What are the big takeaways from this funding round?
It’s the largest round raised by us and we don’t just get capital but access to a very interesting partnership. With eBay, there is the cross-border business, global collection for Indian customers, and global buyers for Indian sellers.
I am very excited about how this business will grow in the next decade, it is a big win-win. Tencent can manage hundreds of millions of customers, we will partner with them on the payments and fintech space.
Will Tencent also make a direct investment in PhonePe?
A good part of the capital (from the $1.4 billion round announced on Monday) will be deployed to scale up PhonePe’s operations and also towards our overall fintech ambitions.
In the core (online retail) business area, we are looking at investing in new growth areas like furniture, private labels, improving customer capabilities and investing in automation and AI. We will continue to build on our growth momentum in the last six months.
The last time Flipkart raised a mega round, a lot was spent on discounts and hiring. How will you ensure such mistakes won’t be repeated?
Whatever we do today is because of the learnings in the last 10 years. We have focused a lot, in the past 12-15 months, on improving costs and margins, reducing burn rate, and improving working capital. The target for the core business is to get to free cash-flow positive.
HR is the biggest cost for Flipkart, what has changed in the way you hire?
Hiring is one of the biggest costs. I think the philosophy of how we hire hasn’t changed, we look at very high ownership abilities and tech capabilities.
We have done a lot to become more nimble in design and getting to the right balance of process, creativity and freedom. A lot of these changes have brought down the hiring requirement. A big focus has been on user automation and AI across functions like operations, customer support, and category management. Last year, we found that we have three extra layers and came up with a new design to streamline the organisation.
Do you also see the need for a level-playing field for Indian Internet companies?
I think it’s a complicated issue. In any growing economy you need to give room to local players to really mature, in all sectors.
Otherwise it is a vicious cycle (until) you get to a tipping point where the local ecosystem is mature to take on global technology and capital. That has happened in all categories of business in India, but internet is just one sector which hasn’t been looked at from that lens. I don’t think this is an issue with one company but about how to shape the internet economy of India.
So when do you think the Indian ecosystem will reach maturity?
I think the rate of development is really good and the momentum is coming back. I guess in the next five years we should get to a lot more maturity where players are able to sustain themselves.
And it won’t be dominated by MNCs?
There is a question about whether you will you be at the company for the long haul? What are your thoughts?
First, we are very deeply involved in the operating side of the business so that statement is not correct. There is a long way to go in the Flipkart journey. I think the first 10 years have been great, but there is 10x more to do in the next 10 years. Both Sachin and I are equally excited about building on top of the platform that Flipkart has become.
Just like the first ten years of most Internet companies like Tencent or Alibaba in China and Amazon in US, there is tremendous amount of growth and disruption ahead of us. We have not even scratched the surface yet
INTERVIEW BY – MADHAV CHANCHANI, ET TECH
EDITED AND CURATED BY – ARJUN MEHTA, FOUNDER, THE STARTUP CHANNEL IN ASSOCIATION WITH THE TECH POST