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Why the spate of recent high-profile exits from e-commerce companies doesn’t matter

T N Hari
26th May 2016
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Due to a timely confluence of factors (domestic and international), e-commerce in India had come of age. There were at least a couple of players that suddenly seemed strong enough to make the best of their early-mover advantage, consolidate their position, and even take on the global numero uno – Amazon!

These companies hired a new set of leaders to lead some of their functions; hires came from Silicon Valley companies or large domestic companies. Many of these hires didn’t survive for long. Some of them are still riding the media publicity that followed their hiring to stretch their relevance in public memory. There has been a lot of unnecessary debate on the reasons for these exits. Seeing some of them operate, it was pretty obvious that something like this was coming soon. Their LinkedIn activity was indistinguishable from what they were doing on FB – one posted a picture of his backyard on LinkedIn (relaxing at the end of a hard day’s work!). Anything can get you a hundred likes, and they seemed to be basking in this new-found glory and media attention. Their contributions to building the businesses that hired them were never really known.

Shawshank

There have always been enough Indians (and Chinese for that matter) that have done reasonably well in the Valley (and elsewhere in the US) but would have struggled to accomplish anything of significance in their home country for the simple reason that the environments in these countries is unstructured and chaotic. There is a lot of friction in the environment that can make even the simplest things very complex. A lot of people that are smart at one level lack the tenacity to deal with the chaos and excessive friction. Most professionals, who like a stable job, don’t do well in this environment but can do exceedingly well in a structured, enabled and friction-free ecosystem. The entrepreneurs that created these companies were thriving in this environment precisely because they were entrepreneurs and not professionals that loved stability.

Now the kind of people that these e-commerce companies hired (or were forced to hire) were professionals doing reasonably well because of the system that they were a part of (an enabling environment in the Valley or the supportive systems of large domestic companies). They were not even the best in the business. Most of them had failed to make it big in their respective companies and were looking to build their place in the sun. The big e-commerce opportunity in India was the perfect place to try their luck.

It is silly to assume that just because you have worked for a large company you know how to build for scale. In reality, most executives at large companies just do not know how to build for scale. They know how to operate in a place that already has scale and maturity. When they need to build for scale, they simply lack both the know-how and the stamina!

Companies that are going through a phase change (from a startup to a scale-up, or a scale-up to a global player) need leaders that have tenacity and entrepreneurial energy. They can do without people that operate at 80,000 feet, thinking they are God’s gift to these smaller companies.

Very quickly, when it comes to execution issues, dealing with hard questions, handling the daily conflict and contradictions, they panic. Soon, their inadequacies are exposed.

Some clear give-aways when you interview candidates to check whether they fit:

  • The way they approach compensation and lifestyle benefits. They tend to be focused a little too much (and sometimes very subtly) on risk-free compensation and lifestyle benefits. One candidate from the Valley asked for his pets to be flown along for the meetings in Bangalore – a 100 percent giveaway that he was a perfect misfit.
  • They are often very articulate and smart; they have all the right questions, have a knowledge of all mega trends, have a view on most common topics, and above all you would never hear them say things like, “I really don’t know much about this,” or “This was really insightful.”
  • Above all, their CVs would have short stints, especially in tough environments.

The companies that have lost these executives are led by very capable entrepreneurs who have earned their spurs! Building a team that creates world-class companies is a tough journey. It involves weeding out the misfits, underperformers, and showmen. Over a period of time, the tough and tenacious will stick along, thrive and emerge. The showmen that exited can only lament that the firms they exited from are resistant to the idea of a “professional CEO”!

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