Now, that the storm has settled a bit, a deeper analysis of the mega deal.
The big takeaway from the present deal is that deep pockets win. This is a maxim that has been demonstrated over and over again, especially in B2C technology plays. A certain disdain for capital efficiency, a focus on gaining share and a relentless focus on killing competition define today’s leading companies. Flipkart would have been in the news for very different reasons had it not been for the timely fund infusion by SoftBank in 2017. Growth had stalled, the annual burn was high and unit economics were unsustainable. And yet, as part of the strategy of Lee Fixel of Tiger Global and Kalyan Krishnamurthy, Flipkart doubled down on not ceding market share to Amazon, whatever the capital burn. This in turn caught Softbank’s eye (whose earlier investment in Snapdeal was not working to its expectations).
Rajat Kumar — Knowledge@Wharton