Near death to cash positive: Kunal Bahl shares Snapdeal's 'comeback' story

"A day doesn’t go by when someone doesn’t ask me this question – So, how are things now at Snapdeal?”, Snapdeal co-founder Kunal Bahl on Monday shared on LinkedIn the story of the e-commerce company's struggle in the last one year to 'turn the ship around' from 'near death', thanking employees and others for the participation in re-igniting the fire in the start-up.

"There is a story to be told here that can be instructional for some and hopefully inspiring for others. Most importantly, for the incredibly resilient team at Snapdeal, that has worked so immensely hard to turn the ship around, it is time to give credit where it is due," Bahl wrote.

But this is more than just a milestone. Going from just a few months of money left in the bank in August 2017, to now being completely in control of our destiny a year later, has been an exhausting yet exhilarating experience

Referring to the failed merger with Flipkart, Bahl said "the summer of 2017 brought uncertainty for Snapdeal in the form of an on-going, protracted merger discussion that wasn’t going anywhere. 

The view across shareholders and board members was divergent. Key business decisions had been put in abeyance for many months, adding that "the uncertainty was costing Snapdeal money, morale, momentum and more. 

He admitted that it was clear that the company was "hurtling towards a full-blown crisis."

He said by mid of July 2017, it became 'obvious' that efforts to drive a merger were crumbling under the weight of "irreconcilable differences."

Bahl said the process dragged on for more than half a year without an end in sight with many discords outstanding and the business was losing money and cash reserves were depleting fast.

"We were going to fall off a cliff if a call was not taken immediately to continue to build the business," he said.

Bahl said this was the time he and his partner Rohit Bansal decided to launch Snapdeal 2.0.

"Rohit and I were clear that in light of all the friction and delays around the merger process, Snapdeal’s best bet was to go forward as an independent company - with a clear business plan, christened Snapdeal 2.0.," he said.

"Any further delay in taking a categorical decision, one way or the other, was guaranteed to be fatal for the company. The Board agreed with our conviction. The date was July 31, 2017 and Snapdeal had just a few months of money left."

Snapdeal 2.0

Bahl recalled a "well wisher’s message" that "Snapdeal will not see a day of 2018, and will definitely shut down before the end of 2017".

We had witnessed adversity in early 2013, when we had one month of money left in the bank in the midst of a hard pivot from selling online coupons to physical products, and yet had come out of it stronger. But this time it was different. It was at a much larger scale, very public and the stakes were very very high.

Bahl said they had started the implementation of Snapdeal 2.0 over the previous many months.

In brief, Snapdeal 2.0 was their effort to "only running a pure-play marketplace and divest non-core assets."

"We were clearly moving away from the approach of being in multiple businesses at the same time," he said.

A path filled with uncertainties

Bahl wrote that for Snapdeal 2.0 to get off to a solid start, conviction and confidence of each team member was important and that was a difficult task to start with as many team members were barely coming to work for just a few hours a day since they had no clarity about whether or not they would have a job if a merger happened.

"Hence, after the merger discussions were called off, all of August, September and October ‘17, we organised a continuous loop of engagements, each individual was spoken to by one or more members of the leadership team. Rohit and I gave presentations to the teams about the strategy, execution plans as well as the uncertainties."

We installed screens all over the office, where live dashboards transparently displayed in real time our progress vis-a-vis targets. With the results speaking for themselves, the team's morale followed the upward trajectory of the business metrics and wasn’t undermined by the negativity of the external world. 

Meanwhile, Bahl described the job cuts as 'our toughest decision as entrepreneurs till date".

"We had done a very painful resizing in February 2017, and we were very clear that it wasn’t necessary to further reduce the team size to meet our goals as a company. 

The big fear, oft expressed by the team, was whether there would be further job cuts and our assurances of no such plans were met with skepticism. 

Gathering steam

To maintain the purse, Bahl said they picked up speed cost optimisation. 

"E-commerce is a thin margin business. Anything that lost money had to either go or had to be recast in a profitable mould, he said adding, "While we made good progress with optimising costs, it was also important to create cash reserves."

To maintain this target, the e-commerce company shifted to smaller office with around 800 employees, as well as sold off its other companies, including mobile wallet FreeCharge, logistics entity Vulcan and e-commerce management company Unicommerce.

"In the last week of July, we had sold FreeCharge to Axis Bank but the money was still to be received pending RBI’s approval for the transaction. The FreeCharge sale was an important part of Snapdeal 2.0 and without that capital, our survival as a company would have been at risk, Bahl said.

"It took a few visits to RBI to sensitise the decision makers to the gravity of this deal for the survival of the company," he said.

"With the FreeCharge money in the bank in From October‘17, we started setting monthly targets for how much margin we would like to earn in the current month. The year 2017 ended on a positive note, with three consecutive months of target achievement," he said.

