Early in 2015, Snapdeal acquired FreeCharge in the largest buyout in the largest Internet M&A in India at that time. The story of the FreeCharge journey is also the story of a great partnership among all key stakeholders.
Kunal and Sandeep and Shailendra talk about the mutual trust and understanding between them that helped build a special partnership.
The memories of our first meeting are still vivid. We started to pitch our concept and 20 minutes in, Shailendra told us he wanted to move forward. Kunal, being Kunal, kept going. I nudged him to stop since Shailendra was clearly sold on the idea.
The reason we chose Sequoia was not that they had the best terms to offer. It’s that we thought there would be comfort in working with Shailendra. We had to decide if we were willing to meet this person for the next five years.
Kunal is a philosophy major who dropped out of his MBA and had run a BPO business before. Sandeep had run an electronics manufacturing business and BPO business earlier. But they had all the ingredients of Sequoia founders – very committed, resourceful, independent minded, full of profound insights. I loved how Kunal articulated habit forming activities and the power of “free”. He went on to coin the term “habit commerce”. For us, it was a contrarian investment. After all, recharge was viewed as a commodity business. For a while, many people quizzed us on the FreeCharge investment but we knew that all new category creators look puzzling to outsiders in the beginning, so we kept at it.
We agreed on an arrangement that would give us half the money upfront and the other half later. Just before we closed, the rupee took a downward plunge. I got a call from Sequoia then – I was expecting them to ask for a renegotiation in light of the currency devaluation, but was completely thrown by what they proposed. They wanted to give us the entire amount upfront since the rupee’s future looked volatile. That’s been the tone of the relationship throughout – no game playing, no hedging.
We have never had a negotiation call with Sequoia. There have been multiple calls – but never a negotiation call. We firmly believed in our lead investor Sequoia and are confident that was a good decision on our part in all our rounds of investments.
When the investment was being discussed, there was agreement on the terms in five minutes. As the round sizes increased later on, Sequoia volunteered to remove its participating preferred security and change with non-participating preferred securities, as this was more company friendly and helped to bring in more investors at the same terms. This was one relationship when the short-term economic agenda did not matter, everyone was singularly focused on winning.
We ran into a couple of roadblocks in trying to scale. The biggest challenge was recruitment – it was especially difficult to attract talent in Mumbai. It was probably one of the worst periods for us as a business. It was comforting to have Sequoia tell us that we would get through it if we continued to focus on the important things.
I still remember what Shailendra said to me at that point: “Don’t worry about the fuel; just focus on getting the plane off the ground.” For a founder, someone showing faith in you during rough times becomes the biggest motivation. I remember sending Shailendra a text that evening saying, “ Thanks for having faith in me, I promise to make this big”.
We always had open discussions focused on what is best for the company. That helped us zero in on where we felt the gaps existed. For instance, we were able to study the situation objectively and open our minds to bringing in a CEO from outside the company.
We knew how to grow and monetize by then but we really needed someone to run the tech and product side of the business – to help us think more clearly about those aspects. And we didn’t want to let things such as rank and position get in the way of more important goals.
We were ready to help in the search for this person but we always told Kunal that it was ultimately his decision and his choice. That’s how Alok Goel, an ex-Googler, came on board. The fact that Kunal voluntarily ceded the CEO title speaks volumes for his maturity and magnanimity. Founders who are secure about their own contribution don’t care about titles.
Our conversations with Sequoia have always helped to clear the fog – whether it involved our initial business plan or the launch of our marketing campaign or the final sale to Snapdeal.
Each of us trusted the other side to do the right thing. This is one relationship where personal ego and economic agenda have never come in the way of the greater good.
It felt like we were one seamless unit and that was very helpful to us as entrepreneurs. It freed up a great deal of mental space and energy. We didn’t have to worry about what the board would say – just what we could say for ourselves.
Our board meetings were always extremely candid; we never had a investor-founder relationship. It was a discussion between partners about what was the right thing to do. That’s what we had – an extraordinary amount of trust. It made everyone want to give it their best.