkart will use this corpus to finance deep discounts in the fight for customer loyalty and keep Amazon at bay.

But if you are an Indian consumer rubbing her hands in delight at the prospect of more wonderful sales coming your way from Flipkart, financed by the largesse of Softbank, you might want to wait and hold off exulting just yet.

Discount, discounting

There is a popular belief that e-commerce in India is relevant only because of deep discounting by the incumbents. While this might have been true at some point in time in the past, especially so when the likes of Flipkart were evangelizing the concept of buying things online, those days are far behind us.

Value for money is still important but this is driven more by operational efficiencies and scale economies rather than deep discounting. The players have also realized that trying to buy customer loyalty through discounts is chimerical and self-defeating in the long run.

So if this fundraising was not about financing further discounts, was it to stave off Amazon?

Unlikely.

Détente
While the competition between Flipkart and Amazon has intensified over the past year or so, the burn rates of the two companies provide an interesting insight.

Flipkart used to have a burn rate of $60 million per month a year or two back. Today it is rumored to be in the $30-40 million per month range. So, even though Amazon has been sniping at its heels and it has more funds in its kitty than ever before, Flipkart has actually pulled back its foot from the pedal, at least in terms of burning money aggressively. But what about Amazon?

Amazon is reportedly burning $60 million per month currently but comparing this number against Flipkart’s is not particularly meaningful. A big part of Amazon’s burn is going toward developing infrastructure and financing other capital investments, investments that Flipkart has already made in previous years itself. Interestingly, Amazon’s pledged cash arsenal for India was $5 billion in 2016. In spite of this, Flipkart has largely been able to defend its market share from Amazon during the last year or so.

Against this backdrop, Flipkart and Amazon are today running neck-to-neck in terms of being numero uno in Indian e-commerce. Flipkart is generally ahead in terms of total order value while Amazon is ahead in terms of the total number of units. These numbers might change month on month but both companies seem to be operating in the same bracket. A détente arrangement that suits both parties just fine!

 

What is wrong with the Unicommerce?

Nexus is obviously in this list of 35 shareholders but there is clearly no disclosure of any sort regarding whether it was in the list of 16 preference shareholders who had blessed the merger. Ideally, Nexus should have declared its interest in this matter and should have recused itself from participating in any way but clearly, there is no evidence of any such thing happening.

Another matter altogether that this saga doesn’t end here.

What Happened To The Transaction?

Despite applying to the court for permission to amalgamate the two companies and seemingly securing such an order, the transaction never took place.

Instead, in March 2015, Snapdeal (or Jasper Infotech) invested Rs 36 crore in Unicommerce for a minority equity stake in the company.

Now, why would someone who has already in effect purchased a company choose to not consummate the transaction but instead pony up money for a small stake in the company that they had already acquired? This is akin to a person buying a house and then deciding to take a single room for rent in the same house.

Again curiously, neither Snapdeal nor Unicommerce chose to make any kind of public statement about the merger or investment. But nevertheless, from FY2015, Snapdeal started declaring Unicommerce as a partially-owned subsidiary in its filings. Other than declaring the investment made for equity, no details were ever provided about Snapdeal’s relationship with Unicommerce.

Immediately after Snapdeal’s formal investment into Unicommerce, there was predictably a backlash from competing e-commerce marketplaces who felt threatened that Snapdeal could now access data about transactions on their platforms via vendors who were Unicommerce customers. The biggest pushback came from Paytm* who cut off their API data access to Unicommerce.

To get around this, Unicommerce attempted to provide its customers with a solution that would scrape data off the Paytm website. This resulted in Paytm taking Unicommerce to court on charges of data theft and an ugly legal war ensued.

Amidst all this, Snapdeal felt that Unicommerce was better suited as an inventory and order management solution that it could offer to its key brand partners rather than to the long tail of small sellers that it had traditionally catered to. The idea was to position this as an omnichannel platform that would “blur the lines between online and offline retail and act as gateways to each other”.

This initiative went live in October 2015 with the rather unfortunate name of “Janus“. Just like this eponymous two-headed Roman God, adding a new customer persona as a focus area was a risky and intrinsically confusing proposition.

According to multiple sources, the Unicommerce founders weren’t too happy with this change in strategic direction and didn’t enthusiastically embrace this new direction. Perhaps this contributed to the ensuing failure.