Bahl said in January 2018, they were successful in finding a good home with the Future Group for their logistics company, Vulcan Express.

"As we moved into 2018, with green shoots starting to emerge, not only were our economics in good health, we were also growing the business,"he said.

In quick time the sales of such products surged. By March 2018, the seller community was taking notice of the steady increase in sales at Snapdeal. Sellers who had gone dormant revived their listings and added more of what was selling on our platform.

Re-energising Culture

Bahl said in order to re-energising culture, they set up rewards and recognition for the team members, who were performing well and hitting their goals. 

"We discussed everything - our personal lives, issues about work, short term worries and long term hopes. The senior team also bonded well. We started going out for dinner once a month, where we barely talk about work, and have gotten to know each other so much better as people, than just coworkers who only discussed targets and achievements," he said

"The average tenure of a team member at Snapdeal is 3.5 years, which is much longer than what one sees in Indian startups. We also have colleagues who have been with the company for over 10 years - from the time we worked out of the basement of a house in Delhi's furniture market selling coupon books," he said adding, over the last year, we have also added about 100 members to the team. Nearly 50% of them are former colleagues who rejoined us."

Talking about times when everything was right to rainy days, he said "When the big investments came in, Snapdeal’s journey was widely celebrated – Everyone was singing praises and wanting to shake hands and be friends. Funnily, a lot of these people that we called for help and support last year, wouldn’t even return calls or emails. However, some did."

I recall sitting in the room with one of the above persons in August 2017, staring down the barrel with only months of money left in the bank. The gentleman, probably seeing how dire our situation was, picked up the phone and called six of the top business people in the country in quick succession explaining our situation to them – that we were good guys stuck in a bad situation – and requesting them to meet me to see if there were any synergies with their businesses, that could give us a financial parachute. Thankfully, things worked out in the end, and we didn’t need to take up any of those offers.

The Tide Turns

The completion of nearly a year of rebuilding was also when we hit the first waves of positive cash flow. For the first time in our history, our business generated cash in June'18. 

As we exited July’18, we had finished 10 consecutive months of achieving all our goals and despite all the odds, had more than doubled our monthly orders and revenues in the same period, while cutting down our cash burn by 100%.

From near death to generating cash, from despondency to resurgence – it took a lot of courage, focus and discipline to turn the ship around sharply. And we achieved all this with a nimble 800+ member team - in a flat, agile structure responding in real time to external and internal needs. Healthy, rejuvenated and in control of its own destiny, Snapdeal is now sailing ahead towards brighter horizons (and we also just moved into our brand new, open plan office, which means no cabins for anyone).

Talking about numbers, Bahl said, "We have over $125mn in the bank and runway that extends to a decade."

Bahl said they wrote to the families of all team members in July‘18, whose immense support has played the most critical role in keeping their spirits high and execution focused, especially in times when it would have been easy to move to greener pastures.

"Entrepreneurship is lonely. A great co-founder is often the difference between hope and despair. Rohit and I are fortunate to have each other - we couldn’t have done this without each other," he said adding that, "Leadership under fire is who you really are. Tough times bring out either the best or the worst in you."

Recently, someone asked me, “So, what are you upto these days?” - suggesting that there must not be a lot of work left to do at Snapdeal, I smiled and moved on to the next item on my task list. 

Bahl said the culture that will last the test of time and adversity takes a lot of consistent physical and emotional effort to build, adding that the best ivestment one could make is "invest time happily, willingly and excitedly with the team by constantly communicating with them."

He acknowledged they are building a company in the most hyper competitive e-commerce market in the world, up against not one, not two, but three multi-hundred billion dollar global e-commerce behemoths.

"If there was an exaggerated practical metaphor for David vs Goliath(s), this may be it," he said adding, "We recognise that we are now the only horizontal e-commerce company at scale left in India that is independent and not owned/operated by a large multi-national corporation."

"We can’t afford to do too much, and at the same time, we can’t afford to do too little. It’s the things you don’t choose that make you who you are," he said.

Our goal is long-standinging methodically, brick by brick, a long standing institution that hopefully gives inspiration to entrepreneurs across our ecosystem, that while success is not permanent, failure is also rarely fatal, he said.

"What one needs to muster, right when you are at the bottom of the abyss, is the grit and courage to continue. That spirit to keep moving ahead, resolute and steady, is both liberating and energising at the same time," he said.

The journey of Snapdeal will continue. There are many mountains left to climb and together as a team, we know that we will rise to each challenge – there will be days when we will sprint and some days we will hunker down to ponder the best way forward, he said.

"We want to thank everyone who has been a vocal or silent cheerleader for our team. You inspire us to do our best every day and keep moving forward. Thank you!," Bahl ended by adding this.