#5 - India's Largest Exit

Balaji Srinivasan 0:00

Welcome to never exceed podcast. See, I'm here with my friend Binny Bansal, co founder and former CEO of Flipkart. Now Flipkart is Amazon of India. And it's India's largest exit. In 2018, Walmart bought a 77% stake in Flipkart for $16 billion. For context Binyon as co founders bootstrapped, the company in 2007, were just a few $1,000. Getting from that to $16 billion was a huge result. And that exit was obviously big for anywhere, but it was massive for India. It put the Indian tech ecosystem on the map and approve the global investors and local talent could build massive companies in India. Indeed, Binny story and data flipcharts is a story of the rise of India on the global stage. Well, welcome to the MX a podcast. Binney Glad to have you here.

Binny Bansal 0:44

Oh, super excited. Thank you for having me. Awesome.

Balaji Srinivasan 0:47

So um, we just kind of gave the audience an overview of the rise and really the return of India, the return of Indian tech. And you personify that you exemplify that India's largest exit, ever proving that both local entrepreneurs and foreign investors could collaborate to build a technology company of global significance, with both Amazon and Walmart bidding over it. You were founder, your first time you were CEO. Now you're doing your next thing. We want to hear about the rise of Flipkart. That was the founding of it, how you got it to what it is, which is a very difficult environment in India at that time. And and then what you're doing next, so why don't we start there? Tell us about, you know, the origins like, Where was India when you got started? Or? Yeah,

Binny Bansal 1:35

you want to start there? Maybe a little bit, maybe even earlier, earlier?

Balaji Srinivasan 1:39

Starboard start where you think we should?

Binny Bansal 1:40

I think, yeah, I think what is probably relevant is, I was thinking about this, like, where to start. And I remember now we will remember that we will sort of memory today morning, where I'm in like, fourth grade. And fourth grade is when I saw my first computer, and that was in high school. So my school had these computers on which were very early. You could sort of do stuff in logo. And, and you could, and there were sort of there was a computer course and which everyone had today,

Balaji Srinivasan 2:17

this is like 91 ish, this would be

Binny Bansal 2:21

this would be 9192. Ish. Yeah, very early. And I was an average student in class, in all subjects, but when I saw the computer, I knew that, that is something I'm going to be good at. Like, I just felt like, this is something I love, passionate about. And I remember when sort of the whole the year ended, I had scored like the most in class, like, by far, like, there was nobody even close and I wasn't average students, everybody, all the teachers were quite surprised, like what happened. And somehow that gave me actually confidence to do better in other subjects as well, especially maths and science. So as I got more confident, sort of became better and better, and sort of top of class in math, science. And that's how I got confident enough to sit for the rtj exam, for there is a exam for getting into

Balaji Srinivasan 3:22

explain what that is focusing on it. So in

Binny Bansal 3:25

I think one of the great infrastructure pieces, I think India really invested very early on since getting independence was these Institute of engineering and technology called IoT. And there were, when I got into one, there were, I think, seven or eight. And now there are 20 of them. And these are like in elite engineering schools with really world class faculty, world class sort of facilities. And obviously, the best thing in students sort of compete every year. I think more than Atlanta, when I get the exam, I think it was more than two 300,000 students giving the exam and only like, three or 4000 students get in. So it's pretty hard. It's pretty hard.

Balaji Srinivasan 4:13

It's actually it's, uh, we'll probably put up some, like images of INTJ questions, but it's math, it's physics section and fairly difficult integrals that they'll typically ask each year. Right. And, and it's also, um, you know, for 50 years has been corruption free. Like I say, it's a very high integrity exam with the questions kept and many of the technologists in the US like, I think Vinod Khosla, I believe he was, right. Yeah. And a number of them, are it or Cinder. Exactly. And, and he, I think he was like a civil engineering grad, but it's really just like a test of technical ability. Right? Correct. And so that means that actually, so the most ambitious and intelligent people in India become engineers. Yeah. Technical Training. Very, right.

Binny Bansal 4:57

Yeah. I mean, I came from a sort of middle Last family lower middle class both which I grew up, I grew up in a city called Chandigarh, it's near Delhi. Yep. And it's also unique city in a way. It's the sort of only planned city in India. Right. Very new city. It was established in 1960. So after India's independence and a French architecturally crab boozier, designers, and

Balaji Srinivasan 5:22

he's gotten a lot of flack in the West, because he makes these big, you know, boulevards and stuff like that. They used to have shade and stuff, or they like, Yeah, but like, Was it okay, growing up?

Binny Bansal 5:32

I'm really, I would really grateful. I love the city. So interesting. Okay, I go back almost every year. My parents are still there. My parents who live in in Chandigarh, so I have a lot of family there. So a lot of connection there. So yeah, so. So I was saying, so I come from a middle class family, both my parents are working in government jobs. My father was a manager in National Bank. And my mom also sort of had a job in a government office. But I mean, I could sort of dream while growing up like in the 80s, and 90s. I could dream of going to like the best institute in the country, right from there. And then I mean, working for organizations across the world,

Balaji Srinivasan 6:23

which it did you go to,

Binny Bansal 6:25

I went to IIT Delhi. Okay, so in your home? Yes. Yes. Home? Yeah, I'm having a ton of good computer science department.

Balaji Srinivasan 6:34

And so, that was you. That was like, what the early 2000s or whatever. So

Binny Bansal 6:38

that was 2001. So I started, I went to IIT Delhi 2000 2001. And then I graduated in 2005.

Balaji Srinivasan 6:51

And then, so after that you joined Amazon, or we went straight to college, Amazon, is that right?

Binny Bansal 6:56

Yeah. So I didn't join Amazon right out of college. So I joined this small sort of company called Sarnoff technologies. And they used to be famous. Because lots

Balaji Srinivasan 7:13

of it grads want to join like a, you know, elite international brands. That was that dollar is a typical day. Yeah, yeah.

Binny Bansal 7:20

Yeah. So I think I was in college again, I was most of my batchmates were either going for a masters or PhD to the US, right. And, and few of them, were going to go to these Management Institute's which India has called IMC. So I was one of the fewer ones who said, Okay, I think I like the ICT experience, but I was sort of done with education, I didn't find that spending two, three years more in an education institute was gonna be good for me, was the right thing for me. So I thought I'll sort of, and I didn't want to go outside India, I somehow felt that India's right place to be this probably, I mean, energy and opportunity here.

Balaji Srinivasan 8:09

So that was a non consensus. I mean, like, one thing that we, you know, talked about is like, so I'm born around the same time as you. And, you know, we kind of like seeing some of the same phenomenon. But from, you know, 10,000 miles away, I saw the rise of the Internet, the digital infrastructure, but I also saw the decay of physical infrastructure in cities like San Francisco, where it's just far worse than it was 20 years ago. And and that's true in Seattle. That's true in LA. That's true in a lot of other places in the US, you saw the rise of the Internet in India, but you also saw the rise of the physical infrastructure. It's improved dramatically over the last, you know, especially 10 years, but certainly since you know, the 80s, or the 90s. And so it was that what why did you make the relatively non consensus decision in the mid 2000s, to stay in India, wherein a lot of your classmates were emigrating and building things abroad? It wasn't yet known you were one of the first to build a giant tech company. Right. So what made you do that? Was it seeing the rise? Was it just just a feeling? It

Binny Bansal 9:06

was just a feeling? I wouldn't say I mean, I mean, at that time, there was no plan to start a company or anything. I mean, it was one of the things I might on the back of my mind, but it wasn't like the thing I wanted to do. I just wanted to start working, let me just get my hands dirty. And apply what I learned. See how sort of working in a tech company feels like a working sort of technology feels like and go from go from there. And, and to do it from from India, because again, there as I said, I think I could just see I, I was sort of seeing, as you said, both the digital and the physical infrastructure sort of growing pretty rapidly in India in the 2000s.

Balaji Srinivasan 9:53

And but even in 2008 I think, if I'm not mistaken, there was still only about 5% of India have it Connect Connect. Right yeah. Today with Reliance Geo and the rise of it, it's like I think past 50% or so on and we're gonna get to a billion something right. But, but you could see that this thing which had become so big everywhere else was was rising there like, you know, from Sarnoff, then you joined AWS, what it says enough to

Binny Bansal 10:19

Yeah, so yeah, so Susana was also sort of a big non consensus move, because Sarna was a small sort of company out of Princeton, they were very famously known as RC labs. Okay. And I think they did a lot of pioneering work before, machine learning became what it became, I think they were sort of the early pioneers of computer vision and machine learning, interesting, and all of that, and they'd come for a talk in our and there were a couple of a couple of seniors from, from a department who worked there. And they come and given a talk that this is what we do, and, and they were working on automotive vision, figuring out whether a car is driving in lane. And as a driver sleeping and all that sort of stuff back in like 2005.

Balaji Srinivasan 11:06

It sounds like around the time that self driving was, I think the DARPA Grand Challenge just happened around it was

Binny Bansal 11:12

just Yeah, was just getting popular. Yeah. Yeah, it was at the time. So So I got quite excited about that. I was very interested in computer vision and graphics and all that sort of thing. So So I basically got a job on campus in de Shaw. And, but I didn't really want

Balaji Srinivasan 11:36

to go there. She's like intern there or something like that. Yeah,

Binny Bansal 11:39

no, no, I got a job on campus. I mean, last in the last year, you sort of set for placements.

Balaji Srinivasan 11:43

Got it. So they have the working in placement process and,

Binny Bansal 11:47

and us going interview with companies and you are allowed to take one job. So that job I got with the Shah about, I mean, it was a hedge fund. It was a sort of, I mean, something I didn't want to do. So I applied to these seniors on at Delhi, I wrote to them that I would really want to work on these problems and, and went through their interview process and got a job with Sarnoff and they had an office in Bangalore, where I went and joined.

Balaji Srinivasan 12:23

So you know, the thing is that, you know, something I've remarked to many Indian immigrants, right, is that for many folks, just the level up from especially lower middle class to upper middle class with a Google job or Facebook job. It's like an IPO for that. Oh, yeah, absolutely. They're, they're very suitable boy. You know, they're Varenne and so they can have, you know, a good marriage, all that type of stuff. So it's like a huge level up for them. So the extra risk of actually going and starting a company is for many folks, at least until recently, not worth the reward, right? Because you can take the relatively safe bet. And that's like, such a big level up. Yeah, over what it was that that people will just kind of go with that. Right. So she went to Sarnoff and then you decide to join Amazon, right was that was like it says de SHA then Sarnoff then Amazon, right. So it was,

Binny Bansal 13:14

yeah, the show was just an offer. I mean, you're joining them. So never joined them. I ended up joining Sarnoff in 2005. And I worked there for a year and a half on various projects. So the work was very interesting. But what I learned there was that while the work was interesting, I mean, there was no business model. And it was never going to be an interesting business to work for. It was like if I could go into research probably was a good place to write. And I could go to a PhD using sort of the work there. But so then I decided to sort of move on maybe join a look at joining a company where I think internet was really getting big at that time, globally. And I think India was just starting to see green shoots as well. So so obviously internet companies fascinated, I think all of us at that time. So I decided to sort of join one of them and thankfully got into Amazon,

Balaji Srinivasan 14:13

and also in Delhi and Bangalore in Bangalore. And you had you were there for about a year and you could see Amazon India, and you could see that. I mean India was was it a focus for Amazon at that time or

Binny Bansal 14:27

India was a satellite office. And they had teams working on Aw, that AWS teams, they had teams working on payments, which I joined. And they had teams working on their Inang search engine, which was there as well. So it was all work for the US business. There was no India focus or interest to early 2007 was, as you said, like 5% of people had internet and it was like 256 kbps at best and that was called broadband at the time and so it was very, very small percentage of the population, which photos very early for an Amazon to take a bath.

Balaji Srinivasan 15:04

And when did Amazon dot ion launch? months later?

Binny Bansal 15:07

That was like 2013.

Balaji Srinivasan 15:10

Okay, so So Flipkart proceeded Amazon by like six years ago. Okay, so, so basically you were at Amazon, you're at AWS, you're on basically, it was like a tech back office, like a satellite office. And, um, you got bored there and you said, okay, you know, why isn't there amazon.com in India? And hence Flipkart, right. It's like, Oh, 708. Right. And, you know, the thing is that for the Indian market, you had to optimize for the fact that most people didn't have internet connections, at the time was still very much a cash based economy. There's pre mobile, certainly pre Indian, mobile, all those kinds of things meant the difficulty level was just much higher.

Binny Bansal 15:52

Oh, yeah. I mean, it was like, think about like, what when Amazon started in the US, it was probably from an internet standpoint, that era, but from an infrastructure standpoint, even like worse, they weren't ready cards. When you couldn't pay online. There was no UPS or FedEx to deliver your packages, but

Balaji Srinivasan 16:09

in the offline Logistics was also hard because so on weren't even built, right. Yeah, exactly. So the digital was hard. But the physical was

Binny Bansal 16:16

physical was even harder, right? So no warehouses, no UPS, FedEx, no large distributors of books where you could just plug into like, couple of distributors and get like millions of millions of books up and running within the Soviet to do all of that.

Balaji Srinivasan 16:34

So how'd you do that? Because I mean, you're talking about that's not just building Amazon. It's also building FedEx. Yeah. FedEx. Right. I just some tweets. When I put up some tweets, have you actually going in like delivering packages and whatnot? Right? Yeah. So you're delivering packages? Also, if it's cash economy? What if they don't have the cash on delivery? Now you've taken the hit of delivery costs, right, that raises costs through the whole city? There's so many logistical issues here. Tell us about kind of how you kind of dealt with that.

Binny Bansal 16:59

Yeah. So when we started, we were obviously I mean, very small, like almost any, like any garage startup in the in the US just just the two of us. We bootstrapped. We'll put in four or $5,000 Each of our own sort of savings into the company. So no venture capital, no angel. Oh, so yeah. So I mean, to paint the picture, again, 2007, five, like 20 25 million people online in India. And I mean, you could count the magic number of venture capitalists on sort of your fingertips literally. Right. So there were like six, seven of them with small funds, like 20 million, 50 million, 50 million, sort of font sizes for the VCs. There was some pea funds, which are large, but they were not investors

Balaji Srinivasan 17:39

had there been inland. I mean, there is emphasis. Right. Right. That was like the big Indian tech story writing. And

Binny Bansal 17:48

so there were these IT services companies Infosys. Wipro. Right. Yeah.

Balaji Srinivasan 17:52

But that's not what we think of as tech, because they were consulted. They're not product companies. I mean, it was fine. And I respect you know, them building the businesses at the time they did they help kind of put Indian software on the map. Yeah, right. But they were not product company. So that was the only precedent in India.