Thus while Unicommerce, to this day, continues to function, it is largely a forgotten stepchild for Snapdeal. The move to cater to large brands never fructified. The original market that Unicommerce intended to cater to—small vendors who needed an inventory management tool for selling their wares on multiple platforms—is now a noisy space with several other players such as Browntape and Primaseller competing for head-on with Unicommerce.

Behemoths such as Amazon also offer competing solutions. Unicommerce is, therefore, one of many in this small space rather than the undisputed leader that it could have been.

So is this a story of lost opportunities?

For Unicommerce the company, probably so.

But for the others involved, maybe not. We go back to the said acquisition.

While there have been no public statements or specific RoC filings to this effect, somewhere between 2015 and today, Snapdeal acquired Unicommerce in total. This is corroborated by media comments by the founders of Unicommerce.

Though it is as yet unclear whether Snapdeal finally went ahead and amalgamated Unicommerce into its fold as per the original proposal submitted to the court or whether it simply bought out the remaining shareholders, there is no doubt that an acquisition transaction was consummated.

 

Kothari’s designation at Snapdeal says he handles strategy

“Since the second round of layoffs, Jason never met the technology or operations team. He never understood what Housing was really doing,” says a senior Housing executive who has since moved on. Kothari’s staffers often felt that he didn’t trust the technology either. “And that’s why he never managed to add anything of value to Housing,” adds the executive. If Kothari was hands-off on technology, in a tech company, and operations, what was he doing?

“A lot of public relations (PR),” says another former Housing executive. “I worked across companies and industries. But I have never seen a CEO so interested in PR. It was almost as if he really wanted to be the head of communication than running the company.” He delegated running the company to others while he focused on ‘refreshing the impression of the company’.

Perceiving same as loose cannon

Kothari though believed in the PR overdrive because Housing was perceived as a loose cannon. But people who were once on the board say that it was the founder Rahul Yadav who gave that impression and not the company. It was made clear to Kothari several times. But Kothari stuck to that argument until the very end.

Even if Kothari found joy in the cosmetic, he did manage a face-saving burial for Housing.

Or did he?

The deal was brokered by SoftBank and Housing CFO Mani Rangarajan. Kothari was handling communications. Why? Because he did not want conflict. He wanted to focus on easing the sale. The penchant for avoiding conflict was something that Kothari carried with himself to Snapdeal as well. “He did not want any confrontation. It is fine if you don’t want to be the CEO or in the top three positions in a company. Confrontation is necessary,” says the senior Snapdeal executive.

When Housing was sold, Bahl called him again; this time to lead fundraising for Snapdeal. While at Housing, Kothari raised no money from external investors. SoftBank promised to pump in money until the company was sold. People close to Kothari claim he was handpicked by the investors but senior employees in Snapdeal say that the board was surprised when Bahl pitched his name as someone who would lead fundraising for the company.

“SoftBank did not care. In December 2016 [when Kothari’s name was mentioned], SoftBank knew that they were not going to fund Snapdeal anymore. The only reason he was brought in at such a high salary was so they could keep Bahl on their side and negotiate with him when the time came to make a sale,” says one of the Snapdeal executives quoted above.

Soon after he joined, Govind Rajan, the CEO of FreeCharge quit. Almost immediately Kothari was appointed the CEO. Employees at FreeCharge expected him to come to Bengaluru, the payment company’s headquarters.

Handling business from a considerable distance

But Kothari almost never visited the FreeCharge offices in Bengaluru and chose to operate out of Snapdeal in Gurugram, where he had a special cabin to himself.

What happened between Rajan leaving and the company’s sale?

Nothing. Not a single change.

The company did not innovate. Neither did it add any new technology or vendors. Kothari let the company run on autopilot. What was Kothari’s role in Snapdeal at the time?

“No one knows. He really didn’t do anything,” says a former FreeCharge staffer. “It was left to us to run the company.”

Kothari was trying to broker a quick sale. And he did.

To Axis Bank.

Some more fine print. The first offer, which was made by Paytm, was brought to the table through Snapdeal’s investors and had nothing to do with Kothari. And when the eventual offer from Axis did come in, the sale was brokered primarily by Snapdeal co-founders Rohit Bansal and Bahl. Kothari was not at the table.

Let’s look at his role at Snapdeal. When Kothari’s name was first announced, he was to be heading funding and strategy. Funding was off the table. But the strategy was a big role.