Is Flipkart failing...?

On Nov 6th, Housing.com announced a new CEO Jason Kothari.

Jason Kothari was brought in by the majority shareholder, Softbank to fill a void after five months of cofounder and former CEO Rahul Yadav being ousted.

Just about 2 months later, on Jan 11th, Housing was merged with News Corp backed PropTiger in an all-stock deal, thus bringing to end the Housing super inflated drama. Dhruv Agarwala of PropTiger will be the CEO of combined entity. In the whole process, Housing valuation went down from $400 million to possibly less than $30 million, the value ay which they had probably approached Quikr for a buyout in Oct timeframe. The buyout didn’t happen. Investors decided that “enough is enough” and it was about time to salvage whatever they can from the sinking ship. Comes Jason Kothari to kill the failing venture, do an all-stock deal, and moves on Snapdeal as soon as deal is announced.

Now the Flipkart story….

Flipkart has had four consecutive devaluations in 2016 with the last being in late Nov wherein a mutual fund managed by Morgan Stanley slashed values of its Flipkart shares by as much as 38.2%, pegging the valuation of Flipkart to $5.54 billion. Compare this with the valuation of $15.2billion just about a year ago, in July 2015! Two thirds gone in about a year. Two months later, on Jan 10th, Tiger Global, the investor with 35% stake in Flipkart, names one of its former executive Kalyan Krishnamurthy as the CEO. I guess another couple of months we can expect to see news on slump sale of the hyper inflated venture with possibly Kalyan also moving on….

When you have an executive from investor/finance background running an operationally intensive venture like Flipkart, you can smell that things are not going wrong. All of us with any experience in industry know that financial executives are not good at handling operations. They are best at manipulating numbers in their office and “dressing-up” the P&L in whichever way desired by the top management. Unfortunately, or shall we say fortunately, real operations can’t be dressed up and require a lot of hard labour and stress to be streamlined. Also, it is a standard practice in the industry to bring-in a “finance” CEO when the numbers are to be worked upon to touch-up and make the “bride” beautiful…. hoping that some investor-groom out there somewhere would get excited and tie the knot. What he will get…that’s his problem. With Kalyan taking over, we believe that Flipkart is time to visit beauty parlours starts now…

The similarities between Housing and Flipkart don’t end here. A major connection between them, almost like twin brothers, is fundamentally flawed business model. Housing thought that transactions in real estate were not happening as the convenience of doing it on mobile app was missing. That’s as far-fetched from real reasons as North Pole is from South Pole. You can’t get any further, at least not on planet Earth.

Flipkart believes that it can sell me products from my neighbourhood store at a discount after incurring all the additional overheads of pick-up, delivery, COD management, customer support and zillions of other expenses incurred in an online model. That’s more far-fetched than North Pole to South Pole.

I guess Kalyan is going to look for a new planet…

This is also a point where PriceMap differs. We have a sound business model based on solving a real problem, the one of product and price discovery in brick-and-mortar retail.

Every individual on this planet faces it when they step out of shopping…. where to find what they want to buy at the best available price.