Binny Bansal 18:06

The other precedent was, I mean, all these offshoring offices. Google had an office like Amazon, Microsoft had an office for a long time, Texas Instruments, IBM, IBM had, like lots of hardware companies also did. So Nvidia had an office. So all these large tech, US tech players had important teams in India, Yahoo, had a big office, we ended up having a lot of people from yahoo, yahoo, had a big office in Bangalore, AOL, all of them. So I think that's where the product and tech talent came came from. And that's a sort of existed

Balaji Srinivasan 18:37

because I learned what world class was. And then you know, and this actually something, you know, people talk about, like, quote, brain drain, but then there's this other kinds of like brain circulation or brain regain where, you know, certainly a big part of India's rise is the diaspora going abroad buildings reputation, having Capital and Talent come back, know how coming back, okay, and Indians kussell In the US, okay, maybe we'll set up an office in India. Okay. Now, Indians within India learn something. There's like, that kind of loop. And you saw that, right. Exactly. And so, the logistics part, I'd love to understand that because, okay, so I mean, I'm just thinking about level of difficulty. This is like scaling Everest without a map. Since 2007, and you have no angel investment venture capital. There's no like success stories that you can point to, at least domestically, you can point to, right. There's, there's very little in the way of physical logistics, right. Yeah. So while it's true that the amazon.com business model has worked, and you can also see that had been cloned in China, right, and that that was starting to work at that time. Even the Chinese tech story only truly built out in the 2010s. But there were there were some stories of Chinese tech success and right it wasn't a total zero. India was even further back. So how did you manage like the the logistics of everything? Like did you deliver yourself you built your own, you know, network of drivers. How should I think about that? Yeah,

Binny Bansal 19:55

yeah. So for the first two, three years, we were selling on the books And there were some small companies like UPS and FedEx local companies in India, courier companies, which were delivered, which would sort of were good at delivering documents. And hence, I think with books, they were able to manage our business, right and scale. So we just partnered with them games on model started, started with books. And on the supplier side, we just went from small distributor to small distributor to publisher, like, we had to go to like 2030 of them instead of like one or two, because there was no large aggregator who was aggregating books at a large scale. So so we aggregated that, and we put that all on online. And we started with a very simple USP that what you see is what you get, I mean, even doing that in India, was was good enough because nothing else,

Balaji Srinivasan 20:51

there's no there's no hidden costs, there's none of this seems like a WYSIWYG for prices,

Binny Bansal 20:58

whether it be for prices, and for delivery, like you will get if you order you will sort of get it within three to five days

Balaji Srinivasan 21:04

is explained why that was in innovation. It's because people were used to haggling, they were used to hidden costs or something like that. Is that what it was?

Binny Bansal 21:12

Yeah, so retail in India is at that time, wasn't very well developed, it was completely fragmented market, no, no large retail brands. So Indians had never really seen customer service, so to speak. So if you went to a small Indian mom and pop shop, the sign on the on the shop would say once sold, no return. So the address or the level of customer service policy, right in India's. So there was basically since no brands will build there was sort of lack of trust in the system from both the seller and the buyer. Right, right. So. So just launching something online and saying, yeah, what you see is what you get, because online, you really can't get ahold of the person, if you if you've paid money. And if you don't get what you want it then what happens

Balaji Srinivasan 22:00

this, this is actually I mean, in the 50s, US 60s, us like big chains like McDonald's, or actually, today, people you know, are tired of them are negative on them in the US. But in India, they're actually good. And they were good in the 50s and 60s, because it was like, Okay, this is a large multinational, I know I can get a consistent interface to them. Even if they burned their coffee, they're gonna burn their coffee in the exact same way. So at least it's consistent, right? They only accept cash, they have accounting practices, the person can take a kickback at the counter, all that type of stuff, etc. Right? And so like, um, so the multinational model actually helped establish trust within India for kind of scale commerce. So is would you, would you? That's basically what I'm hearing from you.

Binny Bansal 22:39

Yeah, I think sort of probably, is a similar story, but happened in the 50s 60s. In the US,

Balaji Srinivasan 22:45

this is a broader thing, right? I think in many ways, like, the US is becoming more like the India of my youth, right. But a lot of, you know, like a lot of smart people who just can't get it together as a society, you know, and lots of you know, communal stuff, all the type stuff. Unfortunately, the US Congress, the India is becoming in some ways, like the 50s us where there's like a, you know, a sort of ideology that is wrapped together a lot of different ethnicities, a lot different languages into a coherent nation. Yeah. There's now like a highway system. There's like shared common infrastructure the government is actually executing and like a surprisingly good way. You know, I said, I'm, I'm only moderately bullish on the Indian state and extremely bullish on the Indian network. But I'm moderately bullish in the in the state, they've actually executed fairly well over the last, you know, a few decades. And so in some ways, like the 50s, US is sort of a cognate. were things that worked then are kind of working now like the big box, big multinational, that's actually good. In India. It's novel. It's good, good customer service. So So you took some of that playbook. What else? Yeah.

Binny Bansal 23:43

So we took that, and we implemented obviously, at a very small scale. And, and we started growing pretty rapidly after six months of, of launching, Google sort of indexed our results. And as we, since we didn't have any money to sort of acquire customers that was working for Google SEO became our sort of free marketing channel. And once customers sort of started buying from us they started buying regularly because all these were like early adopters looking for books on online. And, and they were sort of happy paying online with their credit cards, even degree really early adopters who had internet and credit cards, right? And all of that. So So building the books business was little bit of a breeze from there, because we are on the backend, the courier services we had we knew how to sort of then type in more and more distributors we went to from bank. We started with Bangalore, we went to Delhi, we went to Mumbai, we tied up with all the local distributors everywhere. Then we also reached out to the US distributors, couple of them and got a lot of international books on the platform. And within two years, we were sort of have, obviously the biggest online book platform in the country and one of the larger ECAM platforms as well. And that's when the couple of weeks he started calling us late 2000s. This was 2009. Yeah, mid 2009. And we started talking to them to raise money.

Balaji Srinivasan 25:23

So one thing about this, I mean, in the US, I recall Bezos saying that the reason that he picked books specifically as a segment was first, there's lots of skews. So there's a lot of inventory. So the internet offers an advantage over a physical store. There's only like, a few kinds of soda. And so a physical store can stock one SKU and they're all replaceable. Right? Exactly all replaceable. And so, whereas books are non fungible, and very large variety number one, so the Internet gives you advantage. Number two is shipping. You know, you it's hard to like break a book, and shipping, right?

Binny Bansal 26:00

And in India, books are really cheap as well. They're like, five to $6. Yes. So it's easy to sort of put them use a credit card and buy it online. And you don't really need to put, you don't really need a lot of trust, right, while buying a book while buying electronics. It's like $0 $200.10, people's

Balaji Srinivasan 26:18

Bigger, bigger purchase in there. Yes. And so then the other thing is also like, you could take an order and then get the cash. And then you basically would, you know, where you could concede as on shipping time, you could say, we will get this to you in four to eight weeks, but they might not be able to get it at all elsewhere. And then you can go in order from the distributor. This way you don't have inventory risk, since you only actually get it from the wholesaler at the time that the orders actually come in. Right? Is that correct? Yeah. And then then you can sort of cash because it'll be a long tail, maybe Harry Potter or something like that. You have enough orders that you'll have quicker shipping because you can keep the inventory. Right. And so it's funny. So that playbook worked in the US and also worked in India.

Binny Bansal 26:58

Yes, in in a similar way. And India is a much smaller country. So we could actually do like two to three day delivery, almost across like 80 90% of India, even when we didn't have inventory. Oh, really? Why is

Balaji Srinivasan 27:11

that? Because that's actually surprising. Because I'm think international distributors to get the books into India. And so

Binny Bansal 27:15

you know, when? International, obviously, two to three weeks, okay, sure, yeah. But if it was there in India with somebody else, if we didn't have it in our warehouse, it was another distributors warehouse. And we could sell it to the customer within three, four days.

Balaji Srinivasan 27:28

And that's actually that is actually a little surprising to me. Because the shipping, I would have thought would be more expensive and less reliable, then, I guess India did have a postal service.

Binny Bansal 27:38

Yeah, had a postal service. And there were these. As I said, these companies, which are good had documents, banking documents and stuff like that, but it's usually not because the banking system had a lot of need for couriers, and everything must be in person. Yeah. Right. Yes. So there was that system, which worked ebooks pretty well. So I think it became way more complicated once we launched electronics in 2010. That's where the whole logistics story sort of started to become. Because now a reality shop. Tell us about that. Yeah. Yeah. So books was I think as I think as he said, his business also said is probably the perfect category to start with an E commerce company. And we didn't we sort of kind of looked at the lessons he had learned and also picked up the category and made sense and got lucky with it. I think it was when we launched electronics in 2010 that we sort of had to go back to the drawing board completely. Okay. So

Balaji Srinivasan 28:37

I didn't go from books to electronics, I was out there second category. What did they do afterwards?

Binny Bansal 28:42

Sort of was I think they did media and then I think they did electronics okay as well Yeah, is is how I remember it. But for us, it was very clear in India like electronics was a large category. We will always clear the books was going to be the starting point which was a very small market in India, right much smaller than the US

Balaji Srinivasan 29:03

but it is but all the other ventures it's an elite market. So if you can get like tastemakers, writers, engineers, etc to use you then when you scale it to other things, they're kind of upstream culturally of others sort of like Facebook starting in Harvard. Oh yeah. Absolutely. Breaking diffuse out. So so if you're that's the other good aspect of that as far as initial starting place, right. But go ahead. So electronics why that was a big level values.

Binny Bansal 29:28

Yeah, so we launched electronics in 2010. And a box business was growing crazy. It was growing like 20 25% month over month, doubling every doubling every three four months. And we were just struggling managing that scale. So that was great. We thought I mean, okay, let's now's a good time to launch electronics we just raise Series B from Tiger global, their first large investment in India, the time the effects and and we started okay, we had A few new people to launch the category. And we thought we'll launch and I mean, it's gonna grow as fast as, as books is growing. But after we launched one month went by 234566 Months went by, and we were stuck. I remember almost like just 100 orders a day. And it was not growing at all for six months while books was just flying flying. Yeah. So what was the holdup? Yeah, so then we I think after four or five months of just waiting and watching, we said, Okay, we need to do something. This is not working. It's not gonna work without getting into it. So. So then we spent the next couple of months really looking at this is like, 2010 ish. This is 2010. Yeah, middle of 2010. We start, we spent a lot of time looking at, okay, what are the barriers for the customers, right. And we did a lot of work directly with customers talking to quite a few of them directly looking at our data and making sense of things. And three things really became clear to us. One was that, as I said, books in India, like five $6 each. So customers were willing to pay online. They were sort of books don't break. So

Balaji Srinivasan 31:16

downside risk was low. Yeah. So electronics, they wanted you to deliver your son's

Binny Bansal 31:20

electronics. No. So first thing was, so they didn't want they were okay, buying books. They were only book buyers, early adopters. So they were okay, buying a five $6 book from an unknown brand. Like Flipkart wasn't the brand right? There, okay, like Flipkart, somebody is there. But yeah, I'll get my book. So that's great for $5. With electronics with $200, they were like, who are you? Who are you if something goes wrong? What's going to happen? So we didn't really so they wanted to buy from a little more trusted source than just an unknown brand. So So one outcome was clear that we needed to start investing in building a brand that Flipkart sort of, that you can trust us and, and, you know, as an thankfully, in India, there was sort of, again, a large, equally good start sort of ecosystem of brands, local brands, Unilever, in India, PNG, especially Unilever has a large presence.

Balaji Srinivasan 32:15

So how could you leverage that you just use some of their tactics like brand advertising, so we

Binny Bansal 32:19

use some of the tactics and people. So like, we hired our first head of marketing, and brand was an extremely liver person.

Balaji Srinivasan 32:27

So it's a brand is something many people don't understand, especially technical people, because it sounds like vague and marketing ish, or what have you. Yeah. And you know, I've always thought of it or eventually, I was able to think of it as the set of associations that come to mind when you mentioned a word or show a logo that's bright, right? So it's like the word cloud that pops around, right? And if it's a blank that people draw, then there's no brand association. And if it's negative words, then it's a negative brand connotation. And so you can actually do that empirically, where it's like you give stimulus and response, right that and so what you're doing is effectively installing and lots of brands, this response, which is when you see Flipkart, when you receive Flipkart logo, when you hear the Flipkart word, then you think online shopping trustworthy. Exactly. So so how did you actually do that? Because it's actually unusual to hear a relatively early stage startups thinking of brand as they're

Binny Bansal 33:23

doing their playbook was very different, right? Like, Amazon probably didn't do a brand ad probably for 10 years. Yeah. I don't think Google did an ad in the US because for 10 odd years long

Balaji Srinivasan 33:33

term 2010 They did a Superbowl ad is like, a giant company before. Yeah.

Binny Bansal 33:37

But in the essence, I mean, why we needed to do the ad was very clear that our branding was very clear, because customers wanted to buy online buying online, there was a lot of mistrust. And in the consumers mind in general, I mean, as I told you, in India, there was no developed retail. So customers were not very trustful, anyway of retailers, in general, from people used to buy stuff. So if buying online was a step beyond, right, I mean, you're buying from somebody you don't know at all, and you can't go and get hold of them. So building a brand became like a big,

Balaji Srinivasan 34:14

what did that brilliant, better? Does that mean? billboards that mean? TV? Yeah,

Binny Bansal 34:17

I'll come to that. So. So that became the first one. And the second issue we found was that, again, books was being bought by early adopters. Whereas we wanted to sell electronics to like, the next set of users who mostly did not have good ways of paying online. This was very early early days in India. So India, again, had 30 40 million people online by the time 2010 Or maybe 50 million people by 2010 11. And credit card penetration was very, very low. So very few people had credit cards less than 10 million, I guess, at the time, and

Balaji Srinivasan 34:53

in 2010, less than 10 million people have credit cards. Yeah. Wow. Okay.

Binny Bansal 34:57

I'll tell people who are active cards, I mean, sure. would have cards but people using cards was was very low and people kept using cards online would have been like less than 5 million for sure. Yep. So very difficult sort of to figure out a way to for people to pay and there was internet banking, which was also prevalent at the time, but also not very vigorous. So. So cash on delivery that we pay when you, you pick by cash game third, there's a third pick this the second one, using cash to pay became another big barrier to overcome that. We needed to collect cash and to cash on delivery. And the third big one we found out was that customers were asking what if I order and I get the product, but something goes wrong. I mean, after I opened the package, you're gone. Either it's broken, or it doesn't work after a couple of days, what happens? So we had to come up with this thing called 30 day 30 day no questions asked return policy, which in the US is probably just par for the course. But in India, it was like the innovation of the decade. Because as I said, in India, retail was no one's soul, no return. Right? So to go from one solo return to 30 day, no questions asked. Returns was like a huge, huge pivot, right?

Balaji Srinivasan 36:23

You get out of the low trust disequilibrium into the higher trust interest. So there's

Binny Bansal 36:28

basically just thinking of okay, if we have to solve this at scale, and what should it be right, and, and can we can we get it done? So obviously, there was a lot of debate on on misuse, and how will it work? How much will it cost us to, to do that? And we went back and forth. But it was clear that without this, we wouldn't be able to even be able to sort of sell online, sell electronics online. So so we did these three things,

Balaji Srinivasan 37:02

brand, cash, return and return, all of which are like trust building trust

Binny Bansal 37:07

building? Exactly. Yeah. All of these were really trust building things. And then going back to your question on brand, then it was very clear what the job to be done was for the brand it was to build awareness and trust on these parameters. So to first build awareness that yeah, Flipkart is a place you can trust Flipkart exists. Flipkart does you can buy books and electronics on Flipkart. And then the second was that you can trust Flipkart that you can, you can pay that if something goes wrong will take care of you. Today, no question does. So we created three spots, one on cash on delivery, one on this 30 Day returns policy and one just on the assortment that you can buy anything and everything under the sun

or icon iconic ads. I mean, we got lucky with we worked with a startup advertising agency, which one we didn't go to it was called Happy Creative Services. Okay, we didn't we talked to three, four established ones, but ended up choosing ended up choosing these guys who just started their new agency. And and the concept they came up with was that buying online is so we use kids as adults in the in the ads and sort of message was that buying online is as is sort of kids play. I mean, if kids can do it, you can do it as well. And that worked brilliantly, brilliantly.

