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Binny Bansal, Nandan Nilekani on the eternal debate of growth vs profitability

The age-old debate of ‘growth versus profitability’ in the startup world has everyone running from pillar to post. And with the murmurs of a funding winter, it is no surprise that Saikiran Krishnamurthy, Co-founder, xto10x, questioned Binny Bansal, Co-founder and former Group CEO of Flipkart, on this exact same point.

Recalling the 11-year rollercoaster ride of Flipkart, Binny remarked, “For the first three years, our focus was on both growth and profitability equally as a bootstrapped company. Then we raised funds from venture capitalists, and the rest is history.”

He recalled the time in 2015 when Flipkart had decided to pause its growth measures and called it quits with some newly added categories in the face of fierce competition and business pressure.

“I think one needs to know what are the new businesses to add, when to add them, their unit economics, market period, budget allocation, etc.,” said Binny, during a panel discussion.

The panel discussion was part of Startup Summit 2022, held at The Leela Palace in Bengaluru, hosted by Xto10x, an IT startup co-founded by Flipkart co-founder Binny Bansal and former Ekart head and former Ola CXO Saikiran Krishnamurthy.

Xto10x offers tech tools and a learning platform for startups, all over the world, to scale up rapidly. So far, it has worked with around 250 growth-stage startups.

Sriharsha Majety, Co-founder and CEO, Swiggy, had a different thought. With Swiggy being in existence for around nine years, he said the focus for him has been prioritising growth before pointing the needle at profitability.

“I believe in the profitability of a company but I also believe that there should be conscious growth. When we launched Swiggy, we made some mistakes, but we learnt from them and moved ahead. One needs some time before hitting the market to understand the business and shape certain decisions. At this point in time, if Swiggy has to add a few new categories, we will have the time for understanding the opportunity costs and the market. But sometimes, you never know whether it will work out or not,” he said.

Former Infosys head Nandan Nilekani said, “I believe in focusing on both growth and profitability at the same time. If you have got the right model and the right basic unit economics, you can focus on both and the rest falls into place.”

The panel also had Harsh Mariwala, Chairperson of Marico, who said growth needs to be sustainable. While growth is exciting, it cannot be done without profitability. “Sustainable growth and profit need to go hand in hand,” said Harsh.

Even as the debate continued, the questions of growth or profitability and when to focus on what is still looming large for founders.

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