Kunal Bahl, the 32-year-old co-founder and chief executive officer of Snapdeal, appears relaxed in a light blue shirt and dark trousers, as he settles down for an interview at the large conference room in the company’s Gurgaon headquarters, but he clamps down on issues that he calls “conjecture”. Bahl’s firm has been in the middle of some firefighting over reports on how there are efforts to downsize, as cash is depleting and investors are not forthcoming. In conversation with Karan Choudhury & Nivedita Mookerji, Bahl says investors regularly chase Snapdeal and that the views of pink papers must be separated from those of consumers.
The pecking order in Indian e-commerce seems to have changed. Amazon has replaced Snapdeal at No. 2 position, as Flipkart remains on top. Do you agree?
It depends on the metric you are looking at. If you assess the vanity metrics, it does not concern us. Assessment should be based on metrics that matter and that is real revenue. There was a time when metrics such as GMV (gross merchandise value of products sold) were important as there wasn’t any other metric to measure progress. Companies were small and the space was nascent. Now that size and scale have been established, it is important to figure out who can drive revenues.
In the revenue pecking order, where is Snapdeal placed?
I am pretty sure we are No. 1. From a growth trajectory standpoint, we are clearly No. 1. In the past one year, we have seen 300 per cent growth on our revenues year-on-year. At the end of the day, if your real revenue is growing that fast and you are able to keep on improving your customer experience considerably, which we have been able to do, that represents real progress.
Are you ahead of Amazon and Flipkart as far as real revenues are concerned?
I do not know their numbers, but I think our growth rate is by far the fastest.
By when will Snapdeal start making profits?
We can do it as fast as we like, but we are also investing in a lot of things such as payments, logistics, etc. Hence, two-to-three years is a reasonable timeframe.
There has been a lot of buzz around Snapdeal not doing well, retrenching employees and even that the company could go on the block as it’s not left with much cash. Does that worry you?
I have not heard of such a buzz. I can only respond to facts…
But, Rohit Bansal (co-founder and COO) had written a blog to clear the air on such matters...
There is a general doom-gloom that is being painted for the broader internet ecosystem at present and we feel it is also our responsibility to put the narrative of our company, as well as that of the overall industry, in the right context. There is always an over-indexing that happens. When there was euphoria around the sector, there was over-indexing in that side. When there is a softness in the market, there is over-indexing in the negative side…. We are here to stay and would keep building our business. The buzz that you mention has never bothered us. What matters is that of all marketplaces in India, we probably have the clearest strategy and we are executing it phenomenally.
If someone wants to buy out Snapdeal at a good valuation, will you be game for it?
I cannot respond to conjectures. It’s like asking if somebody offers me a great job, would I take it. I don’t know.
What about Alibaba having a direct play in India through a venture or a deal with Snapdeal?
These are decisions of the board, not of an individual. I represent a company of thousands of people, and investors, and I can’t take such a decision. I have a point of view in every matter which is strong, which is listened to intently, but I am respectful of the fact that mine is not the only point of view.
Amazon has said it has an open cheque book for India. Do you see it as a threat?
I think if you are not paranoid as an entrepreneur, then for sure it is a threat. We are an incredibly paranoid company, which is a healthy version of anxiety, and that has nothing to do with any specific player…. As a company, we have some skill, of agility, resilience and also being incredibly paranoid, which makes us identify trends earlier than others. Because of that, we are able to change trajectory much before others. If people are moving Titanic, we are moving a speedboat. We cherish the fact that we are an incredibly paranoid company as we know how to channelise it.
Alibaba or Amazon, which is a bigger competition for you? There is also a thought that if you and Flipkart joined hands, you could together beat Amazon. Do you agree?
One of them is not even here. We are focused on building the best customer experience, real revenues, and the best e-commerce company in India.
Don’t you think that the threat is not from Flipkart anymore, but from Amazon?
Look at the telecom sector in India. It is also very large and has an acute amount of competition more than that in e-commerce. About 20 years after telecom came into prominence, there are three flourishing companies in that space - one very large foreign player and two Indian successful players. I do not see why the same will not happen in our space…
Why is it that the overall disillusionment is only with Indian e-commerce players and not international ones such as Amazon?
I think that is a media view and not a consumer view. As a company, we are very clear that we separate the pink paper views from real consumer views.
Valuation for some companies has been marked down by investors. Why has that happened?
These are company-specific issues and no such thing has happened to us.
When you are in the market to raise funds, have you faced any concerns about valuation?
We have enough capital to get to profitability. If you look at our funding history, 90 per cent of the capital was raised in the past 24 months, which was over $1.2 billion. It is hard to believe that consistently for 24 months we would have burnt $50 million. It is not possible, so clearly we have a lot of money in the bank. We have not even touched the money we raised from Alibaba and Foxconn last year. We are well capitalised and the most efficient company by a very large margin on all dimensions. It means our profitability journey does not require us spending inordinate amount of capital.
Like others, don’t you also talk to investors all the time?
Investors keep approaching us. For investors, it is a question of which company to back. There are only two companies in this space that are back-able in India, for investors to get a financial return. We are not actively chasing investors.
After Nikesh Arora (who quit as SoftBank president recently), is there any change in your relations with lead investor SoftBank?
We have strong relationship with SoftBank. I have known Masa (SoftBank founder and CEO Masayoshi Son) since 2011 and have a great personal relationship with him.
Is more investment coming from SoftBank?
I am sure that it will come at the right time. If we need to invest for some strategic reason, I am sure when we go to raise money, people will give it to us.
Are you not looking at other strategic investments?
We have always been looking at it. Since 2010, we have done 15-16 acquisitions.
Would you be interested in buying a company in the fashion space as it is a high-margin business?
I look at net margin; fashion in India is also sold with plenty of discounting. Selling shoes on a deep discount is like selling mobile phones. But, we are constantly assessing players across categories.
Are you not talking to fashion portal Jabong to acquire it?
Well, I’m reading the same news that you are…
You spoke of efficiency in the company as part of the profitability goal. Doesn’t that mean you are able to make do with lesser number of employees? By how much has the employee strength come down from the 8,000-mark last year?
Overall, the employee strength has not come down. We have done a repurposing within the company. For instance, a bunch of people who were doing commerce at Snapdeal are now with Freecharge (which was acquired by Snapdeal). We have done a lot of realignment as for who does what, but overall, the headcount has not changed. We have also actively outsourced some of the functions, whereby the same people are now working for the process partners.
Nikesh Arora in one of his exit interviews said that Snapdeal has a long battle ahead with Amazon and Flipkart. Is it a long-winding battle for you?
Nikesh continues to be a super supporter of our company and he continues to advise us. But, going back to telecom, do you think folks at Airtel and Idea are sitting back and relaxing? Why should it be any easier for us? It should not be and it will not be and that is where we will differentiate ourselves. If this is a long-winding race, then I am even happier, because I know with our resilience and efficiency, everyone else will tire out but we would be there.