Balaji Srinivasan 38:48

Really interesting. That's so different than almost any American startup story I've ever heard that like advertising and brand building was like a core thing or

Binny Bansal 38:56

exactly. It was a core thing early on, which is like very different from so if you had a lot of mentors, let's say from the US and you're giving the advice, we would have never done that. Yep. So it was very, very, very different from the US way of doing things. And then it took off. So we again, went from I think 10 million to like 100 million run rate within a year. And at that time, we hadn't built our own logistics on delivery fleet. And we were doing cash on delivery and our partners third party partners, the sort of UPS FedEx equivalent in India. We're sort of not able to manage the complex cash on delivery process. Yeah, at scale, because there's a million ways that can go wrong. Yeah, has a million ways cash on delivery can go wrong. So So We will again back to the drawing board. Okay, now we figured out how to sell but we need to figure out how to deliver. And then we start said, Okay, let's, we tried working with them for four or five months isn't 2011 It was 2011. Yeah. And but we were clear that they didn't have. They didn't have sort of the right expertise logistically and especially around. I think more importantly, from a technology perspective, they didn't have any platforms, or technology to help them sort of manage complex operations at at scale. And this was a very complex operation much more complex than they were used to. So I think our intuition was that you would need to really leverage technology to, to do that. So we started an experiment within Bangalore, in a couple of areas, and we had a bunch, we had a team of like, 2030 people to deliver products within Bangalore. And we did that for two, three months. And then we looked at the data, the data was just like, very obvious. I mean, we were seeing 45% more repeat rates in those areas we were seeing, and we used to measure NPS, very religiously, across the business, our NPS rates are again, 2030 points higher. So I mean, within three months, the data was clear. So we decided to just basically scale it up to like 20 cities in the next. In the next one year, we are in 20, by the end of 2011, we had 1000 People in 20 cities in India delivering packages within our team in our own team.

Balaji Srinivasan 41:43

So that's really interesting. Basically, if I can play that back, one, one aspect is you honestly like a case control study, right? Like, you've got all your cities, and then you have an intervention here. And then you're seeing that NPS is up and so on. And you know how much capital you invested to do that. And you could probably even say, we invested extra capital, our sales is up, 45%, or NPS is up, you know, our return, or return customer rate is up. Therefore, we're investing X capital, we're getting Y out why is much greater than x and then scale it out, right? Like essentially, kind of calculation can do. And when you've got geographically isolated markets, you can run those kinds of experiments. The other thing that, you know, also came to mind for me when you were talking about returns, and cod is, you know, there's way more code pads when you have returns. And when you have cod, because like, oh, you send it oh, they send it back? Oh, you send it again. Oh, they like, you know, they don't give the cash this time or whatever. Like now you can have ping pong back and forth. And every single one of those, you'll have somebody who have returned to like five times or something like that. And it's not just code, but it's also logistical thing of making sure that you have some cut off rules, they can't return it like three times in a row or something. Right. All that type of stuff. You had to figure out.

Binny Bansal 42:55

Yeah, exactly. I mean, so you have to figure out all that type of stuff. Nobody else was going to do that for you. Yes, exactly. She couldn't answer set. Yeah, he pulled out towards that.

Balaji Srinivasan 43:05

In the line for outsourcing. You have to insource Yeah, okay, good. Yes.

Binny Bansal 43:09

Yeah, yeah. And that became a huge competitive advantage for us, right. Probably last, I mean, that advantage lasted us for, like more than a decade, almost like 778 years, at least, because Amazon came in 2013 had to go through the same. Same issues, try to copy a lot of what we had, what we had done, but took them a lot of time and money to do that. Yeah,

Balaji Srinivasan 43:35

you know, the thing that's interesting about this is, you know, I've also like, you know, helped build a clinical genomics factory. And one thing I observed with that is that, I think there's two kinds of innovation. I call them the rhinos horn and boosting metabolism, right? So rhino horn is what it sounds like, it's a big perceptible horn. Oh, Google is PageRank. That's it's big innovation. And because legible, because perceptible people gonna be like, Oh, I'm really good. Make sense of it. Make sense of it, right? Whereas boosted metabolism, it's like, why is it cheetah fast? Okay, maybe you can put its legs or something like that. But it's, you know, just 1000 metabolic changes where, you know, it can stretch more, and so on. It's, it's not

Binny Bansal 44:13

like any one thing. Titles and things coming together to

Balaji Srinivasan 44:17

exactly and it's not like, it's got wheels for legs, you know, it's got a rocket for a tail or something like that, right? So it's not like very visible or legible, and therefore, it's harder to copy. And therefore, it's a more durable competitive advantage. But it's also hard to to articulate. And so you have to just see it in the graph, right? And you can see that it's faster, but the fact that you can't easily explain it, it's actually an advantage. It's illegible. Yeah. Right. So you guys had kind of boosted metabolism, where it was the hardcopy thing? Where in a sense, sometimes the fact that one can't just bullet point the innovation I mean, you can now you know, you've got these three things and you know, the returns and so on. You can explain it but it's not just like a one liner.

Binny Bansal 44:56

Yeah. Oh, it's not a one liner at all. I mean, if you go back to the Lord's sticks. Problem again in India, like addresses are not really geocoded. I mean, the address could be, especially in a tier two, tier three town could be like as amorphous as, or behind this temple. Oh, man. Yes, person's name and like, this

Balaji Srinivasan 45:16

is pre GPS, or this a pre ubiquitous earphones.

Binny Bansal 45:19

So behind this temple, so all that information, all that knowledge, all that knowledge sort of got encoded in our own systems, right? Because our system knew where this address would be and could do it could sort of deliver more efficiently as it learns over time.

Balaji Srinivasan 45:35

She was actually mapping India, in part, because that as as you start going from 1 million, and then 10 million and more Indians, you start hitting locations that are more off grid, right. I see. Especially that first delivery to a spec.

Binny Bansal 45:48

So yeah, so that's the system that got that got built and became like one of our big enablers,

Balaji Srinivasan 45:58

you must have been a big, you know, a big part of that electronics must have been people buying their first phone or something like, right, right. Yeah. So people must have had to buy a phone for somebody else. Because many people didn't have phones, right? Yeah. So probably a significant chunk of those orders. Because how are you gonna buy online if you don't have a phone? Right? So and it probably meant that your interface was like more Android first and more mobile first, or what have you read? Tell me about that. Yeah. So

Binny Bansal 46:22

that shift started happening in 2013. And 14? Yep. Till then it was mostly on the web. Okay. Yeah, it was mostly on the web, and then Android, and mobile. So that was a time when mobile phone prices became like $200, came down to $20, a good mobile phone start costing that much. And then it really took off. And when I remember Xiaomi, and Motorola were really the two big sort of beneficiaries of the take off. And both of them work very closely with us. So we, in 2013, we had a huge innovation with change sort of the way mobiles are sold in India. So. So before we did that 90% of 95% of mobiles were sold off is obviously offline in India. And there was this whole chain with multiple people in the middle, right middlemen. So it started with, obviously, your brand, and there was a national distributor, then you had state level, distributor, then you had a city level personnel. And then you had sort of a retailer, like all the way down. And it was a pretty inefficient sort of supply chain. So what Motorola and then Xiaomi did with Flipkart was they said, Okay, if we can sort of design a phone, which is 2030 30%, cheaper, but with the same quality, and we can sort of sell it direct to the customer online only like so this phone won't be sold offline. Can we make a dent in the market? And can we increase sort of the share of the market? Can we increase the number of people buying phones? So we did that? And in 2013, and just took off like crazy. I mean, I remember we launched it. Like, why did that go? 12pm? In the night? Yeah. And everything crashed like that systems. We hadn't seen a spike like that for a long time. And all our systems crashed the first time. First time we did it, it became a rage because you were getting a really high quality like Samsung, like really good phone, but at like almost half the cost. Because you cut out some because you just cut out. Yeah, because it cut out all the steps and sort of all the innovations in the system. So I always

Balaji Srinivasan 48:55

say going direct. Yeah. Awesome. And so and then how many phones? Do you know how many phones you sold? Like total? Did you have any number? It's got to be millions? For sure.

Binny Bansal 49:04

I mean, I think one or two phones sold in India sold online. So it is like phones are heavily penetrated. category is the most penetrated category online. I mean, we would have, I mean, we would have sold upwards of in the first two, three years upwards of 10 20 million phones. I think now we would have hundreds of millions of phones. Now.

Balaji Srinivasan 49:29

The thing that's interesting about that is basically, I remember so this is something that happened around 2013 2014 The whole free basics thing. Alright, so for those who don't remember this, basically, Facebook came in and they were saying, Hey, we will subsidize your connection to the Internet, right? But we're gonna get it through Facebook. And you know, this is something which will get a lot of Indians on the internet. And was interesting was at the time the Indian tech ecosystem resisted this, because it was all going to get centralized Facebook. And I remember thinking from the outside, I was like, you know, because I was I was in the US at the time. And so and I was like, Well, you know, look isn't something better than nothing? Right? And the thing is that you know, what happened, India actually did something that China also did, which is they said no to free basics. And but then they also built something better, right with Reliance Geo. And so they built something domestic better. And just like, you know, China, for example, they did ban foreign social media, but they built their own thriving ecosystem. And I think a lot of the sort of industrial policy or protectionism type stuff, they people will, you know, be quick on the band, but they don't realize how hard it is to build. Yeah, and you actually that's, that's actually the real hard part. It's easy to ban, it's hard to build. And if you band without being able to build, you just lower the quality of life for everybody, right? So it's sort of like asking for the ball. You know, you're in sports, right? Okay, basketball, you better dunk the ball, if you're asking for the ball. But India's tech ecosystem did dunk the ball and you were kind of watching the whole free basics thing on your side. Right. So it looks like absolutely the right decision from 10 years later. Now, the whole thing is not choke pointed. I mean, I respect Zach, I respect Facebook. But I'm also glad the Indian ecosystem is not choke pointed through Facebook. Right? So how did that look like in 2013 2014?

Binny Bansal 51:10

Yeah, so 2013 2014 was sort of the pre geo days, right? Internet, mobile internet, was growing, but growing like at a steady pace, not like growing very, very fast. It was still expensive. I think one GB would still cost you like more than $1 and a half.

Balaji Srinivasan 51:30

Tell people about by the way, like for global viewers, what is geo what is Reliance Geo? How did that come on the scene?

Binny Bansal 51:37

So yeah, so Reliance geo is now I think, the largest telecom player in India are in the top two. The other one is retail. But realized you came in at a time when they were already eight to 10 players, they were the last ones actually, to enter. But they took a huge bet on 4g, and, and on. And on mobile internet and the crash prices, that basically, business model was to deliver very, very high speed Internet 4g Internet prices, which are 1/5 to 1/10 of the market price,

Balaji Srinivasan 52:19

and the constables subscription, and they just, you know, you can build so much wealth on the internet that crash the cost of that and the market and so on, which seems to have played out.

Binny Bansal 52:28

And before they came in, I mean, maybe there were 100 million people using mobile internet. And not using it like as a daily part of their life. Like it was mostly chat and search and maybe some commerce. It wasn't really a lot of video or and it was It wasn't sort of you will not like living your life of your mobile. Whereas today, I mean, you can get you can do your work you can get you can sort of get education classes, you can obviously get all your content online, you can get all your entertainment, I mean, just become became a part of people's life after after God. Amen.

Balaji Srinivasan 53:12

Yeah. And, you know, what's, what's happened here, by the way, something I've remark on is, I think God really started going vertical, like it came out. 2015 2016 right. And then it was like, huge by 2018 or thereabouts. Right? And, and I think we've crossed a billion Indian mobile phone users now and we'll get to 1.3 or something. I don't remember the exact number last year look was like 860 or something like that. Right? So one thing that's happened, I think, is that people don't know is Indians are or soon will be the majority of English speakers on the internet.

Binny Bansal 53:43

Yes, right. Maybe they will soon be soon be dipping,

Balaji Srinivasan 53:47

depending on whether you define how many English speakers are, are in India and are the first or second language. And the thing is that you have these amazing like YouTube channels, which are like villagers from rural India. And they're just online, you know, the ones the guys who are making food and stuff like that. You've seen that, right? And the thing is that a gigantic part of social media audiences actually are Indians who are lurking. And you know, one of my friends, you know, Akshay is this line, which is, you know, the Indians don't need the h1 BBs anymore. We have the TCP IP visa, right? Because you're basically online, you know, and Indians are getting acculturated to the west, or more generally, the global intranet, right? They're able to see the memes, and they can type without an accent, right? And a good chunk of the synonymous accounts online are actually Indian accounts. So you saw a bunch of that right? And like, of course, Flipkart was more on the E commerce, right. But you start to see the the growth of Indian culture. I mean, you were kind of, you know, Indian internet culture. Tell us about that. If you have any thoughts on that.

Binny Bansal 54:44

Have? Yeah, as I said, I mean, we were very sort of focused on the commerce side of it. So I think on the culture side, probably I'm not the best person to, to comment. I think I can what I clearly saw was that after geo happened? I mean, before you happen, there was actually a little bit of a lull in the whole industry. I mean, I remember 2015 16 The numbers for all internet companies, including like YouTube, Google, everybody was static, nothing was growing. And we were all scratching our heads that if the market doesn't grow, what's going to happen?

Balaji Srinivasan 55:25

Right? What's going to happen when you see it and all your numbers to just like a huge and

Binny Bansal 55:29

then to sort of comes in 2016 2017 1819. We're just we saw crazy growth, traffic growth, leading to obviously, conversion growth, eventually, for all businesses. And in parallel, I think the big story, the big other stories, which started in 2016, along with the geo revolution was a upI was a payments. She talked about that, because front sort of see it as well.

Balaji Srinivasan 56:01

Well, so talk about that, because it tell people first what is UPI its unified payments interface and tell people about that? Yeah.

Binny Bansal 56:07

So UPI is this sort of amazing innovation by by then sort of Indian, you could say system and government is a big part of it, where they created this platform where all the banks had to connect into and be available to make transactions between bank accounts happen. And then this platform was made open for entrepreneurs, and tech companies to build to build customer facing moats and facing apps and use cases and businesses. And that

Balaji Srinivasan 56:54

is a government project that actually worked, or it actually is a quasi government project. It's like, it's like government aligned.

Binny Bansal 57:00

It was a government aligned. Yeah, that's the right way to put it. It was a quasi sort of, it's a government aligned project. It is run by PCI, which is owned by the top 10. Banks. its shareholding is the top banks of the country. But the regulation obviously, and comes from from the government. And the government has been a big supporter of driving this forward. See

Balaji Srinivasan 57:26

this thing, the thing about India is I had to kind of retrain my machine learning model, right? Because it's almost like being on a planet where the gravity is pointing in the opposite direction. Okay. And the reason is in the US, like over the last 1020 years, what you've seen is the government just failing harder and harder with more and more money at the local state and federal level at San Francisco, California at the federal level, like healthcare.gov, massive software failure, despite all this money, California, their giant, you know, high speed rail train hundreds of billions of dollars total disaster, San Francisco $12 billion a year for the city, it's covered in poop and needles and syringes is a disaster. And people are just leaving the city, you know, 500,000 people of California, San Francisco, all these people leave, there's a little bit of a bounce back. But it's like a, I think it's a dead cat bounce. But still, it's like way down from where it was. And so you see, this just basically you're trained on in the US is the state simply cannot ship software, it can take huge amounts of money, it just blows it all, and so on. And that was actually also frankly, my mental model of India in the 80s. And the 90s When I visited, right, because it was, you know, as the ambassador, and it was, you know, there's ambassador and Limca licensing

Binny Bansal 58:31

regime, we had to get that license or even starting a small business. It was hard to import things. It was exactly

Balaji Srinivasan 58:37

backwards. Exactly this right. Like, you know, there was like, there was one car the ambassador was like the one car in the entire country, right. And there were a few things. He had some like Coca Cola, there's Limca or things like that. But it basically seemed like it was frozen in time. Static, right. And then posting it anyone you had liberalisation after the fall of Soviet Union. Again, people may not know this, but just the I'll probably give a quick like history of India to open the thing. But liberalisation 1991 started, India's economy started taking off. And now what's amazing is I'm actually starting to bet on I remember, actually in the 2000s, you may remember this remember the golden quadrilateral? Yeah. Okay. So I remember seeing that announced in the 2000s. And I was very, I was like, Okay, it's not gonna go anywhere. I haven't seen any government project or work. But we have highways down here. Right? There's, there's like, I remember getting off the plane. I think it was like 2019 or something. And, you know, I come back every few years now, I've come back much more frequently. But I was like, this is incredible. There's, you know, the streets are quiet. There's like modern traffic lights and stop signs. People are breaking at stop signs. And so I couldn't believe it, like the end of my memory had just completely transformed and you kind of lived through that and probably, it made some of the delivery and logistics easier. When did you start to see that the government was actually able to execute or at least, you know, I'm not saying it hits it every single time and There's things like D monetization, which one can argue. But that was like, actually, it had a nonzero batting average. When did you feel that like start to happen? Because that's a relatively new thing? Yeah.

