BENGALURU, Karnataka— Flipkart Group CEO and co-founder Binny Bansal stepped down today following allegations of serious personal misconduct. Bansal has denied the allegations, but his resignation is confirmed. Neither Flipkart's communications team, nor Bansal's personal representative, have offered any comment on the matter so far.
A statement by Walmart, the American retail giant that acquired Flipkart earlier this year, offered the barest of details. "His decision follows an independent investigation done on behalf of Flipkart and Walmart into an allegation of serious personal misconduct," Walmart Inc. said in a press statement. "He strongly denies the allegation. Nevertheless, we had a responsibility to ensure the investigation was deliberate and thorough."
While Walmart did not specify the exact nature of the charges against Bansal, a source told Moneycontrol that the development is related to a complaint from a female colleague a few months ago. This was later corroborated by other sources close to the company. The allegation was brought up in July by someone outside the company.
Walmart said while the investigation "did not find evidence to corroborate the complainant's assertions against Bansal, it did reveal other lapses in judgement, particularly a lack of transparency, related to how Binny responded to the situation. Because of this, we have accepted his decision to resign."
In his letter to employees, Bansal wrote that the allegation left him stunned, and that he strongly denied the claims. He noted that the investigation showed lapses in judgement on his part in how he handled the allegations, leading to his exit. He added that he will continue to be a shareholder in the company.
The details of the complaint shared against Bansal were not revealed by Walmart, but this marks the exit of both the co-founders of Flipkart. Binny Bansal had started the company with Sachin Bansal (the two are not related) in 2007, with Sachin handling the role of CEO while Binny was the COO of the company.
However, according to sources in the company, there had been tensions between Sachin and some of the investors, which led to Binny Bansal taking over the CEO's role in January 2016, and with the Walmart acquisition, Sachin Bansal announced that he would exit the company once the deal closed. In January 2017, Binny Bansal was named Group CEO.
Binny Bansal's exit marks the first time that the company will operate without either of its founders.
"Binny was anyway not taking care of day to day operations, it was more of a chairman kind of role, so it should not hamper Flipkart beyond the distraction it will cause to the employees," said Satish Meena, of Forrester Research. "With Walmart we were anyway expecting some kind of leadership change—though not to remove Binny—and this might take some time now as they have to see who can replace Binny, but that's the problem. Other than that, it's a big setback to the ecosystem because even if the allegations are not true, if he had to step down, it doesn't look good."
Others see it as a possible opportunity for the company. "I think this is blessing in disguise for Flipkart (Walmart) to realign leadership and streamline operational to more Walmart way and drive efficiencies and burn less cash," said Neil Shah of Counterpoint Research. "Flipkart badly needs 'customer-driven mindset like Amazon' and 'cost-driven execution like Walmart'. Secondly, unlike Amazon they don't have a fast growing AWS cloud business, or a maturing content plus service driven Prime program to ensure customer and consumer stickiness. Competing just on attractive price and exclusives is a risky strategy and will continue to hurt the bottom line."
Kalyan Krishnamurthy will continue as the CEO of Flipkart, which will now include Myntra and Jabong, Walmart said. Ananth Narayanan will continue as the CEO of Myntra and Jabong and will report to Krishnamurthy. In its statement, Walmart said that Bansal had been contemplating a transition for some time, but sources close to the company said that his sudden departure was not part of the roadmap.
Here is Walmart's statement in full:
Flipkart and Walmart statement on Binny Bansal - Nov. 13, 2018
Earlier today, Binny Bansal announced his resignation as CEO of Flipkart Group, effective immediately. Binny has been an important part of Flipkart since co-founding the company, but recent events risked becoming a distraction and Binny has made a decision to step down.
His decision follows an independent investigation done on behalf of Flipkart and Walmart into an allegation of serious personal misconduct. He strongly denies the allegation. Nevertheless, we had a responsibility to ensure the investigation was deliberate and thorough. While the investigation did not find evidence to corroborate the complainant's assertions against Binny, it did reveal other lapses in judgement, particularly a lack of transparency, related to how Binny responded to the situation. Because of this, we have accepted his decision to resign.
Binny has been contemplating a transition for some time and we have been working together on a succession plan, which has now been accelerated. Going forward, Kalyan Krishnamurthy will continue to be CEO of Flipkart, which will now include Myntra and Jabong, continuing to operate as separate platforms within the Flipkart business. Ananth Narayanan will continue providing great leadership as CEO of Myntra and Jabong, and will report into Kalyan. Sameer Nigam will continue leading PhonePe as CEO. Both Kalyan and Sameer will report directly into the board.
As we look ahead, we have full confidence in the strength and depth of leadership across the company. We remain committed to investing for the long-term and are supportive of the leadership team's desire to evolve into a publicly-traded company in the future.