Why Flipkart's $700 million cash payout matters?
Inflection point that's so important right now.
Welcome to the 167th edition of the GrowthX Newsletter. Every Tuesday & Thursday I write a piece on startups & business growth. Today’s piece is going to 95,300+ operators & leaders from startups like Google, Stripe, Swiggy, Razorpay, CRED & more
2016 : Flipkart acquired PhonePe.
2023 : PhonePe is splitting from Flipkart
Why the $700 mil cash payout matters ⬇️
Some context 🗓
Flipkart was India's biggest celebrated startup exit. What Binny & Sachin Bansal started with selling books online from Kormangla became a $16 Billion empire.
Fast forward 2016 ⚡️
Right before demonitization, Flipkart acquired a payments company - PhonePe. The small startup then went onto become market leader in UPI based payments in the country. 1 in 4 people in India use PhonePe.
Then came December 2022 🎯
PhonePe decides to split from Flipkart & build the next stage of growth. Walmart decides to maintain it's controlling share in the new PhonePe entity & give everyone who owned a share in PhonePe <> Flipkart group.
The result? ✋🏼
Equity Stock Options worth $700 mil will be given to 19,000 Flipkart employees in cash - yes "CASH". This has been the 3rd time Flipkart employees have received a liquidation event in last 10 years.
How will this change India's startup ecosystem? 👇🏻
1/ Everyone would want an ESOP 💵
Looking at the cash everyone has / is receiving is making ESOPs even more lucrative. No wonder every new startup employee will negotiate for large sums of ESOPs.
2/ Startups will attract better talent 💰
ESOP will be the startup leverage to attract top talent in the funding winter. Meesho & Zomato founders were were inspired by Flipkart’s exit even before they started their journey. The flipkart buyback will inspire millions.
3/ Employee retention will improve ❤️
ESOPs typically have a 4 year vesting period. That means if you want to meaningfully impact your wealth upside through ESOP - you need to stay & impact that specific company for the period, pushing employee retention.
4/ ESOPs will push co-ownership 🚀
Most startup fails and ESOPs will ensure the feeling of co-ownership. The more employees participate in ESOP pool, the higher the odds of winning the whole startup game.
5/ India's journey to 7 Trillion GDP 🇮🇳
Value creation is the only way India can get to the GDP goal. We need 100s of ₹1,000+ Crore companies to make it happen. Startups & medium size companies are the key to growing 10% yearly growth.
What's next for India's startups?
Next year is going to bring a lot of memories of 2021.
The likes of RazorPay, Swiggy, OYO & more to the list will create true wealth for the ESOP holders. This flywheel of ESOP will drive more startups getting built.
I'm excited for what holds for India in this decade and I'm bullish on Indian founders creating massive upside for our country. What we definitely need is great growth leaders focused on value creating (& revenue generating) companies.
Are you building for the long game? 💙
Businesses built on strong revenue lines are key to building the $7 Trillion economy. At GrowthX®, we have built the science to revenue led growth. Over 1,800 businesses have figured it out in the last 3 years. The rabbit hole awaits you.
Want to watch an insightful story?
Swiggy scaled from 30 → 510 cities in 9 months. They had a “mom & washing machine” insight. Saurabh, GrowthX member since 2021 describes how 👇
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