Binny Bansal 1:00:09

Well, I think that had sort of start. I had sort of started feeling that it started to happen since I think early 2000s. I mean, for sure. As you said, the golden sort of quadrilateral thinking was that the first was Was there anything else came at came at the time. And I mean, in memory of more recent recent examples.

Balaji Srinivasan 1:00:32

What was the first it was like the early 2000s? I mean, was it just like capitalism came in and so on. But like, what was happening, the early 2000s,

Binny Bansal 1:00:40

what was happening was that some of these new industries were, were sort of starting to boom, and you were starting to see some of the Western brands also enter India and things starting to modernize, like, food and beverage. Let's like talk about McDonald's McDonald's sort of came in. From a food food standpoint, you obviously had the big tech companies coming in and setting up satellite offices. You had the Indian IT, services sector grow starting to grow really fast. You had Indian Telecom, I think Telecom was a major sort of boost for the whole economy and the social fabric as well. Starting to see that Heartland saw

Balaji Srinivasan 1:01:31

that kind of infrastructure prerequisites. And then like, you know, now we have there's golden quadrilateral, there's UPI. And then more generally India stack, there's,

Binny Bansal 1:01:41

there's DSD, there's a uniform sort of now tax code for goods and services, which was very complex when he started Flipkart.

Balaji Srinivasan 1:01:50

So why is that better? It's basically just like, much easier to calculate. Now, you told us just

Binny Bansal 1:01:53

when we started Flipkart, it was almost like, in the Indian tax code was almost like you're living in Europe with every country. Before the European Union. I don't know how it works with every country having its own set of tax laws and tax taxation rules and slabs, and to get that sort of down from, like, 45 different rules and regulations to like one unified GST regime was adding a major big boost as well. And when was that that was 2010. This was middle of 2010 2015 16.

Balaji Srinivasan 1:02:34

See, what's interesting about this is, you know, I'm, I'm big as a decentralization proponent, right. But I'm a pragmatist. And I think there's centralization, decentralization, decentralization, and India, and actually, also, arguably, China are in the middle of there, maybe China's past this now. But India is in the middle of a positive centralization arc, right? Where all of these different languages and cultures and so on are now kind of unified, like, you know, rather than having 25 different, you know, payment codes, it's E Pluribus Unum, and the US is in the opposite phase of the decentralization arc, where the states are increasingly pulling away from a federal government, right? So that's what I'm saying. It's like gravity is reversed. And many things are happening in opposite in India than they are in the US, which is like a really useful contrast of the two systems. Right. Go ahead.

Binny Bansal 1:03:22

Yeah, so I think that, um, with the, you touched upon the India stack, the India's I think India stack has been going there, sack team has been also major reason for digital infrastructure to really come about and be successful. So, the first success was obviously Aadhaar, which is like a ID, digital ID for more than a billion people. So getting a digital ID working at that scale and country, like India, was a huge, huge challenge. And that was sort of the first digital win for India. And that created, I think, a massive confidence that we, you could you could do it at scale in many other areas. I think second one became UPI.

Balaji Srinivasan 1:04:12

Were talking about that that was a big one also. So, so, on UPI,

Binny Bansal 1:04:15

the philosophy was that in India, India, India was a cash economy, obviously, for the longest time. And it was obviously inefficient from that standpoint, there was inefficiency, tax leakage, all sorts of problems, because of because of that, and a lot of people were not also part of the banking system in India, so there were sort of a two pronged approach. The government was taking that and trying to get hundreds of millions of people to get a bank account, but you can get a bank account if it's not used useful or usable, then it's not A doesn't help. So upI was sort of an answer to make it useful, right? If you can get money and get money out into your bank account in a very easy way without opening hundreds 1000s of hundreds of 1000s of branches all across India for billion people, that was really critical. So the mobile phone infrastructure enabled, so they said, Okay, let's write on the mobile phone, infrastructure, mobile phones. I mean, more than a billion people are going to have mobile phones, more than seven 800 million people, we're going to have internet enabled phones. So how do you leverage that and get banking for everyone on to their mobile phone versus going to a banking branch and, and getting it getting it done? So so the first all the banks to come on to this platform and be available. And as the entrepreneurs and internet companies could sort of build applications, banking applications, and payment applications on top of the stack. And so there was a company started by 2x Flipkart colleagues, which had started building on the stack, which we acquired very early on 2016, called Phone pay. And Google in parallel was building an application called taste, which means fast

Balaji Srinivasan 1:06:34

in, in Hindi chess. So yeah, actually, I know some of the people

Binny Bansal 1:06:37

so basically, that you can transact very quickly from bank account to bank account. And, and Paytm was another established payments company, which was obviously also working at started working on on the stack. And all of this launched in 2016, and six years sort of forward. I think there are now more than I don't have exact numbers, but definitely more than 303 5300 to three 50 million people monthly active transacting users on UPI.

Balaji Srinivasan 1:07:12

Oh, it's gone like whoosh like this? Yeah. I mean, the thing is, in 2016, there was the D monetization episode where a lot of cash was just turned off. And at first, it seemed like, Oh, this is a disaster, there were long lines, and so on and so forth. And electronic payments, were not uptaken before then. But this is kind of what we're talking about where there's like a ban, and then a build, right? There's many aspects of D monetization, which I disagree with from a philosophical or whatever level, but the stimulus that it caused in terms of electronic payment uptake, that definitely juiced it within like two years, it was an enormous, enormous jump. Right. Is that correct? Right.

Binny Bansal 1:07:47

Yeah, it was definitely, I think, I think a big sort of boost for the digital payments. Industry, but I think, could it happen? It was gonna happen anyway. Yeah. So I think it was sort of, I think this was just a coincidence that those two things sort of happened during during that time, probably for different reasons. But I think it was definitely I think it's probably the right time for that. But today, I mean, UPI has become so ubiquitous that we were just talking to our friends who just came back from Bangalore, they spent three weeks in Bangalore, and they have been living in Singapore for 11 years. So they don't have a phone number in India. And if you don't have a phone number in India, it's hard to use UPI. And they were telling us that how they had such a hard time during this trip, because nobody was accepting cash, like, auto driver was not accepting cash. Give me UPI, what are you going to flip from tenure? I had to call his father in law every time that can you transfer 50 rupees to this to this phone number or to this UPI ID so that I can get a ride. So what I flipped from like cash and Flipkart, cash and delivery days that customers are not willing to pay, you've discontinued cash delivery now, nothing is still do cash and review is going down fairly rapidly.

Balaji Srinivasan 1:09:13

That's amazing. That's actually just not cash on delivery notes

Binny Bansal 1:09:16

actually payment on delivery now. So people basically do UPI when they receive the product. So it's a lot of European delivery.

Balaji Srinivasan 1:09:23

What's that? So maybe, you know, that reminds me of, like, Uber also actually, in 2015. Even they, Uber India had cash, right, right. That was actually a big launch for them. And then because it was a bottleneck in the market, and now like just like, less than a decade later, it's probably flipped, or I don't I don't know exactly. They just continue. It reminds me of actually Netflix doing meal or DVD. And now it's completely flipped to streaming and it's kind of discontinued. So like, it's like the step ladder that you need to get to the destination then you kind of you don't need any more. That's really interesting. What other stuff is like that? I mean, like, obviously, you know, India is now in many ways mobile first, like Flipkart is like, you know, so that flipped over where mo But it was an edge case. And then it's a main thing. It went from cash and credit cards being an edge case to like UPI being the main thing, what are things that kind of flipped like that in India? You know, obviously the consumer has become much more sophisticated. They're all, you know, they're conversing. You've seen your social media traffic, and so on become thing, where things have kind of inverted like that. And

Binny Bansal 1:10:17

I think the other in version, obviously, it's happening on the media side, I think I'm on consumption of media. I think a lot of it is now on mobile, mobile as well. And it's sort of, I think, becoming, I think people are spending way more hours on, on their mobile phones for entertainment than on TV as well. I think that that is also happening, especially after, especially because the mobile internet rates in India are the lowest. Like across the world, it's probably like 1012, center costs, the cost of mobile data is very low. So certain labels do to sort of get your biggest entertainment for for a very affordable rate. This

Balaji Srinivasan 1:11:11

is another just enormous flipping where India went from, like internet you couldn't get for love or money to some of the cheapest high speed mobile internet in the world, like from like, all the way in the back to all the way in the front, this giant leapfrogging

Binny Bansal 1:11:24

India's Yeah, like, I think then then he says like India's infrastructure, poor data, very data rich. So that's where we are very different. Yeah. It's a very different environment than anywhere else in the world. I guess.

Balaji Srinivasan 1:11:40

It's really interesting. I mean, the the Okay, so that kind of takes us through, like the rise of Flipkart, the 2010s GST UPI other do you guys use the other as a login mechanism on the site? You know, like with Singh pass, for example, in Singapore, you can like log into banks with SYNC pass. Yeah. How does all that work? Is it like Facebook login? How should it be thinking? Not very

Binny Bansal 1:12:04

odd? Har is mostly useful? Stuff like KYC. And? And those things banking? Yeah, it's your digital sort of ID you don't it's not like your sort of digital. It's not like your internet ID. And in that sense. So it makes all the processes where you need to identify yourself and get registered with, with a financial institution or with a government institution easier.

Balaji Srinivasan 1:12:34

Yeah, you know, one of my theses is just like, digital currency has sort of converged, currency, stocks, bonds, every other kind of instrument, I do think that we are getting to eventually a digital passport, where your other your Google login, your ens, ID, all those things converge into a single electronic ID. So this way, you don't have to keep typing in your information over and over again, you can just like your social profile and your government profile. And so you might choose to have different profiles, right. But if you want to have one, like main profile, you can hit a button and just kind of log in with that. Right. Go ahead. Yeah, I think I think I mean, something like that is a systems integration problem. Or you need somebody who's got a lot of, for lack of better term, political capital, social capital appeal to drive it. But this is something I've been thinking about

Binny Bansal 1:13:21

something that's happened in India first. Maybe Yeah, given again, the, I think the way I think these things. And yeah, it's Greenfield. And there is a process now to imagine something like this and get sort of build it and get it delivered. Now in India, that was the India stack thing that I feel could be.

Balaji Srinivasan 1:13:43

Now one of the things one thing that's also pretty impressed so you know, you built Flipkart over the 2010s, we've kind of gone through and you electronics was a second category. And then after that, there's, I mean, what should we know about the mid 2010s? Because eventually, by 2018 or so yeah, it was a big enough thing that Amazon Walmart both vied for it. Amazon or Walmart eventually paid 16 billion for majority stake. And that was like the first gigantic Indian x I mean, 16 billions a lot, even still for the US. So that was absolutely gigantic for India, put India on the map. Tell us what you can about that. That sounded five years ago. But you know, maybe maybe you could talk about it. Because I'm sure there's all kinds of things but you can't forget. Yeah.

Binny Bansal 1:14:21

Ya know. So I think going back to the 2011 12 electronics story, so. So after electronics, we launched fashion, which was sort of the next big category and it took us two, three years to sort of become fairly large. In that we ended up acquiring a company, fast vertical fashion retailer retailing company called Myntra. At the time as well. And fashion became one of our biggest categories and one of our biggest differentiators, along with logistics. For the longest time, especially versus Amazon, because Amazon was sort of never really good at selling fashion, even in the US. And then Amazon

Balaji Srinivasan 1:15:11

why fashion? Because that so that is definitely like a, you know, I wouldn't have thought of that as I would have thought it like, I don't know something matrimonials Ria, that's education mantra. So, like the two big spends or whatever in India right. So, so, why why fashion is that their

Binny Bansal 1:15:25

fashion was a big and growing market in India, as the economy was growing, people are spending a lot more on these on these categories, and with again, meet global media and exposure and all that fashion, the fashion, fashion industry in India was growing much, much faster than the overall retail industry in India was growing. So fashion became, I think, a very important category for us. And we were also looking at China when we were doing a lot of this so, so we drew a lot more parallels actually, to China, JD, like JD and Alibaba, like to call in JD and Alibaba than to done to the US, because the market structure exactly the new as the market structure was very different. They were already established retailers and brands in the US, and like building a fashion business in the US, I can see why it would be so hard because there was already a lot of established players in the market and strong brands in the market. Whereas in India, I mean, it was like Nikes, business in India was like $100 million, like very, very small, when we started fashion. So they were, nobody was really established. Everybody was looking to figure out the right way to scale. And online, and we were seeing that fashion in China, online fashion in China was also taking off. So. So that gave us a lot of confidence. And fashion became a major, major, big sort of category and reason for us to succeed. So,

Balaji Srinivasan 1:17:07

so talk about that for a second. For a long time. I think India was copying China and China was copying the US, I think, post 2020. I feel like that is somewhat change where folks, you know, Chinese kind of on its own path. And I feel India has also gotten a lot more confidence recently. Right. But But tell us about that. So like, aspects of the Chinese economy, were things that Indian entrepreneurs look to this is, you know, the pre g times, you know, to some extent, right, so tell us about that. Yeah,

Binny Bansal 1:17:34

I think there are more similarities between China and India, from an internet and ecommerce standpoint than the US. So, one, as I said, I think China was also developing economy, obviously, way ahead of India. But if you look sort of 10 years back, it was sort of in a similar position. So you could kind of correlate and see where India could be. It's about 13 years, like 1970. And the cost structures were pretty similar. So the margin structures, the cost structures, what what a delivery would cost, what would it cost to make a delivery in India, would be sort of similar to China, whereas in the US, it would be like, an order of three to five times more than that, so. So a lot of the models could be similar. And like, there was a lot of cash on delivery in China as well, in the early days. JD had to also do a lot of cash on delivery, as well. So some of the inspiration and models, we sort of looked at China, and we used to, like go to China almost every year, every other year, and, and meet founders and companies there and try to sort of learn and see where, what was applicable to our business. Yes.

Balaji Srinivasan 1:18:57

And that was that was when China was more friendly and open between people now forget this in 2003.

Binny Bansal 1:19:02

Yeah, it was very different. It was just totally political thing. Yeah.

Balaji Srinivasan 1:19:06

I mean, like, there's that, you know, for example, there's probably Profoto in 2015, or 2016. G was taking smiling selfies with David Cameron in the UK, right. She was visiting the US and going to where he was, he had he had done a thing in Iowa. Like where he had been an exchange student, he went and visited like an American family in the mid 2010s. So there's a very, very different posture, like less than a decade ago that people forget today. Because, you know, all the geopolitical, you know, stuff. So,

Binny Bansal 1:19:35

so then, yeah, so then Amazon came in, in India in 2013, started really investing heavily into the 1415.

