Flipkart co-founder Sachin Bansal has revealed he had to step down as the company's CEO and take up the chairman's position after missing performance targets, a media report said.
Bansal made this disclosure at a town hall meeting with Flipkart employees on 19 August, The Economic Times reported, citing two people present at the meeting it didn't name.
"Look at the top level around you. Everyone has changed. In fact, even I am gone. Some of our targets have been missed and everyone, including the top management, has paid the price," Bansal said, according to the two people.
Bansal's reply came on questions from employees as to why they had to face the axe for unsound management decisions, weeks after reports of Flipkart laying off underperformers did the rounds. Flipkart is said to be downsizing its workforce by 3% (around 700 employees) to cut costs and take on rivals Amazon and Snapdeal.
The Economic Times also cited a Flipkart spokesperson as saying that, while the performance management philosophy was part of the town hall discussion, most time was spent on discussing the improvement that Flipkart had made in its business performance.
Bansal's candid display of admission of fault is being seen as an attempt to improve sagging company morale and winning back employee confidence and loyalty.
However, an industry observer who closely tracks the e-commerce industry said that it comes rather late in the day.
"The larger story here is that investors took over the reins of Flipkart almost six to eight months ago, sensing this crisis. Today, it is Lee Fixel [of Tiger Global, a large investor in Flipkart] and Kalyan Krishnamurthy [who joined Flipkart from Tiger Global recently] who call the shots and Bansal's role is merely titular. But this was bound to happen. Hence, this admission at this juncture makes no sense," said this person, who did not wish to be named.
Flipkart has been going through a tough 2016. Several mutual fund investors have marked down its valuations, Amazon is snipping at its heels, and it is struggling to raise funds. The hiring fiasco, where it deferred the joining dates of IIM graduates, earned it the ire of one of the elite business schools in the country. Job cuts make matters worse.
Haresh Chawla, a partner at India Value Fund Advisors, had said in a blog in April that growth at Flipkart had stalled since the middle of last year and that the leadership team hadn't figured out a way to kick-start sales.
To be sure, Flipkart is still the market leader. Over the past two months it has announced a $70-million acquisition of fashion e-tailer Jabong and picking up a majority stake in actor Hrithik Roshan-owned fashion label HRX, indicating that it is no mood to give up the fight.
Like this report? Sign up for our daily newsletter to get our top reports.