Irony bought itself a coffin on Flipkart and drove to the cemetery in an Ola when Aggarwal-Bansal complained.

The hypocrisy of Ola and Flipkart poster boys of Indias lala economy with a digital face
Voices Opinion Saturday, December 10, 2016 - 15:11

During my first stint in Delhi, I was introduced to the moniker 'lala'. There are caste connotations to it: 'lala' is generally used to refer to owners of businesses who are of certain caste groups, but the term has come to mean far more than that.

A 'lala' is more than just a business-owner. He is the whimsical Indian boss man. He is the money-bag. He does what he wants. He hires and fires at will. He shuts shop when he feels like it. His success is not based on innovation, and the ‘business acumen’ which he is usually credited with is in reality inherent privilege, connections and shrewdness.

They are businessmen of the merchant-trader type, not necessarily the production-innovation type. One very, very important aspect of their business ideology is protectionism. They do not want a free market, but freedom from any market competition. Business is falling? Ask for subsidies and freebies. Competition is going up? Ask for regulations. And with their lobbying power and access to the top echelons of Indian government, they are able to get their way through almost anything.

It is not so much of a surprise then that much of corporate India lacks innovation and depends heavily on government subsidies to make money. Basically, much of corporate India is a ‘lala’ economy. 

Entrepreneurship in the digital world and startups were supposed to change all that. They did not require a huge amount of human resources or capital immediately. Scaling up was faster. Funding was available easily if your idea was good. Innovation was essential. Processes needed to be smarter, well-defined and that’s how you scaled-up. Market competition was important, healthy. Businesses benefited from a free-market and reduced government interference. They were capable of solving problems. 

Not in the lala economy.

When the initial anger over the statements made by the top bosses of Ola and Flipkart tides over, you realise how cute their hypocrisy is. And that they are just digital faces of India’s lala economy. 

Let’s have a look at the narrative which Sachin and Bansal and Bhavish Aggarwal are building now. (Read full news report here.)

- “Indian” companies need to be protected. 

- Let’s emulate China. 

- Capital matters more than innovation in present market conditions, because capital is distorting markets.

- American companies are a threat to Indian jobs, security and data privacy. 

- Indian companies are major contributors to society.

- Foreign companies have more access in India.

- East or West, India is the best. India is the best. 

File Image: Bhavish Aggarwal with PM Modi

Now, some reality. 

- Ola and Flikpart are getting whipped by Amazon and Uber

- The American companies are expanding with far higher speed and efficiency than they were expected to.

- Ola and Flikpart are stuck without promising growth, and their valuations are dwindling. 

 - Ola and Flipkart are copycat companies. Uber and Amazon are the big-daddies in their sector. They are simply better at what they do. 

- It is increasingly becoming clear to the Indian consumer that Uber and Amazon services are superior – this is however a matter of perspective. So, let’s just leave this as my opinion. 

It helps then to see Aggarwal and Bansal’s recent statements in this context and raise some questions.

Irony bought itself a coffin on Flipkart and drove to the cemetery in an Ola when Aggarwal-Bansal complained. 

The duo says that it is capital which is the game, not innovation. Is that how they felt when they put millions of small retailers and cab operators out of business? When they pumped in capital, by billions of dollars, into the market and killed the smaller guys in India, that was all right. But when someone bigger (also better) threatens their dream to buy another Rs. 32-crore palace in Bengaluru, then it is about nationalism, fair play, WTO and predatory pricing?

And how ‘Indian’ really are Flipkart and Ola? They are two of the largest foreign venture capital-backed companies in India. Flipkart is registered in Singapore, and China’s Didi is one of the investors in Ola.

The other big bogey they want to create is that of Chinese success. The idea that we have to return to the protectionism of the pre-liberalization era is about as unoriginal as Ola and Flipkart, but there is another problem with the suggestion. India is a democracy. You could bulldoze your way through your competition in China if you had the government on your side because no one would dare ask questions. In India, we value our relative freedom and democracy. And to assault our individual economic freedom just because it does not suit their purpose is a bit too much to ask. 

There are, in fact, other things on which Indian companies must be focusing on. As Archana Venkat points out here, Indian e-commerce is a different ball game, and they have not so far been able to crack the market here. They depend instead on huge discounts and deals.

Indian companies’ regressive policy stances have already started harming Indian consumers and, in the case of cab aggregators, drivers. Read how Karnataka’s (absurd) cab aggregator policy, backed by Ola, is wreaking havoc in the lives of drivers. How can then these companies complain with a straight face that American companies are destroying jobs? And in what way are Indian companies contributors to society, that the American ones in the same sector are not?

The way of the market, because of which Flipkart and Ola are what they are today, is that you die if you are not good enough. So, there is only one way for companies to survive – be better. If fake nationalism and protectionism is how they want to survive, at least let’s be open about it. 

Note: Views presented here are of the author's.

Editor's note: Two days after this piece was written, OLA COO spoke to Ramanathan. Read the interview here. 

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