Balaji Srinivasan 1:19:47

And how do you think about them as competition?

Binny Bansal 1:19:50

We took them very seriously. I mean, till Amazon came in, we did have some local competition, but we never took them very seriously because Of all the debt arrays Snapdeal, Snapdeal, and a couple of other vertical players, and they raise enough capital, but we could sort of see that customer experience was way more superior. So, so we looked at the mood that, actually, but Amazon obviously, is the world's sort of most feared competitor. Sure. And, and they were very serious about India. And we could also see there were serious from India, from the top. I mean, Bezos were very serious about it. He's announcing in Islam came down to India twice. So he's really backing it with his time and, and money, as well. So, so we, we were taking them very seriously. It was almost, I wouldn't say an existential threat. But we knew that like we had your attention, yeah, attention and that we had to figure out our place in the market once the game so and so it has it took sort of jostling for about couple of years, between the two of us. And then I think,

Balaji Srinivasan 1:21:09

where is that now? What is it like the relative after

Binny Bansal 1:21:11

a lot of share jostling the sort of shares settled, somewhat like 60 4060, as for the sort of Amazon and then over the last few years, we've been gaining share pretty pretty steadily. Now, after the acquisition, which speaks like I think, which speaks to one the team that we have team and the culture at Flipkart. And also, I think the way Walmart has managed, yep, the acquisition. It's not easy to do. Yeah, it's, I mean, it's very, very difficult. So one of the hardest things to do is to manage a acquisition of the scale and make it successful against the biggest competitor on Yep, on planet Earth.

Balaji Srinivasan 1:21:54

You're getting two things have been dancing in very different things. Dr. incoordination? Yeah. That's really interesting. So tell us about that. So basically, I mean, the thing is that one thing I wanted to actually ask you, well, firstly, acquisition, but like 2023, what are the best practices for getting money into and out of India? Like, where do you incorporate all that type of stuff? Because like, he's a gift city. But in 2018, before we even get to that, it was totally unheard of to have a multi billion dollar. You know, us, like acquisition in India. To my knowledge. Yeah, there's nothing there's no, right. Yeah. So So first, like, just the international complexity of the legal system, because India's legal system is fairly complicated. Yeah. So just that alone was a big thing. And then having multiple bidders and so on, tell us what you can say about that. Yeah. No, so

Binny Bansal 1:22:41

yeah, so 2016 17, we had, I mean, we had this obviously, battle going on with Amazon and both Amazon and Flipkart was scaling pretty rapidly with the geo sort of effect and rising consumer Internet growth in growth in India. And we were constantly in the process of raising money. I mean, we just raised capital from consortium of internet companies, eBay, Tencent, and, and then Softbank in 2016. And in 2017, and, and we were in discussions on and off with Walmart. Since 2016. And thing at that time, Walmart was very focused on its turning out cus business and, but was looking at India in a very serious way. And so we were on an often discussions and by I think, 2000,

Balaji Srinivasan 1:23:43

late 70s, Walmart have any presence in India, Walmart had

Binny Bansal 1:23:47

a small presence in India, they were in this they had a b2b business where they were they service the Indian Kirana stores, Mom and Pop retail stores through their demand doing something like what they were Oh, they were definitely not doing anything an E commerce and they were not doing anything in in sort of physical retail because it's not an India that is a restricted area and foreign companies are not allowed to do right. So that was physical, physical retail.

Balaji Srinivasan 1:24:19

So how did Amazon manage to do that? Oh, because Walmart of course starts with the physical plane right? physical stores. Yeah, Amazon marketplace businesses allowed cooler get around that ice.

Binny Bansal 1:24:29

Got it. Okay. So, so yeah, so So Walmart was had a small presence Walmart had tried retail with along with a partner before. So Walmart did have history in India, that

Balaji Srinivasan 1:24:43

McDonald's and other things are allowed to operate. What is sort of allowed food is different readers. I see. Okay, interesting. Why, just like random regulations. Is there any logic to that?

Binny Bansal 1:24:54

I think retail is a huge industry. So reader is way more important is protected but to be productive. Food was very small, like food, food industry and organized food industry was

Balaji Srinivasan 1:25:03

very, very small because people didn't eat out. Yeah, I see. Interesting. Interesting. So there's there's a small shopkeeper so retail was protected. But the small going out to eat actually is very small. It's relatively modern thing, even in the US actually, by the way, like restaurant culture was, you know, in the 1950s, maybe you'd go to like a deli, or you'd have like a truckstop. But it wasn't like all these fine restaurants have Thai and this and that food, like restaurant culture is actually relatively new in the US. So it's probably like, like, very low there.

Binny Bansal 1:25:30

So then we were in discussions with Walmart and Walmart had in China also done an investment into JD, and was a large shareholder in the board of jd.com. And they were looking in India to do a similar sort of strategy. And they started talking to us, as things sort of progressed, I think there's really probably liked what they saw, and discussions, sort of convert got converted into more of an acquisition discussion than an investment discussion from their side. And I think for them, they really wanted to take a big bet on free markets, right. I think in hindsight, I can see that now. Because after the India acquisition, Flipkart acquisition, they ended up sort of selling most of their businesses in other markets. Even even in the UK, they sold their business to our local entrepreneur, and they're partly on it, but they don't run it.

Balaji Srinivasan 1:26:38

So they're just, they're just like us, China, India. Yeah.

Binny Bansal 1:26:41

So they're like us, China, India, I think Canada and Mexico are also big. So like, it's the Americas and then China and interesting and an India. So starting with that sort of focus, they wanted to then obviously take a big bet, which is, I think I can see in hindsight. And so that discussion started then obviously, I mean, Amazon was also in India in a major way, and was also part of the discussion, but we ended up sort of partnering with Walmart for that. And at that time, it was the biggest it was the biggest, I think ecommerce deal globally, not just India. So I mean, if you look at E commerce, it was the biggest e commerce deal at the time globally. And in India, it was, I think, the biggest m&a deal again, till that time, I mean, across all sectors, like not just yesterday into commerce, like it was the biggest stuff.

Balaji Srinivasan 1:27:41

Yeah, I mean, it's the scale of what I mean, WhatsApp is only thing that WhatsApp was like 20 billion. Yeah. Isn't that isn't a ballpark? Yeah. And that's actually interesting, also, because WhatsApp is also an international growth story of a different continent. But so that

Binny Bansal 1:27:53

really, I think, both India and India tech on the on the map globally. And I think after that the amount of capital which has come in after 2018, into Indian tech, not just Indian consumer tech, like right now, there's a big part of the Indian ecosystem, which builds for the, for the world, SAS is a big software service is a big area, as well, where there are quite a few unicorns now. And a lot of money has flown into that side as well.

Balaji Srinivasan 1:28:34

And the actually India is now number three and unicorns globally.

Binny Bansal 1:28:40

The US and China. Yep. Which also happened

Balaji Srinivasan 1:28:42

pretty fast. And, you know, so was everything is the whole, the whole story somewhat reminds me of Uber and Didi, like Uber tried to kind of make inroads into China on and then it didn't and then had to basically sell it stake to Diddy, or what have you. And so like this a little different, where for Walmart to actually have a, you know, Amazon, I think we had a defensive buy, right? And then they just kind of lock up the whole market. But I'm actually even surprised they were allowed to bid because, you know, I would thought Indian regulators say, oh, it's anti competitive or something like, right now, I mean, maybe

Binny Bansal 1:29:20

there was there was no bidding or like there was a lot of discussion. So

Balaji Srinivasan 1:29:25

okay, it makes sense. So So now, you know, of course like Indian markets continue to grow Flipkart is a big part like it's a jewel and, you know, the whole Walmart thing, but they only bought they didn't buy 100% Why they only buy 77% Was there some limit like statutory limit?

Binny Bansal 1:29:41

No, there was no limit to it. I think their strategy was to I think it was a very smart thing to do. The strategy was keep some skin in the game to Yeah, exactly. Keep some skin in the game to still like so to be an owning shareholder, but to stay We'll run it like a venture capital owned technology startup.

Balaji Srinivasan 1:30:05

I see. So this way, by having some points, they could they could sell them to other investors at some point. And, you know, maybe the thing grows nothing everything then

Binny Bansal 1:30:12

most more importantly, from a talent perspective, talent standpoint, it still needed to sort of feel like you were working for Flipkart or not Walmart. That's interesting.

Balaji Srinivasan 1:30:22

So, so that's actually very enlightened of them. I mean, I know that Walmart's had like a great data science thing and so on. But that's surprisingly enlightened. It's kind of like, you know, the YouTube acquisition by Google. And they kind of allowed to keep its own brand and a lot of its own, you know, offices and stuff.

Binny Bansal 1:30:37

Yeah, it was exactly similar, actually, even beyond that, right? Because Youtube got 100% acquired. And if you were employing YouTube, you got Google stock and right. And maybe the culture was a little different, but I don't know. Mostly similar. But if but Flipkart is sort of a different company within the Walmart ecosystem, and has completely different culture, completely different compensation sort of policies. And employees in Flipkart of Flipkart stock, not Walmart stock. So it is managed. In exactly so far, for an employee, the experience really didn't change. Yeah, there's sort of leaders and managers in change, and none of the policies changed. For them, the culture didn't change. So it continues to be sort of that's very unlikely, the same thing. And that's been I think, the I think 80% of the reason for the spin, the acquisition has been sort of pretty successful. And it's probably a good case study. For such for such acquisitions.

Balaji Srinivasan 1:31:47

That's really interesting. Yeah, for it's like, when it's that big, you don't want to break what, yeah, built it.

Binny Bansal 1:31:53

I actually, I had sort of personal experience, doing this twice in the Flipkart journey. So we bought, when actually we bought this fashion company called Myntra. Yeah. And it was online fashion, right. I mean, Walmart buying an E commerce company in India is, is like two degrees removed, because it's one I mean, they don't know as much about India secretary. They were not the best in E commerce. So sort of being hands off. Makes sense. We bought this company called Myntra, which was in ecommerce and fashion, right in India, right. But we kept it separate for the last six, seven years. Our reasons were a bit similar and bit different. One was, again, it was clear to us the reason we bought Myntra was because it was very different from Flipkart, the culture was very fashion first. Flipkart was very Technology and Logistics first. And the customer segment that Myntra was having was much more premium and fashion forward. Yes. Flipkart was trying to serve like, everyone and anyone in India. So and most important thing. objective for the next five years for that company was to grow. Right, which wasn't synergies were the costs were not the most important. Objective, the most important was was growth. So So keeping sort of this context in mind, we just kept it completely separate. Actually, the Flipkart and Flipkart fashion teams and mantra teams almost competed and clashed quite regularly. Oh, that's right. Yeah, exactly. It was always like a conversation in management meetings, and sometimes on the board that oh, why? Why are your internal teams fighting? And, and all of that? So it was interesting to manage that dynamic. What did you work really? Well,

Balaji Srinivasan 1:33:36

it works. So why don't you just shut down? Like, you know, the fashion vertical on Flipkart and directed ultimate throw?

Binny Bansal 1:33:44

Again, because it was so different. I mean, the reason we bought Myntra was because Myntra was serving high end clothes, fashion forward, sort of premium customer, whereas Flipkart was serving as like a Walmart, exactly the Walmart sort of kind of an experience. You're trying to serve mass market. So but there is some overlap. And there was a little bit of an overlap. So which you had to deal with, but these are different businesses. Yep. And had to be managed, with a very different rhythm and very different culture.

Balaji Srinivasan 1:34:15

It's interesting, because, you know, I remember I'm not sure if this is still true, but I do remember the 2000 people say, Oh, McDonald's and Chipotle, and I think they just have like a large taken or something like that. But you know, I believe, like, even when we think about, it's almost the same company. The reason they have these different branches, those branches stand for something, and they can't see and for everything, and that's why like it's almost like a different user interface. Exactly. Yeah. Yeah.

Binny Bansal 1:34:38

And then we did the same with the payments, business phone pay, where we acquired this, like, 20 people 1020 People company very early on, and we just kept them completely separate in a different office. And we acted like, like what Walmart did, is doing with Flipkart, we acted like almost like a VC owner. With the And, and we just gave them sort of the capital industry support required. And we just let them sort of, again build their own company with their own policies and with their own HR on sort of

Balaji Srinivasan 1:35:15

any culture, even when they were a small company, I mean, this is something I've also like, Instagram was like, 13 people when Facebook bought it, I mean, it's much bigger now. But there's an interesting aspect or sometimes a company or a government that's like the US has 300 million people in Singapore is like seven, 7 million, 8 million people. But Singapore still, you know, the the Prime Minister Silla head of state and gets a state visit. And so they still interact with them as like CEO to CEO, right. Similarly, like Zuck, and Instagram, rizek, and WhatsApp and they were acquired even though was a much smaller company in scrims like 13 people, what seems like 35 people, he's still and faced with this giant Goliath interact with them as CEO to CEO, and respected that kind of internal boundary, because he knew that there was a formula that made it work. It wasn't about absolute size, it's about like execution, given that

Binny Bansal 1:36:01

it was about potential size, right. I mean, future, right. Yes. So yeah, so I think that playbook made a lot of sense. And when we were discussing with Walmart, I think that sort of continued playbook. Week, we saw that Walmart was always thinking of the same playbook was a relative

Balaji Srinivasan 1:36:17

scale when you guys were required. Scale off. Yeah. Like, how many people did Walmart have? How many people do you guys have?

Binny Bansal 1:36:23

Oh, really, I don't know how many people bought at Walmart would have like hundreds of 1000s of people. I think Flipkart had about 25 30,000 people. Oh, that's

Balaji Srinivasan 1:36:31

still pretty big. Yeah. Okay. That's pretty big. Because you had all the logistics people. Yeah. Yeah. Um, that's including all the drivers,

Binny Bansal 1:36:38

and drivers and all that would be probably 100,000. People. Wow,

Balaji Srinivasan 1:36:42

that's so you were managing? Like, I mean, so. Okay. Now, this takes us from Flipkart to the next thing that I want to talk about. Right. So the, I mean, you were essentially managing something that it was on the scale of a small country. Right, right. That's it, you know, I've got this graph, we'll probably put it on screen, which is there's there's 12 countries in the UN that have less than 100,000 people, right? Is there 26 that are between like, you know, 100,000 to like a million, and there's like another 60, something they have between a million to 10 million, I may be slightly off. But that's where I kind of remember the numbers you can put on screen. And so I mean, essentially, those 100,000 people fold it up to you. Right, right. And so you cannot give I mean, with that being a small country, you could not possibly give instructions to every person, right? You might be able to have one on ones with, I don't know, 10 executives, right? And maybe you knew the names of 150, maybe even 1000 people within the thing, right? How did you manage this gigantic thing? Because it all folded into you ultimately, they would have to kind of listen to you go ahead. Yeah,

Binny Bansal 1:37:49

no, I think we learned very early on that. The only way to scale the business and to manage the complexity was to have really great leaders in the company. And and I think our first two sort of hires, in the company, became like, very cool sort of leaders. The first one was Soo Ji two, who was a head of operations and sort of business development. Second was Megan, who was our first CTO. And they sort of became part of the core leadership team along with me and such an like, it became like a four people sort of leadership group. And then I mean, we, they ended up hiring more people. So it it expanded over time. But I think that kind of stuck with us that first experience of getting these two guys in and being able to scale the business, being able to scale the number of people we could manage, I think became sort of a formula for us. So at that time, I think the talent story is also interesting, because in India, I mean, to build ecommerce, you needed a lot of different types of talent. So an E commerce company is like five companies in one. It's not like one company when buyers say that because it's such an internet company, you have to, you have to know how to do digital marketing, you have to get users you have to have a web interface, mobile interface. So anything which a normal internet company would do. So that's one, you need to use a retail company where you manage sellers and you need to manage pricing and Merchandising, and what sells and what doesn't sell then you need to be a logistics company as well, because in India, we had to deliver packages. So we had to we had to be a logistics company. We also had to be a customer support company. So we had like 1000s of people working in, in customer support, answering queries for sellers and customers and whatnot. So So you have to be like many companies. I was

Balaji Srinivasan 1:39:53

the fifth so there's website logistics sellers customer service.

