Revealed: How Walmart decided to oust Flipkart co-founder Binny Bansal

Flipkart employees and workers at other startups wondered whether Walmart was using the episode to push Bansal aside.

Business Standard : For Binny Bansal, the end of his long run as co-founder of India’s most successful startup came Saturday when he began calling colleagues to say he was done. The 37-year-old was stunned that officials from Walmart Inc., his startup’s new owner, were probing details of an affair years earlier. An investigation found no evidence of wrongdoing. Nevertheless, a decade after he created e-commerce leader Flipkart, he was calling to say goodbye.

His ouster, announced Tuesday from Walmart’s hometown of Bentonville, Ark., left workers at Flipkart, half a world away in Bangalore, stunned and struggling to make sense of the cryptic explanation. They worried about Walmart’s motivations and wondered if other Flipkart leaders would exit.

ALSO READ: Binny Bansal's retention on Flipkart board may be part of investor contract

In its announcement, Walmart said it had initiated an independent investigation into an allegation of “serious personal misconduct.” The probe didn’t uncover evidence to support the charge. However, company said, “it did reveal other lapses in judgment, particularly a lack of transparency, related to how Binny responded to the situation. Because of this, we have accepted his decision to resign.”

The explanation satisfied almost no one. Flipkart employees and workers at other startups wondered whether Walmart was using the episode to push Bansal aside. His co-founder left after the deal was completed, and several Flipkart employees saw the timing of his resignation as suspicious. Walmart’s handling of the situation raises more questions than answers, said Kannan Ramaswamy, a professor at the Thunderbird School of Global Management at Arizona State University.

“Like it or not, Bansal is one of the very successful entrepreneurs in the country and India likes to claim such heroes as its own, so I don’t think this issue will disappear,” said Ramaswamy, who specializes in management strategy in the country. “There has to be more information forthcoming.”

Walmart declined to comment for this story and Bansal did not respond to questions.

This account of what led to Bansal’s departure was pieced together from interviews with two dozen people directly involved in the events or associated with the company. It doesn’t answer all the questions swirling around the e-commerce giant long heralded as the leading example of India’s rise. But it clarifies some of the key details that led to the ouster of one of the country’s most celebrated entrepreneurs.

The allegations against Bansal arose just after Flipkart agreed to sell a controlling stake to Walmart, the American retailing giant. The deal came after months of negotiations during which Walmart archrival Amazon.com Inc. pressed hard to win the deal. In May, Walmart agreed to pay $16 billion for a 77 percent stake.