FAILING TO
SUCCEED
Praise for the book
Vaitheeswarans first-person account of the rise and fall of Indias first real e-commerce venture is sometimes awe-inspiring, sometimes gut-wrenching and at all times insightful and interesting. If you are interested in the supposedly magical world of entrepreneurs and start-ups, or just interested in reading about the fascinating roller-coaster ride of an Indian online pioneer, hit the buy button. Now.
Prakash Iyer , author of The Habit of Winning and The Secret of Leadership
As children we all learnt how to walk by falling down more than once. And that is precisely what this book can teach you to do. It is a must-read for start-up founders, venture capitalists and aspiring entrepreneurs alike.
Ashwin Sanghi , author of The Rozabal Line ,
Chanakyas Chant and The Krishna Key
Indiaplaza would have been one of Indias most valuable e-commerce companies today. A visionary thinker and a strategist, Vaithee did not have the cash to burn, which e-start-ups have today, but was always clear why it is never a good idea to sell a dollar for ninety-nine cents. This book will open your eyes to the present and future of e-commerce companies, not only in India, but also the world over.
Ravi Subramanian, author of The Incredible Banker ,
The Bankster and Bankerupt
In 1999, I made my first purchase over the Internet from a company called Fabmart. Over the next few years, I became an admirer of the excellent customer service of the company. It kept experimenting and transforming. It was clearly a pioneer. And then it closed, despite having excellent operations, a strong brand name and huge customer loyalty. It became a puzzle for a management academic like me. Why do good guys finish last? Why do pioneers fail?
I am happy that now finally a book has been written on the Indiaplaza story. Its both of historical value and of contemporary relevance. We can understand how the e-commerce industry took shape in India. We canentrepreneurs, customers, regulators and studentsalso learn valuable lessons. A rare and honest gem. A must-read.
Professor Vidyanand Jha , IIM Calcutta
Nothing succeeds like a failure well told. This would-be-national-bestseller that you hold in your hand features the incredulous story of the first Indian e-commerce company. This unravels the mystery shrouding the life of an entrepreneurial start-up venturea 24-hour, action-packed journey with ever-changing scenarios and situations
Professor Vivek Gupta , IIM Lucknow
We mistakenly assess success or failure of entrepreneurs by the funds they raise or the personal wealth they create. True pioneers enter uncharted territories without worrying about personal gains and create paths for others to follow. Vaithee is one such visionary who pioneered e-commerce in India and showed the way forward for hundreds of start-ups, including unicorns. If you are planning to launch a new venture, here is a tip for youstart by reading this book.
Professor S. Sadagopan , Founding Director,
International Institute of Information Technology, Bengaluru
Published in Maven by
Rupa Publications India Pvt. Ltd 2017
7/16, Ansari Road, Daryaganj
New Delhi 110002
Copyright K. Vaitheeswaran 2017
The views and opinions expressed in this book are the authors own and the facts are as reported by him which have been verified to the extent possible, and the publishers are not in any way liable for the same.
All rights reserved.
No part of this publication may be reproduced, transmitted, or stored in a retrieval system, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.
ISBN: 978-81-291-4802-5
First impression 2017
10 9 8 7 6 5 4 3 2 1
The moral right of the author has been asserted.
This book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, resold, hired out, or otherwise circulated, without the publishers prior consent, in any form of binding or cover other than that in which it is published.
To Radhika and Arvind,
Thank you for understanding the difference between value and valuations
I have not failed.
I have just found 10,000 ways that wont work.
Thomas Alva Edison
We are all failures.
At least the best of us are.
J.M. Barrie, creator of Peter Pan
Contents
Preface
Before the story in this book, theres the story before the book.
It was February 2011. We had just raised 25 crore in funding for Indiaplaza, Indias first e-commerce company, but instead of being delighted, I was worried.
For over a decade, I had been running the company by keeping costs down, pushing up margins, avoiding wasteful expenditure and bootstrapping wherever possible. But now we were up against hyper-funded e-commerce start-ups (and upstarts) spending billions of advertising dollars promoting millions of deep-discounted products. Crafted by thousands of overpaid staff, each of these were loss-making deals.
I could sense the start-up bubble building. It was obvious to me that once the bubble bursts, thousands of employees would lose their jobs and hundreds of deserving entrepreneurs with sound and profitable ideas may no longer be able to attract funding for their start-ups. Both jobs and new job opportunities will be destroyed. In other words, an entire ecosystem would pay dearly for the follies and fallacies of a few. When I said so ( Outlook magazine, August 2011 issue), I was branded a pessimist and seen to be discouraging start-ups.
Is it possible for someone to be absolutely correct and yet completely wrong about something at the same time?
It is. I managed to do it. Let me explain.
I got the crash absolutely right: As I had predicted, easy money has stopped flowing into hyper-funded companies and the deep-discount model of selling is rapidly getting discarded in favour of a new-found fondness for profits. I erred in the timing though. The madness lasted much longeralmost three years morethan I had anticipated. In retrospect, it took longer because it just takes a bit more time to burn through a lot more money.
Where I went completely wrong was in assuming that by staying away from the deep-discount game and continuing to focus on building a profitable business, we would be aroundand much strongeras and when sanity returns to the e-commerce business. Sanity returned late, but we died early.
What really hurt was the way we died.
We pioneered and built Indias first e-commerce company almost a decade before the market exploded. Along the way, we launched several firstsIndias first online marketplace, a PIN-based payment gateway, e-wallet, electronic gift certificates, cross-border gifting service, customized merchandise and cash-on-delivery (COD), among others. Some innovations like going online-to-offline, hyperlocal and omnichannel deliveries, and an online loyalty program were global firsts, years before even the mighty Amazon.com launched similar services anywhere in the world.
Yet we lost.
We were not out-competed in the market, although we were undeniably out-funded. There is no problem in losing to market forces; thats how businesses go. Instead, we were destroyed by a string of incidents that even today sounds unbelievable and surreal.
A large number of people including customers, colleagues, employees, suppliers, merchants, shareholders, friends, competitors, investors, media and industry watchers continue to believe that I destroyed the company through an inspired spell of incompetence and mismanagement.