Binny Bansal 1:39:57

Yeah, let's afford On Stage One Sure, sure. Yeah. And interestingly, in India, the talent for most of the these things to do this at scale was like almost zero. I mean, the only good talent, which existed was probably technology, because of companies, as I said, like Yahoo, and Google and Microsoft,

Balaji Srinivasan 1:40:23

the call centers and stuff. So didn't you get some good call? Yeah. So call

Binny Bansal 1:40:26

centers. Call Centers existed, but they were mostly serving us customers. So again, building something which could serve Indian customers at that cost, sort of point was, again, a little bit of a different ballgame.

Balaji Srinivasan 1:40:39

Yeah. Now, now, they could actually use, they could call themselves by the Indian name. On the phone or whatever, you know, it's our sweat. Yeah.

Binny Bansal 1:40:49

So So retailing, as I said, was not a big industry in India. So retailing talent was really not non existent, then you didn't have logistics, talent, logistics, there was no large large logistics company. There was train everybody. Exactly. There was no large digital. So that's the first business education. University. Yes. Oh, that's funny. You say that I was talking to one of my, one of the founders of a company called Echo, which is into, which is a tech digital insurance company in India. And we were talking about Ed Tech, and and what's happening in tech and all that. And he made this exact same comment that, you know, which, which is the biggest tech company in India, it was like which one? I said it was there's no Flipkart. Yeah. Why do you say that? Like I just hired my last three leaders. The last few leaders have hired are all x Flipkart.

Balaji Srinivasan 1:41:44

Yeah. So that's the other thing in which he did for the ecosystem is, like, you know, sort of like how early tech executives, many of them actually, Yahoo in its day was actually like a big deal, right, Google. And it's, I mean, Google, still a big deal. A lot of people came from there. So it was the kind of DNA that's installed.

Binny Bansal 1:41:59

So So what happened in Flipkart was that the DNA became sort of very, very entrepreneurial. So because the talent did not exist, yeah, we had to hire really young, smart raw talent with very high potential, but who did not have experience right, so all these people from elite engineering colleges, but it's IITs. And management colleges, I rms. And the other ones were to sort of bring them in and just throw them into the deep end.

Balaji Srinivasan 1:42:30

So how hard was that? Because in India, there wasn't an example of startup success, right? You know, in the US, you know, people are I mean, the people know that startups exists. But people are often cynical, my equity is worth nothing. Right? So in India without that track record, like recruiting these folks who are like, Why should I work at the startup, which I've never heard of, versus maybe they've heard of Flipkart. But yeah, right. But But basically, you know, this has seemed to have higher risk, then, you know, Google or what have you. Right. So how did you?

Binny Bansal 1:42:58

So there are two parts of the story? I think one, I think there's the first part, which is before we built before Flipkart became a consumer brand, before we did our advertising. And then there is after we became a consumer brand, right. So before we were a consumer brand, it was super hard. There was absolutely no models of success. People. People want it to work for obviously more stable jobs in either in these global companies, in their product and technology departments or for IT services companies. Those those jobs were looked at as much more stable and much more safe. I remember like, in 2009, we had hired three or four software engineers, and one of them didn't show up on the date. He was supposed to show up. And we called him. And he said, Sorry, I can't join us. Why is like, I mean, when I told my in laws that I'm joining this company called Flipkart, they were like, Why would you go and work for a bookseller? When you when you're working for this large IT services company? It makes no sense. And he just could not convince his mother in law.

Balaji Srinivasan 1:44:13

She probably regrets that. Yeah. So that

Binny Bansal 1:44:15

was the culture, right? I mean, that's where that's what we were sort of, so we had to get a lot of these. I think before Flipkart became a consumer brand, it was really very passionate people who wanted to atypical Yeah, a typical personalities who wanted to build the biggest sort of consumer brand. consumer internet brand in India like that. People with that passion. It was, I think, great self selection because we didn't need a lot of people so so if you could sort of still tip somebody over with that passion. That was absolutely the right person to have. So that happened before. But after we became a brand, it became much easier because then you were joining accompany which was probably going to make probably going to be one of our success stories it was it was going to be consumer brand, which was I mean, it was really sexy to work with one of the biggest upcoming consumer brands in India and be part of the journey. So I think the USP for talent became a little easier after we became a consumer brand. It helped notch customer acquisition, but our talent acquisition, but that time we raised a lot of money as well from like yellow will venture invest global venture investors, so So I think this, it became a little bit easier to take that risk.

Balaji Srinivasan 1:45:36

Got it. So. So basically, it's something where your brain advertising the outside investment, boosts your brand, not just among consumers, but also with

Binny Bansal 1:45:43

any anybody doing at that time for anybody in India who had sort of the passion to build for the Indian ecosystem, and build at scale at Flipkart was the place to be.

Balaji Srinivasan 1:45:55

So that's also interesting, because the WhatsApp acquisition was kind of surprising in the US, because so much of its energy was global. Right. And everyone's like, WhatsApp, WhatsApp, now. Now, of course, people kind of know WhatsApp, or what have you. But at the scale of acquisition, the amount of money and the relative unknown pneus of it was, I remember was a huge shock in the American tech ecosystem. But with India, Flipkart was basically the, you know, the best known tech company, by a certain point by the early 2010s, or thereabout. So then it became something by authority 1213 2012 13. Yeah, got it. So it was it was a foundation stone of kind of the space changed. Yeah. Now, one question I have for you is like, you know, if we look at like the American tech ecosystem, it built out a certain way, you know, there's first it was Microsoft and Apple, and then it was Google, and, you know, Amazon, and then Facebook, and then, you know, like Uber and Airbnb. And then in China, it's like, you know, the Galapagos Islands, where the animals are all just different, right, or there's this place called Socotra, this island, and like, it's like near Yemen, where they've got trees and species that are like nothing else. Right? So the ecosystem is, it's like air gap and the rest of the world. So China has this ecosystem where, for example, like Matewan, the Chinese Groupon is much more successful than the American. Right? That is an analogy of it. But like, imagine if Groupon had become a multi multi billion dollar company, right? So, you know, or WeChat, you know, the chat interface, the entire society just just like grown differently, right? So if you think of India as like a third ecosystem like that, it also has certain Galapagos Islands aspects to it, where it grew. Similarly, it grew differently, like its flagship company was, like an Amazon equivalent. I mean, Flipkart was like a, you know, Amazon cognate, early on, what things are kind of the same? And what are different, in your view, kind of having seen the Indian tech ecosystem that like versus the American?

Binny Bansal 1:47:46

Yeah, I think India is somewhere in the middle of China and the US. Yeah. Because I mean, language is the same and sort of culture would be somewhere in the middle as well. So you it kind of it used? I would say, learnings from both both sides, right? And kind of ended some of the middle. So it's early days. I mean, it was obviously a lot more like the US. So Flipkart, e commerce ride hailing with Ola, and stuff, I think it was very similar. I think food delivery is probably more similar to China with like, why swiggy and Zomato? Again, because of cost structures, and

Balaji Srinivasan 1:48:34

and what is the difference for the American audience? What's the difference between India and China,

Binny Bansal 1:48:38

I think like India is again, a lot of most of the deliveries are on on motorbikes and two wheelers versus like, I think us would be mostly still so cars and much higher sort of cost of delivery, right. So, so that way, are much more similar to similar to China. But I think only in the target. Only in the last two, three years, we are sort of seeing newer models sort of eMERGE, which are very sort of India's specific now that there are more than half a billion people with mobile internet access. So it's a large enough market to really build India first type of products. And UPI is a great example of that like phone pay and the way some of the fin fin tech companies are coming up, very unique. Definitely, than what happened in in these markets, this this company insurer tech company, invested in called ACO which is, I think, which is probably a model which is getting set That's in India. But I think in the US, quite a few companies tried it, a few of them went public as well. But it hasn't really helped. So, again, digital, sort of. So in India, a lot of the insurance is sold to agents. So somebody sits in the middle, like, solo entrepreneurs, it's sort of in the middle of you and the insurance company, and is a big part of the transaction is distributed. And yeah, so what is that, and then also, on the delivery side of, let's say, I mean, you've bought auto insurance, and something sort of goes wrong with your car, then the insurance experiences also over an app and digital and like, click of a button versus going sort of, to people and, and being inefficient. So it's sort of leveraging technology and digital infrastructure, and both the sale site site and delivery site.

Balaji Srinivasan 1:50:59

So on that point, like, you know, some of the earlier internet, things that worked in India were like, by shoe, which you've mentioned, which, you know, for, you know, American viewers, or Western viewers that don't know, it's like a multibillion dollar Indian Education startup. Also Shah, the which was like a matrimonials. Right. So like education, and matrimonials, those are the things that Indians do pay money for the value culturally, right. So the demand even on a small base was there. And so things kind of built out, like, you know, the first kinds of things that happen, right. And, you know, the so those are things that were, I think, distinct in the Indian marketplace that were perhaps relatively bigger probably proportionately than they were in the US, right. Um, the other thing that I've thought a lot about, I'd love to get your take on this is, you know, I think India is okay, as a market. But it's not, I think it's going to be more about digital production than consumption. Like, you know, all of the AI training data, a lot of that type of stuff, you know, the digital assembly line with a billion Indians on mobile phones, doing a lot of that kind of micro task type work, feels to me like, it's going to be a big thing. India is a nation of content creators in English, which is a totally different thing than China, right? Because China creates cotton is a massive ecosystem, but it's only for its domestic, right, you know, kind of market, right? India is the biggest, you know, aspect we need. It's not just on the internet, it's, it's speaks English. And it's almost like, you know, NAFTA, NAFTA is no, NAFTA, North American Free Trade Union, right. So is like Canada, US Mexico, in a sense, there is now been formed, but people don't see it yet a gigantic indo European Union, right, or indo American indo western union of all of these English speakers on this gigantic global internet. And all these bonds are being created very quickly, that are not visible, it's as if, like, the contents of sort of dots near each other. Right. And so this is the source of a lot of digital labor. A lot of, I think, you know, telemedicine, or what have you happens here,

Binny Bansal 1:52:54

it's many things. I think it's interesting you say that, so, I think the go through three sort of trends here, right. One is, as you say, a lot of English speaking a big English speaking population, probably, it's going to be the biggest English speaking internet population in very, very soon, very young populations. So I think in a few years 25% of 25% of the world's workforce here is going to be in India, right? And with COVID and with remote and what's happened in the last two three years, especially anyone sitting in a tier three tier four town in India, today can sort of be working on for any company sitting anywhere in the world and any any and this company can be any size or shape right. So, it can be one person company two, it can be like the IBM or Walmart of the of the world. So,

Balaji Srinivasan 1:53:56

so explain that by the way for the viewers. So like Kunal Indian investor has this concept of like India one India to India three, you want to talk about that people may not know about that,

Binny Bansal 1:54:05

yeah, so, I mean, India's obviously 1.31 point 4 billion people so there is this sort of India one which is more like, which behaves and acts and has access to, to money and to products and technology, like anybody living in the West would have.

Balaji Srinivasan 1:54:27

And that's how many people that's maybe

Binny Bansal 1:54:31

I think, not more than 50 million, like 20, somewhere between 20 to 50. So like a European country, like a European Yeah. Which is still pretty big. Yeah, like it's it's like France. Yeah, France or the UK or something. Right, right. Yep. And then there is this India tooth, which might be a little larger than that, but in that ballpark, right. Yep. And then there is India two, which is sort of the middle and emerging and has high aspirations is has all the Uh, has access to all the digital content knows all the brands, but probably does not have enough money to sort of do to buy everything and do everything today but is educated and and has a lot of potential to sort of get connected into the global economy. And then there is the India three, which is probably in rural and tier four cities which which still is starting to get access digitally and probably comes into comes into the mainstream or India to maybe in a few years.

Balaji Srinivasan 1:55:39

So it's like roughly what, like 200 million in the second category and like a billion in the third or something like that, is that

Binny Bansal 1:55:45

maybe more? I think maybe, I mean, if you count households, and maybe it's like more than 100 million, the first one, then 4453 400 million, at least in the second, and then maybe half a billion or more. In the third.

Balaji Srinivasan 1:56:00

Yeah, I mean, it'd be great to actually, like, literally track that over time, like once you've established those numerical measures, because you should see because, you know, for example, is a lot of infrastructure numbers, we'll put these up, like, I actually tweeted something the other day that just showed the incredible growth in, you know, public toilet infrastructure, in electricity, airports, roads, all that type of stuff, like the growth in India, and infra has become incredible. Yeah. And actually, you know, the Prime Minister Modi retweeted that, right? And so something like that, for this where you'd see folks moving from India, three to India, to India to to India, one, if those numbers are kept absolutely over time. Right. And so it'd be great. I mean, maybe there's some graph, maybe we can find that afterwards.

Binny Bansal 1:56:46

Going back to your original point. Yeah. So. So a lot. So a lot of these people, especially, let's say, in India, to living in like a tier two, tier three town, which is 500,000 to sort of 2 million people sort of a town.

Balaji Srinivasan 1:57:06

That's funny. That's a town. Yeah, that's like a big city in the

Binny Bansal 1:57:09

city, tier two, tier three city in India, which is not like the top five, which you hear mostly about, right? Delhi, your Delhi, Mumbai are sitting in this town is today sort of, is equally aware, equally sort of educated equally has sort of equal talent to anybody from these top five cities, and can be working for I mean, anyone sitting in that town, sitting in town city, can be working for anybody across the globe. Right? And maybe not today, but definitely tomorrow, right? Yes. So there is this whole potential and potential energy of these hundreds of millions of English speaking people a lot of potential talent. And if you can, sort of, if you can get them sort of, to work on problems across various disciplines, and you can sort of train them. And today, you can train people remotely, which was again, not yet remotely, sort of the case even like 234 years back, it's not something that we could think about, but I think a lot of those barriers got broken in the last two, three years. Yeah. So I think I see sort of a lot of shift in the production side, as you said, and I think it's gonna be very exciting place. Yeah, I

Balaji Srinivasan 1:58:43

think like, you know, one way I try to think about is if China, if you look around the world, and you say, you know, this, this table, or this shelf, probably a lot of these physical things were made in China, right, or how divergent they're right. And I think in about 10 or 15 years, a very large fraction of that digital world will be made in whole or in part by Indians or in India. And so obviously, there's software engineers, there's tech CEOs, but there's also lots of actually Indian digital artists and graphic designers and you know, all of the AI stuff on both senses of the term, both AI content creators and AI training and so on so forth. A large chunk of digital value add because that's just something Indians just get that culturally right. You know, I can see your type rollin here, but basically, there's something about it where you know, just like less physical, more digital, you know, you call it spiritual or we're having we're just, we're, we're good on the computer, right? Like Indians just naturally have a knack for the computer. And then with that, also think means in the medium term, so you funded Gray, orange, right. We're actually one of my friends, Algerians. Awesome, right. So Indians are also I mean, in terms of labor, right. I think in the medium term robotics is you know, I built a, you know, robotic, you know, clinical, you know, sequencing and genomic stuff. factory, there's gray, orange, there's Mithra robotics, actually diapers.com was also robotics, all those had England founders. Right. So there's definitely something there, where there's quite a few Indian founders who are associated with robotics. And it feels like that turns labour into software. And so China's had a huge labor advantage for a long time, their labor productivity has been higher. A lot of Labor wants to move to India. And maybe the way that circle is squared is just have a lot of robotics. And maybe if you have a decent, because you probably saw a lot of logistic stuff with Flipkart go. Yeah.

