Last week, Snapdeal's founders publicly talked about turning around the troubled company. 

Snapdeal's is the story of the poster boy of the Indian ecosystem, with a very big twist. The company was once the second most valuable startup in India, second only to Flipkart that now sits under the Walmart group. In 2015, the company was heavily touted to challenge the dominance of Flipkart and seen as the one in second place - with Amazon having trouble catching up. From there, the company lost its way to the point of being sold off to Flipkart. The Flipkart-Snapdeal deal was heavily watched but fell out because the founders did not agree. From there, the company has struggled to remain relevant, with a strategy called Snapdeal 2.0 focusing on a turnaround. Whether or not it is a "turnaround" is a question we will answer, but we first need to understand where this all started.

Snapdeal was started in 2009 as a coupon book company called MoneySaver by Rohit Bansal (unrelated to the other Bansals) and Kunal Bahl. The model was entirely offline and the company pivoted to an online model, which was just the first of its many pivots. Snapdeal was backed by NEA-IndoUS ventures (now Kalaari), introducing one of the key investors in Snapdeal's rise. Snapdeal's pivot from offline to online was wildly successful, with the company quickly gaining traction. In the highly competitive and nascent coupons business, the company went from 0 to 70%of market share. The company raised $57MM from its earlier investors and added a new roster of investors to its cap table. The couponing business was doing  INR 500 Cr ($100MM) in 2011, and was one of the fastest growing couponing companies (and all smiles) . The strength of the couponing business was its sellers, and keep this in mind as we begin to understand Snapdeal.

Buoyed by Snapdeal's success, the founders visited China as saw the success of product e-commerce giants, like Alibaba. This is an important event in the life of Snapdeal, because it hints at the DNA of Mr. Bahl was trying to build. I had earlier talked about how Alibaba and Tencent were trying to build ecosystems, and have successfully become the places to do everything. Mr. Bahl mentioned that he was inspired by the product e-commerce, but the company's future path suggested that it was much more than just that. After raising $54MM the company dramatically pivoted to e-commerce, with a marketplace model. This was different from the inventory-led model of Flipkart and Amazon in India, and as Messr Bahl mentioned, "everyone thought they had gone mad". 

It was an audacious move, but it wasn't a pivot as much as listening to the sellers talk. Selling products was a natural progression from selling deals, especially with sellers being so critical to Snapdeal. Additionally, the coupons market is far smaller ($200MM) than the Indian e-commerce market ($60Bn). "Pivoting" from a smaller market to a larger, ancillary, market - is less mad and fairly smart. Snapdeal began its journey into e-commerce, and raised $50MM from eBay in a bearish VC market in 2013. The marketplace was doing $400MM of GMV, and given the marketplace, model took a lesser commission (5%) than the inventory led models (15-20%).  The company rapidly grew, almost 5x in a single year, and attracted Softbank - who put in a massive $627MM in the company, valuing it at close to $3Bn. It's interesting to see how Mr. Bahl in 2014 said that Snapdeal intended to have 80% of the e-commerce market. Softbank had firmly backed the horse in Indian ecommerce, and it was not Flipkart. 

The well funded Snapdeal now wanted to build the ecosystem Mr. Bahl was inspired by, and this would be its waterloo. The company acquired Freecharge for $400MM to build payments, Unicommerce for $17MM to build its ecommerce solutions, GoJavas for $40MM and continued to spend rapidly to build out the ecosystem it so strongly desired. It rapidly deployed raised capital in acquisitions. Integrating so many teams and companies, was a difficult task. Snapdeal hired expensive and talented resources from across the board to help with these integrations, with the clarion call of BHAG (which meant run in Hindi), which actually stood for "Big Hairy Audacious Goal". 

But the business was doing worse, dropping 30% in 2016. The company had a strength with the sellers, not with the consumers, and the weakness began to show with consumer first Flipkart and Amazon. Sellers began to desert the platform because they were not treated well, and the ecosystem began to crumble. Managing so many parts was making the whole less than a sum of its parts. From early 2017, Snapdeal began to put its acquired assets on fire sales, selling Vulcan, Freecharge, GoJavas and Unicommerce for a fraction of the price. The company began to discuss its own sale to Flipkart, with falling revenues. The deal dominated headlines, but fell through in the middle of 2017, apparently due to the founders not wanting scrutiny. This was the beginning of Snapdeal 2.0, what the company claims is a "turnaround". What is the focus on Snapdeal 2.0? You guessed it - sellers. 

The company now focuses on small ticket items, with an AOV (Average Order Value) half as much than its original e-commerce business. The company at its peak did 120,000 daily orders in 2015, fell to 20,000 in 2017 and has now increased to 40,000. From a revenue of close to $200MM, the company likely has $20MM of revenue today. This is because the company claims its operating expenses are close to a $1MM a month. Kalaari sold its stake in Snapdeal for a reported $100MM, 1/60th of Snapdeal's peak valuation. Snapdeal now claims it is profitable but is a shadow of its former self. The sheer torture of having seeing your own company go through this pain, and still managing to keep it alive is commendable. The focus on its roots, sellers, without the paraphernalia of acquisitions, allows it to remain nimble and focused. It may have sacrificed growth for profitability, but it at least is alive. Is scaling down to 1/10th of your peak a turnaround? I don't think so. 

But who knows, this might be a real pivot with a silver lining at the end?