Why Flipkart’s Acquisition of LetsBuy is a Great Story for the Startup Ecosystem
FlipKart has acquired LetsBuy. But, there is way too much negativity and cynicism floating around. Let’s balance it out with some positive spin. The genesis of this post was this tweet:
People who have done it, never done it, have no plans of doing a startup, all together are calling a wolf in this deal.
This is the venture eco-system, this is how it is played. Companies are built, bought and sometimes brought down. Tejit, my previous startup went through two two (sic.) successive acquisitions in less than three years…and I’m still working. I am still below my quota of Fuck You money. Irrespective of what the end-game is, which seldom is a stalemate, the Silicon valley eco-system is built on two simple things:
- Every startup is a success
- No startup is a failure
This is exactly what needs to happen to India and this deal is one of the threads in arriving at that goal.
After the previous exits, the reason I was able to raise my hand and fill a gap in the Indian startup ecosystem because the startup experience gave me enough confidence to do another one, though Morpheus was on the other side of the fence and helping people getting started.
The current consolidation of Flipkart buying Letsbuy, irrespective of the dilapidated state of the latter is a good thing. Why?
- It gives a necessary boost to the eco-system that bets can be paid off, when the vision is right but the markets are tough. If VCs are forced to write these deals off, it brings a black mark in their report card to their investors (LPs or Limited Partners). However, we as entrepreneurs need to keep the funding cycle alive and rotating every few years.
- Venture Capital is an between food chain of money flowing from people who have it. Why have a spock mark when you can avoid it? While getting a degree, it’s okay to get a summer (or suppli) as long as you come out in that 4 years. Some of the startups are like that failed exam but the venture eco-system allows for “exits”. Would you want the annotation of “suppli” in your degree? Nor do they.
- Entrepreneurs who did “okay” in the current startup become capable of taking even bolder bets. If the start-up simply fails, not that there are no learnings from the same, but parking an almost out of gas car securely is much better than leaving it in the middle of the road.
- For the uninitiated who do not understand the intricacies of the deals, it’s a positive story and brings more people to take the plunge and start their own venture.
Yes, it’s a good PR. Can be written in bold in the resume and can even make you a VC, irrespective of the nature of the exit. That’s how sweet these exits are.
Off-topic: The most worry-some part of the current cynicism is not just the angst against the deals but the so called keepers of the ecosystem advising entrepreneurs to keep away from investors and also advising them to bootstrap their startups to death. They are at total loss to understand that these are venture startups and not a “baniya ki dukaan.”
[Guest article contributed by Indus Khaitan. Reproduced from his blog.]
[Adds Ashish: It’s not about being cynic etc – the key is to keep learning from others’ failure and frankly, startups cannot afford to run against wrong metrics. No matter who you are and what your venture is about, the market will decide your fate (and not blogs/media/Facebook comments/Tweets etc). At the end of the day, you will have to answer for yourself (and customers, investors). Like we have been saying ‘the access to easy money’ has been a culprit and no ecosystem evangelism will justify bad decisions made by entrepreneurs or investors. In short, exercise your due diligence. Don’t just raise money because it’s a cool thing to do, raise money because you are in a business of building business and not in the business of buying adwords/TV slots.]
Recommended Read: Notions in India on Startups – Are Few Startups Spoiling the Ecosystem?