Binny Bansal 2:00:30

Yeah, I think it is. Sort of already happening a little bit as well, that as you said, there is a lot of talent robotics talent and naturally in India, and it is it is being implied. But on the other side, I mean, labor is also pretty cheap in India. Right. So So I think there is some tailwind there is some headwind so yes, I don't see it. happening. Ah,

Balaji Srinivasan 2:01:02

that's a good point, actually, very

Binny Bansal 2:01:04

quickly, because entrepreneurs, business owners can always sort of throw people at the problem. Yep. as well. So you can employ people for a while, make it work till a certain scale. So I think managing really large scale with quality is where it's sort of starting to happen definitely, in our business, like in E commerce and, and large manufacturing, I think there's, there's a lot of automation, India's a big auto manufacturing hub as well. So there's automation coming in, in a big way. My friend, Ron, sort of this electric, two wheeler company called Ola, Ola electric and he's built this new factory near Bangalore, where I think it is heavily heavily. The whole line is heavily heavily automated, very much fewer people than I would have expected, like five years back. So things are starting to happen starting to happen. Yeah.

Balaji Srinivasan 2:02:11

So that's interesting. I mean, basically, you know, like, diapers.com has that, you know, famous videos of these Roomba like things, but they're big and they move around the factory and they move things around. So you're not you didn't do that yet at Flipkart. But are you starting to do that? Or how should I think that's

Binny Bansal 2:02:27

starting to starting to do that is how you don't want to because the labor is there. Right. Right. Yeah. But I think that is, it is going to become mainstream, and definitely in next five to 10 years. Got it? Yeah, I think it's not. Yeah, it's a matter of five to 10 years. Okay.

Balaji Srinivasan 2:02:44

That's cool. And then, um, okay, so now, switch gears just for a second. Now, we've kind of talked about the future of India, you post Flipkart, you and I are investing in lots of stuff around the world. Tell us about like x 10x. And what you're doing there. It's not zero to 1x to 10x.

Binny Bansal 2:03:03

Yeah, so back, I made my first sort of angel investment back in 2013 12, or 13. And I've been investing sort of ever since a long side sort of building Flipkart, and trying to sort of, I mean, because one thing, I was just very passionate about the entire startup ecosystem. And also, I got a lot of energy from helping other entrepreneurs, as well. So by 2017 18, the ecosystem had blossom, there were a lot of unicorns, there were a lot of money pouring in, into the ecosystem, Tigers of bank Naspers, like, pouring a lot of money into Indian startups and geo sort of effect that also happened. So I could just see the entrepreneur energy, like, exponentially. And, and then I was probably mentoring, like, probably talking to five to 10 entrepreneurs every month, on sort of different issues that they would be having. And I started seeing a lot of patterns, especially with growth, with entrepreneurs who had sort of woofers facing growth challenges, like what figured out to zero to one who had built a good product. The business was scaling, but they were sort of facing all these challenges of managing scale, like, how do you once you get to like 100 150 people? How do you? How do you build an execution engine, where people are aligned and how do you manage performance? How do you how do you create the right sort of Isa policies like The nuts and bolts, which need to come in how do you manage customer experience at scale operations at scale? How do you build a brand? I mean, for consumer companies in India, that that was also and we

Balaji Srinivasan 2:05:12

better to get that from founders who've actually lived in India and

Binny Bansal 2:05:16

struggling because the the, because none of the regular sort of models would apply, right. So

Balaji Srinivasan 2:05:24

these laws are different. Conventions are different. Yeah.

Binny Bansal 2:05:27

And other words, some success stories, some sort of people been there, done that in India, but not enough. And most of the people who were most of the successful entrepreneurs still building the company, so they didn't have time, a lot of times, to look like gift to other other founders. So that's when I thought that I can only help like, 510 people at a time, right? This clearly will need to have like hundreds at a time very soon. So like they should, I should institutionalize something like this, like the

Balaji Srinivasan 2:06:02

current university next year? That's right, yeah,

Binny Bansal 2:06:05

there should be an organization to do that to just make scaling easier. And, and zero to one is a very different ballgame. And then going from one to 10 is a very different ballgame. I had seen that went through my journey at Flipkart through like journeys of these other, let's say, 2030 entrepreneurs, as well. And I was pretty convinced that there could be many things which, which you could sort of help them on so. So I got a couple of excellent cut colleagues, who will work very closely to sort of come and partner with me on that. And we started this in 2019 2018, or 2018. And with a very simple mission, that we will just basically, we exist to make scaling easier. Scaling a company easier. And we started working with like three or four, three or four startups at the time, almost in a consulting mode, like how a consulting company would sort of

Balaji Srinivasan 2:07:13

make probably make an investment, and then you help or something like no,

Binny Bansal 2:07:15

not no investment as well. So it's sort of a very different animal. It is. So we wanted to keep the brand, very founder and operating centric, not like keep it actually away from being looked like an investor because the founders is talking to an investor. Right, right. The founder is posturing. Yeah, sure. Sure. Right, right. You don't want you want to help the founder really improve their business you want we want him to tell everything that is wrong. Yes. As a business, you don't want the founder to be scared or Yeah,

Balaji Srinivasan 2:07:45

well, it's funny. I mean, I so at least what I found on this is as an angel, right? Like you or I can write a check. And we're kind of taking the lead. We're basically there. You know, we're we're there to help. Alright. And so I find at least I get usually an honest Yeah,

Binny Bansal 2:08:00

as an angel. Yeah, exactly. So we wanted to keep that angel. Right and operate. So tracks, yes. Right. Exactly. You're an angel. And you're an operating Angel. Right. So. So they'll sort of, it's a very different conversation versus the institutional VC. I mean, if you're talking to an XL Sequoia, yeah, tiger, like, it's a very different conversation. So we didn't even clear that, like, the brand is not an actual Tiger Sequoia, the brand is very, yeah, Angel. Like, we're sort of your operating partners, and it's a team of people who've been there done that, and who understand the nuts and bolts of building an operating versus investing. So So yeah, so that's, that's what we started building. And so we just started working with, with, with a few companies that let's try and help fuel them in a consulting mode, almost not strategy consulting, where you just tell them what to do, but actually go and work with the teams and, and gets it done. So we did that with

Balaji Srinivasan 2:09:00

that, that doesn't scale. Well, you just mentioned like, exactly like being like a parachute and executive to really get

Binny Bansal 2:09:05

this was just to get patterns, right? Yeah. Okay, so we worked with a few companies, the team worked with a few companies to get those patterns in. And then we figured out, okay, we defined these 10 pillars for TEDx for, for success, that, that we wanted to build and tools and services around. So first one was like business design strategy, how to think about sort of big moves and strategy in a startup context. Then how do you how do you do your org design and structure? Like, what's

Balaji Srinivasan 2:09:36

the right org chart? Yeah,

Binny Bansal 2:09:38

four, four, again, linked to your strategy and business design, and how do you operate? What is your operating system? OKRs. Business, Finance, news, alert, how do you set that up? When you reach 150 200 people and more, and everybody is not on the same floor yet. How does communicate to work, right, then how do you manage customer experience at scale? Then how do you do branding? If you're if you're a consumer company? How do you think of the brand? Whether you need to invest in a brand? If you need to, then how, how does that work? Because that's a company that is something which most founders have no idea. Unless you come from that world from a world of brands, you don't have much idea around that. How do you manage culture? And culture at scale? How do you manage operations at scale? So again, very sort of operating nuts and bolts of, of the business. And we started defining sort of services and tools around these 10 pillars. And productizing. Some of them and satisfying some of them like some of them are products, some or services. For example, we just built ops, an operating operations practice where there is ops designer service, there is now an academy for up operations leaders. We just launched a new program for 10x. Academy. So yeah, so operations Academy. So the four so that is the latest one, we also when the first thing we launched, actually, after working with this few startups was an academy program for these 10 pillars like yeah, these are the 10 pillars. And we launch an academy program where, which was six months long, and founders of eight company cohort, which sort of join the Academy. And these would be all Series B sort of plus founders, either 50 million to 200 million valuation. And they would be every other week, we would sort of pick one of these topics, and discuss the topic among the founders with an expert, either from x to 10x, or from the startup world coming and me. This is all remote. This was all in person in the first two batches, because that was pre COVID.

Balaji Srinivasan 2:12:12

That's okay. Because I mean, that's actually a big ask, because I mean, you're a founder, you're running like a scaling business and so on. So to come in kind of do in person classes must have been a very significant commitment.

Binny Bansal 2:12:24

Exactly what a significant commitment of founders time. And if I look back, like first two batches, 16 companies, I think almost 10 are unicorns. So it helped. So yeah, no one is, I mean, there was a lot of self selection. Right? So right, because founders were really keen about growing and learning was self aware, and who really wanted to sort of take their business to the next level, and what clearer were they that they need? Where they need help, I think, said, okay, look, we will commit this much time,

Balaji Srinivasan 2:12:55

just like YC outside, it was like YC, for growth companies

Binny Bansal 2:12:59

almost like YC parallel for, for growth companies. And it worked. The model works really well. And so So now there's this founders Academy, where like, 50, companies are now gone, gone through that. And we've worked with 300 growth startups in India in various shapes and forms through these 10 pillars. Some I've sort of worked with us on like, one, some, I've worked with us on five, some have gone to the Academy. And now we have almost a program, which you can almost call like co founder and service program where we bring it's hard, that's hard we bring Yeah, that's not scalable. So we do it with only a few companies at a time where like, now we have 100 people in the company, and all these 10 different practices. So we're like, all these 10 practices sort of are available to you over the next two, three years. And wherever are the biggest sort of challenges at this point, like those teams get involved. And, and work with the founders very closely and, and get stuff sort of either implemented or organized. Like, let's say, you know,

Balaji Srinivasan 2:14:04

the big one that CFO, yeah, for any growth company, like, the organization of all the books, and so on and so forth is like the big thing where it's really great to have someone who's done that there before. And usually the tech founder doesn't have experience.

Binny Bansal 2:14:20

Right? So that's something also we are in the process of building

Balaji Srinivasan 2:14:25

parachute in the CFO Series B Series C Company, a lot of them go off the rails because of that. Yeah, that's good.

Binny Bansal 2:14:31

So we've done a lot of work on the HR side, on the people side, a lot of people practices. How do you hire How do you do Aesop's? How do you do performance? How do you manage how do you leadership training, management, training, all of those a lot of that stuff, how do you know your employees are happy culture, all of that?

Balaji Srinivasan 2:14:49

Are you putting that online? Slowly? Yeah, because that seems like it'd be a great piece of content will will are to put in the feed. That's great. Yeah. Um,

Binny Bansal 2:15:00

so yeah, so that's so. So as I said, we've worked with like more than 300 Group startups in mostly in India, a little bit in Middle East and Southeast Southeast Asia as well through these different sort of engagements. And and it's been quite fun and satisfying. I think, for me, it was really about how to little bit give back how to have a large sort of surface area of impact. How do I find so I think all of these things come together for me through through this engagement to extra next. I think that's how I see my place in it.

Balaji Srinivasan 2:15:45

And so, you're also so I mean, some of those are like, SASS, and that's kind of the bread and butter. I mean, I don't mean to downplay it, because it's important, it's difficult and so on, you're actually also interested in some of the hard Tech Tips for deep tech type stuff, which you don't have to do for the sake of doing it. Right. You are doing you're seeing some of that, right. Tell me Tell me about that.

Binny Bansal 2:16:06

About the deep tech stuff.

Balaji Srinivasan 2:16:09

So UCI, you'd mentioned something along those lines, right? Like if I if I'm not mistaken, was like, you know, like stuff were 3d printing of organs. Biotech. agritech. Right. You know, you'd mentioned some Yeah, this

Binny Bansal 2:16:21

Yeah, I don't Yeah. I'm deeply I think definitely interested in that. But it's not a it's not something I do proactively, I think it is if I find something of that sort, and I felt like the entrepreneurs were doing that then I'm definitely interested. I think one of the latest ones was this company building a row, consumer robot to, to build to to make Indian food. So so that was pretty

Balaji Srinivasan 2:16:58

cool robot or like a for restaurants robot

Binny Bansal 2:17:01

combo, yeah, consumer home robots. So it can now make like this Indian dish called poha. And they can make pasta as well. And Indian curries, it can make Indian curries and stuff like that. So that that sort of thing has been interesting. Early on, we funded this company called ether, which is two electric two wheelers, and they are doing really, really well. Now the unicon as well, now in a big, big sort of two wheeler brand in India. Now, so the that is probably one another example. Then the 3d printing one is Yeah, is very, is probably the most sort of moonshot version, that they're, they're the the company is built this technology to 3d print tissues. And I think the first application there they've been working on is 3d printing the cornea, eye, cornea, and in like, for example, in the US, there are a lot of corneal diseases, which are not big enough to sort of, for large companies to sort of probably do research on and that's one area where, if you can sort of 3d print a cornea and do corneal replacement, it obviously gives vision to like, way more many people than because corneal transplants are difficult to difficult to pull off, because donors are not really available at the time you need the transplant.

Balaji Srinivasan 2:18:42

Seems I mean, there are folks who are working on that, but that is definitely challenging, because it's not just like, plastic. It's very, very complicated tissue. Exactly.

Binny Bansal 2:18:49

And, yeah, again, the point was that, I mean, I would completely I could completely mad somebody in Boston. So somebody sent us working on something like this, but somebody working in a small sort of office out of Bangalore, and, and with the ability to sort of actually do something, which works

Balaji Srinivasan 2:19:15

well, it's often an Indian person in Boston doing right. So like, like a good chunk of American tech talent,

Binny Bansal 2:19:22

right? The ability to get it done in India, of course, of course, right. This was just mind blowing. That's right for for me, and now they've been able to, like hire experts from from the US and they've sort of rebuilding a lab in the US now as we speak, so that they can do it faster. But I mean, it started in India. And for the first three, four years, just they kept chipping away and then after the race, like more money, they've moved to the US.

Balaji Srinivasan 2:19:52

Interesting. So but showing that you can actually at least get started into this. So you know, me last thing you don't give you See? So we talked about how Flipkart is basically the size of not just, I mean, not just a tiny country, but a small country, like bigger than a bunch of countries in the world. 100,000 people is actually in, you know,

Binny Bansal 2:20:11

now it's much bigger, probably 100,000 when we when Walmart bought it, right,

Balaji Srinivasan 2:20:15

so it's like, several 100,000. Right. Okay, so now, you know, you would have a dashboard that is actually representative of the Indian economy at this point, right? Like, a good chunk of just commerce happens through it, right. So, you know, how do you think about like the interface with policy, you know, you mentioned GST that actually simplified your life, amazingly, in some ways, at least, you know, UPI GST to some extent other perhaps, like, you know, the government also made Reliance geo is feasible to do it, there's probably regulations that were cleared out of the way to allow all those towers to get set up. So amazingly, the government is actually making your life easier and unfair in some ways, right? How do you think about the interface between like Flipkart, and like the state and so on? What are your thoughts on that?

