- Wealth PMS
A great read by Ashish Mishra, on the failure of an Indian e-commerce firm, perhaps the first big one, Indiaplaza.
Starting 2013, the Indiaplaza story went further downhill. One miserable day. After another. People started quitting, debts piled up and Vaitheeswaran found himself cornered. He had knocked on every door he knew and returned empty-handed. Then came the fateful Monday, 12 August 2013, when Indiaplaza vacated its office. But Vaitheeswaran still had some fight left in him. He hit the road again to see if anyone would be interested in buying whatever remained of Indiaplaza—the brand name, software solutions and even the customer data.
Again, there were no buyers.
Indiaplaza, earlier Fabmall, remains close to my heart as one of the first startups ever. I remember when I bought a book from them, and they sent me the wrong one. I’d paid by credit card, and I called up the company, and surprisingly, a co-founder answered. He said, “Come over, and choose any book from our office”. It was 1999, I’d started my own company a year earlier, and I went over to meet him – I don’t even remember if it was Vaitheeswaran or Hari Menon – in their little office in Indiranagar.
They didn’t have the book I wanted but I chose something else, and returned the one they’d sent, but the founder told me to keep it. “It’s a good book”, he said, and it was one of those inspirational mouse-cheese type of books I don’t really remember, unfortunately. But I remember the gesture. And his words: “You’re one of the first people to have used a credit card on our site”, he said.
It eventually moved from Fabmall, to having offline stores, to a new setup called Indiaplaza, and then bust.
While it’s sad to see the company fail, there’s honour in it. Failure is important, because it provides the learning for eventual success. A co-founder of Fabmall, Hari Menon, has started BigBasket, an online grocery delivery company that I’ve used over the last two years. Surely, his understanding of perishables came from his Fabmall experience, as well as the deal making ability. Sadly, Vaitheeswaran was left to hold the bag at Fabmall – and he probably chose to do so, which resulted in much unhappiness from the unpaid rents and suppliers and so on.
On that topic: See my note on failure, and why I think it’s important we celebrate it.
There’s things I learnt from that interview:
- The founder’s still adamant about COD being bad. I think of that as an unstable position not supported by facts – COD has definitely worked with a large segment of the population. People will use COD even if they have cards, because they don’t trust you; and because they know it’s easier to return something when you haven’t yet paid for it. You can’t fix that by saying no, boss, people have cards so I will force them to use cards instead of COD.
- You can’t focus on profitability early in this space, because that means being small. Being small is not, and was not an option. In general this is a bad idea, but in the context of online retailers, it’s a hard lesson to learn.
- When you’ve failed, you reach out to people. You don’t hope that they know you for your past and will get in touch with you. It’s the law of the jungle.
- When your business model requires funding from a source beyond “Cash flow from operations”, you are at the mercy of the vagaries of the VC investment world, which might give more credibility to your alma-mater and take your grey hair as a liability. That’s the game you choose to play, so you have to play by those rules, which change every few weeks. You can’t be wedded to this drama, so just play it as a game, don’t bet your soul.
There is altogether too much emotion in failure. From divorces to not-passing-exams to shutting down companies, people fear and dramatize the stigma more than the relief of finally having it behind you. Indiaplaza might have failed, but so what; there will be more great things, like BigBasket, that might succeed from the same learning. Here’s wishing K. Vaitheeswaran well, and in case I didn’t say it, thank you for that book in 1999.