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Snapdeal & Flipkart deal : A great story or a dark day for Indian startup ecosystem?

Flipkart is acquiring Snapdeal and expect the final details to be announced in a few days time. As with most of the things in life, there are 2 sides of the coin.

Let me first show you the happy picture.

  1. Snapdeal founders will get $30mn as cash payout, as part of the deal. This is bigger than any money made by Indian tech entrepreneur in the last 5 years (as part of exit strategy).
  2. Flipkart founders are already billionaires and are considered ‘globally influential’ (by Time mag)
  3. Freecharge founders got a damn good cash payout – they are chilling (and Kunal is having his baba moment on Facebook – no pun intended :)).
    It’s a different matter that Freecharge is being acquired by Paytm for 10% of the valuation for which it was acquired earlier. Nobody cares as everybody made money from the deal.
  4. Even top employees at Snapdeal will get a very good cash out. Flipkart employees have made a killing too.

This is the power of entrepreneurship – founders and top employees have made loads of money !

Right.

Let’s look at the ‘other’ side of the coin.

  1. Flipkart and Snapdeal are arch rivals. It’s a well known fact that both the teams have spent enough on bitching about each other – right from newspaper ads to online campaigns to bickering on Twitter.
  2. None of the founders wanted to go ahead with this deal – it makes zero sense.
  3. The decision to merge has no approval from any of the four founders. In fact, for all practical purpose – their opinions don’t even matter in this deal.
  4. The deal, for what’er it is worth creates NO value to anybody (read the next point).
  5. This is purely driven by investors. They need to team up against Bezos. But more than that, save their investments.
  6. It’s the same thing with Flipkart acquiring Ebay. Made 0 sense.
  7. Founders are mere founders (for photo op only). Professional CEOs and investors are calling it a shot.

So for those who thought entrepreneurship is about creating value, living at your own terms and conditions etc etc – you know the answer (hint: at scale, think short term and make money).

Post this deal, this is what has actually happened:

4 (top) Indian entrepreneurs lost their decision making powers. To investors. To money.

The top 2 unicorns are now not run by the founders themselves.

Value creation is secondary, if you know how to ‘play the game’. Money is in playing the game and not in value creation.

This deal sends a perspective that new age Indian entrepreneurs cannot perform at scale. So hire professional CEOs/management.

Globally, some of the most inspiring founders have fought for their companies, their rights (to call shots) – and here we have founders who have lost it all. All for money. There is no willingness to fight.

The bigger lesson in this entire episode?

If you have to be an asshole, be the most ruthless one (Hello Bezos!).

As the saying goes : Eat the breakfast or be the breakfast. Right now, Chinese are having desi (for) breakfast!

And the radio plays:

And did they get you trade your heroes for ghosts?
Hot ashes for trees? Hot air for a cold breeze?
Cold comfort for change? And did you exchange
a walk on part in the war for a lead role in a cage?

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