Binny Bansal 2:21:01

Yeah, I think the interface is, I think now becoming irrelevant, I think till like, even four or five years back, we were sort of I would say, the recipients of some of these changes, and we sort of rode on them, but I guess, now you can influence some rather than as big an industry to sort of influence a lot of it, I think today with on the payment side, and on the E commerce side, I think there is definitely I think the size is big enough that there is a fairly good interface on a lot of these things. And there are various sort of different committees and and organizations, which which are working on various aspects. So in where the interface is sort of matter,

Balaji Srinivasan 2:22:00

also, okay, so somebody who has contributed more economically to India, then then most perhaps all you don't maybe, right. But certainly in the very top echelons, what do you think is the top things India should do in terms of tech policy, specifically, economic policy? More broadly, what what? What is next? What is the low hanging fruit? What, which is obvious thing that they should do?

Binny Bansal 2:22:20

Oh, I think, from my standpoint, I think, as we talked about this whole piece around the talent, right? How do you leverage all of this potential talent in India at at scale? So I think that is definitely one and not not just on the digital side. But even in manufacturing. So I think, how do we get a lot of this talent into sort of the into like an organized economy? And get them? I think a lot of that is under employed? So how do you get them to sort of full production, complete employment, whether digital production or physical? I think that's probably my biggest would be my biggest wish list.

Balaji Srinivasan 2:23:09

Interesting. So explain that last bit? How do you get people to full employment from digital to physical production

Binny Bansal 2:23:15

to digital or physical, archaic are? Yeah, I mean, could be digital, it could be physical manufacturing is also a huge area, potential sort of area of opportunity. And there is a lot, which has happened in the last three, four years, a lot of mobile phone production, a lot of electronics production, is now happening out of India. And I think with again, the geopolitical sort of headwinds on the China side, I think India can become good alternate on the manufacturing side, as well. So there is huge opportunity there. And then I think digital production, Indian sort of producing a lot of digital goods. And, and working remotely on for businesses across the globe, I think is is also I think, a huge, huge area.

Balaji Srinivasan 2:24:14

Well, so I agree with all those, I have three concepts which I'd like your reaction to. I've written about like India's crypto policy and so, I actually still think a lot of that will be important because otherwise India's subject to sanctions it can be cut off you know, the West is threatened cutting off India and various times so that's important just have its own sort of network for international transactions, but leaving that aside for now, on I think a remittances and more generally corporate setup, right. So as somebody outside India if you want to do business in India, what is the Delaware of India? Is it gift city? Do you do you incorporate and gift city do you incorporate in Singapore and do business in India? Like what is the best practice as of 2023? What should it be? Right? For example, there's a LRS liberalized remittance scheme to get our money. In and out, but it's like pretty hard still to get money in and out of India, you have to, like give the birthplace of your ancestors on the forms and stuff for sending in like $25,000 or what have you, right? They've got these old banking forms still. And you as somebody who got $15 billion $16 billion into India has probably dealt with that more than maybe anybody else. Right. So just on that first part, remittances and more generally, Corporate Center for International Trade, how, what is the best practice? What should be the best practice?

Binny Bansal 2:25:27

Yeah, I think gift city is more for, for foreign investors to sort of set up shop, I think it's the it's sort of an answer more to, to sort of allow Indian managers to also manage foreign money and also to be able to invest globally. So so far, there is a AIF sort of regime where Indian fund managers could raise money globally, but there was a restriction of only allowing 25% of the money to be invested outside India. Gifts, it sort of allows Indian managers to become global fund managers. So I think it's more than that, when and money obviously can flow from anywhere into gift city.

Balaji Srinivasan 2:26:14

So it's more for the fund manager for the operator. Right. Okay. Still still a step forward? Potentially? Yes, absolutely. Yeah.

Binny Bansal 2:26:19

I think for operators. It is been. I think, I don't know if there's much of a change. But in general, I mean, it's not obviously, India's not the easiest place. Yeah, to do business. With this whole. I think India stack and digitization of even the government services. I think it is improving a lot. There's definitely a lot more to do. But I think remit Archie calm to remedy remittance is for businesses, it's not as difficult but for I think individuals is more difficult because of capital controls. And it's got to do more with control rather than rather than efficiency. I think. I think efficiency is not the challenge. The challenge, there is more sort of India wants to definitely control how much money goes out? Because it is still not very,

Balaji Srinivasan 2:27:19

sort of, did you find that issue and operating? No. So

Binny Bansal 2:27:22

that's what I'm saying. It's not a it's not it used to be an issue like 20 years back, okay. But by the time you it's not an issue at all, for it doesn't come in the way of doing business at all. So

Balaji Srinivasan 2:27:32

is the answer, then just incorporate as a business and just do it like that rather than individual?

Binny Bansal 2:27:36

Yeah, absolutely. I think it is.

Balaji Srinivasan 2:27:40

Like, for example, in the US people will set up a consultancy or separate personal company and, you know, if you're a plumber or something, you'll book business through that. Right. So maybe the answer is, you know, the JC line become a business comment. Something to look at? I'm not

Binny Bansal 2:27:51

Yeah, I think there is. Now you can also form LLC is in India, which is, which was not possible even three, four years back, limited liabilities or partnerships, like we have already made possible. So there is there is, I think progress on the corporate side, corporate law side as well.

Balaji Srinivasan 2:28:13

Okay, so that's remittances gets at number two, a big one is that I've tweeted about a bit but visa is right. If you know like, the West has a lot of asks from India for you know, foreign policy and so on wants to be a bolster this channel just so you know, one thing one point I've made love to hear your take on this is just like the visa situation for Indians, forget about just permanent immigration, just for business travel for tourists travel for attending a conference, or someone's keynote speaker for bringing a remote engineer in for an off site. And also actually, conversely, India sometimes makes it a hassle for some countries for people to get into and right. Like, that seems like an obvious target where, you know, for example, this recent deal where, you know, a bunch of airplanes are bought from the US, right Biden is saying is going to create a million jobs in the US. Well, okay, those airplanes are air and airplanes, it's gonna be flying people of India, how they're going to get into the country if they don't have a visa, right? So this seems like an obvious thing for the US to lean on countries. And say, you know, and India also make this ask and put at the top of the, the, you know, the chart, which is get us a very large number of business and tourist visas for every Western company, every Western country that wants India to do something, help us help you. Right. And it seems like, you know, that that leads to talent, especially given, you know, a good chunk of engineering talent in American universities, as you're aware, was Chinese and Indians right now, like, it's like a plane with like, one of those engines is just cranking out, because a lot of Chinese engineering talent is not allowed to come or, you know, both both on the Chinese side and the American side. So a lot of Indian talent will have to kind of surge to replace that. And so there's a lot of reasons why. I think visas are a big thing. I mean, I'm probably speaking to the choir here. But yeah,

Binny Bansal 2:29:54

that that's sort of part of the the I think the talent vision that I was talking about that, I think at the highest end of it, I mean, a lot of that talent can actually get visas and, and go and work in these markets directly as well and add a lot more value, right. So I think and visa is definitely like a huge, huge bottleneck. Today and not just work I think even yeah, as you said, tourist and I mean, as India is sort of growing as an economy, there's a lot more people wanting to travel and an aspiring to do that. And it is very, it is difficult. I think Weezer is definitely fitting globally. I think this this definitely something they're working on. But yeah, it needs.

Balaji Srinivasan 2:30:47

I'm a big fan of some of, you know, Minister, Junkers, videos, and if he if he sees this, please put visas at the top, you'll get a lot of retweets and likes, a lot of people will focus on this and actually within the US, you know, Joe Lonsdale is a VC friend of mine wrote an article in the Wall Street Journal about opening up visas. Noah Smith. Also friends, I think there is a significant coalition of folks from the foreign policy side and tech CEOs, from folks within India and so on to do something here about this and vault the Indian passport from where it is to at least like a decent mid level. And again, I'm not saying of the billion Indians, all them you know, go and move to all these countries permanently. But like 90 day business visa should not take, you know, like years and years and years to approve, you know, in my view. Okay, so that's something I think we probably both agree on. So their menses and visas. And the third is kind of an interesting one, which is IP. Okay. So India's drug industry, generic drugs is phenomenal, because India takes a less restrictive view of IP than the West as on this. And that's why India can produce, you know, it is this very sophisticated generics industry, he was able to build a vaccine in India, it has the biochemistry and molecular biology, talent to do the stuff, genetics, all this type of stuff, right. And so one thing I've thought a lot about, is, in the age of AI, I think there's going to be, you know, we're very early, right. But there's going to be, I think, three clusters. There's the current centralized American cluster, and they're licensing all of the stuff, right. And then there's going to be the Chinese cluster, where, you know, they're, they just got to have access to WeChat, this pull all the data. But I think that a lot of the most interesting things to train on for an AI are like every Hollywood movie, or every book, right? Every piece of music, lots and lots of content that you want to train on, is something which in the US has these extreme and insane copyright restrictions, right? It is possible to eat well, for all kinds of things. For example, Google Books, there's this whole thing where Google is showing snippets of the books there's holding. And so now like, you know, Getty has hit stable diffusion with this massive lawsuit. I thought that was exactly right. So there's this counter reaction within the US within the west of all these white collar jobs, whether it's and this also within medicine, for example, you know, if an AI doctor is better, oh, my God isn't going to take a lot of jobs. Right? AI is much better at writing than many journalists, is that gonna take jobs? How about AI, art? Ai, videos and movies? Ai music, right AI books? Like not everything, certainly, but for many different white collar industries within the West. AI is threatening jobs, right? And so it'll be, you know, now you can make the argument that it'll make the folks who are good at these jobs even better. That's certainly true for for example, engineers or for designers, we are okay, with AI improving our workflow AI and notion, AI and replique. And GitHub, we're already doing that. That's great. That's going to work that's going to happen. I'm pretty bullish on that. AI and industries that are not used to using AI, they're probably going to fight it in the West. I think there's a massive, massive opportunity for India to build something like it's generic drugs industry, let's call its generic AI. Okay, right, where everything from lib Jen to Sai hub, to, you know, all the academic papers, just say that copyright is like one year or six months in India, India is not going to enforce copyright on these things, right. And just like drugs is just simply not going to enforce those laws. It thinks that you know, what, you know, every every time copyright is about to expire on Mickey Mouse, for example, Disney goes and like gets it renewed for everything, right. This is like sort of corporate capture of copyright in America, India's large enough economy. And it can see a massive benefit of this to just sort of liberalize all this IP stuff, and become a third huge cluster for AI, not the licensed western side, not the Chinese control side. But the more freewheeling side just like its generic drug industry, which contributes enormous chunk to GDP and to in frankly, national security. Right. So I think that's a third cluster of potential that's a policy ask potentially we could do what what are your thoughts on that?

Binny Bansal 2:34:59

Well, yeah, I mean, I and thought about it from that sort of analogy and perspective. But yeah, I can, I mean, my head is already spinning with the possibilities of what it could be. Especially I think, if you think about 10 years from now, most a lot of jobs are going to be ai plus that job, right? If you're not using AI on the job, it's probably you're probably not going to be a very relevant person

Balaji Srinivasan 2:35:28

in the job. And I think, as you're saying, I mean, India can use that sort of as a superpower. That's right. That's an X leapfrog, right to leapfrog. Yeah, where others are stuck. They're stuck because of white collar jobs. The entire the entire continent, US medical system, they want everything to go through a human for billing, right, right. Everything must go through a lawyer for billing event and so on, right? But we could

Binny Bansal 2:35:51

sort of stuck and won't budge very easily with these sort of old regulations. India can be ending a very leapfrogging approach.

Balaji Srinivasan 2:36:01

And because it's Greenfield we don't, you know, the conventions, the laws, everything can be written, you know, for example, maybe it's something where you have like teleradiology you know, you get the images you go and do them remotely. There are obviously Indian lawyers, Indian doctors, Indian actually, less well known illustrators, you know, the movie tenant. Right. So, if you go and look at the end of tenant, right, the credits looks like a New Delhi phonebook. Okay? It's, you know, all these Indian names, right? And, and the reason is that a lot of illustration has been happening, right, like, the cel animation suffered for many years. And now it's graphic design, and so on. So what's interesting is there's a lot of the talent in India, for graphic design, illustration, copy editing, a lot of white collar talent is there. And then with AI, they could potentially leapfrog because these industries and then you have like the Indian American or Indian immigrant bridge, for example, you have like a licensed American MD, who can have you know, 100 Indians who are helping scale teleradiology. Do you have enough of the license here where they're doing the final review of it? Right? So you're still

Binny Bansal 2:37:09

for assisted by this exactly. Sort of India stack of getting stuck.

Balaji Srinivasan 2:37:14

That's right. And this is actually another thing is it white collar people will look at you like, Oh, my God, this so bad boss. But actually, this is how you hyper deflate medical costs, legal costs, all the type stuff is just wildly expensive. The educational costs, he seems are like wildly, wildly expensive. And that's because you got all these billing events that are just baked into it. People call the so called bombshells cost disease. If you heard that term, though, it's supposed to be this. Oh, it's just those sectors that have a lot of labor costs, labor goes up.

Binny Bansal 2:37:40

And it's this inefficiency and efficiency. It's so hard to get in. That's right.

Balaji Srinivasan 2:37:44

It's like at Stanford, for example. I think there's more administrators and there are students, okay. Something like that. Right? In medicine, of course, there's tons of administrators law, of course, right? If you can automate these in a, quote compliant way, and you would need that's the thing is you need a gigantic pool of people and laws and so on. That's strong enough. You couldn't do it in Switzerland, right? What happened is the copier industry would just go and lean on Switzerland too hard. It'd be like Napster, right? And so on. So you need something. I mean, that's actually why, you know, Spotify, right? You know, why they actually started in Europe. Because all the US companies that tried couldn't get licensed and no Spotify being fully Swedish and genuinely Swedish, it wasn't like American universities. They had enough leverage, right? Because like Sweden, I think, also had like the Pirate Party and stuff. I may be misremembering some of this, right. But they had enough like local leverage as being like purely to set the the Ria, and so it just couldn't shut them down. Sort of wasn't negotiation that happened there. Whereas let's say Grooveshark, was just shut down in the US, right. So it feels like this is kind of the right kind of thing. Anyway, I know. I'm digressing. But it feels like an interesting concept.

Binny Bansal 2:38:52

Oh, yeah. No, no doubt about it.

Balaji Srinivasan 2:38:56

So AI, maybe AI Indian or Indian. Okay. Okay, so there's some thoughts up, I leave you with the floor. I mean, we've gone through tons of stuff went through the rise of India, the return of India, really to the world stage, the rise of Flipkart, and how you went from just like basically bootstrapping that thing with $4,000 in India, from a time and less than 5% of Indians were online to one of the largest exits, perhaps the largest exit in the world at that point during the large exit in Indian history to helping mainstream this thing within India. And now helping entrepreneurs you know, with extra 10x. I'd like to know just what give me give me what the last you have the last words go ahead and whatever else we say.

Binny Bansal 2:39:39

No, yeah, I think. I mean, if I look back, I mean, I've seen sort of the journey of India's transformation, so as to speak, right. Through my through my life, and I guess I was lucky to be born in 1982. And, and just when India was sort of liberalizing, I was a teenager. And then I started working when the digital age was sort of happening upon us. And I think today, India's, I think I can see that India sort of sitting on a big potential opportunity and a pivotal sort of moment in history. And I think my focus is to continue to sort of think, drive forward the entrepreneurial ecosystem as much as I can. And then I'm very bullish about this. I think building this whole new talent ecosystem as well. How to convert this potential energy into kinetic energies, so to speak at scale. That's awesome. Yeah. So I think those are probably the two big opportunity, your thoughts.

Balaji Srinivasan 2:40:53

And I look forward actually working with you on some of this stuff. And, yeah, and, but that we're Thank you. This is an everyday podcast. Thanks for coming on.

Binny Bansal 2:41:01

Thank you. Great