It was early afternoon on Friday, 12 August. Sandeep Vats and Prakash R Mishra had just entered AskMe’s corporate office in Noida, Uttar Pradesh. But they were not welcome. Right at the door they were told off; by employees of the company. “Who are you?” “What are you doing here?”

Only a few hours ago, the two had concluded an extraordinary general meeting of AskMe’s board at the company’s registered office in Barakhamba Road in New Delhi. The meeting had not gone well. Sanjiv Gupta, the chairman and managing director of AskMe was in the room and he was not happy. He wanted answers: “What’s going to happen now?” “What have you decided on our offer to buy the company from you?” “Why are you in such a hurry to close the company down?” “There will be consequences.” Gupta’s offer was on the table. This:

But Vats and Mishra were non-committal. Things had come to a head and a management buyout (MBO) was not even under discussion. They were here to take stock of the company’s operations and pull the plug.

It’s Over

Only a month back, Astro Entertainment Networks Ltd (AENL) had appointed both of them as directors on the Board of Getit Infoservices Private Limited, otherwise known as AskMe. Their appointment had been sudden. As sudden as the resignation of the earlier directors — Mohamaed Khader Bin Merican, Hishan Zainal Mokhtar and Ashok Rajgopal — all of whom resigned in June, citing voluntary, personal reasons. The mandate for the new directors was clear — fire everyone, reach a settlement and shut shop. But now, just a few weeks into the job, they were getting a taste of how difficult the task would prove to be.

At Noida, the employees gheraoed them at the reception. They had questions: “Who are you?” “Do you have an appointment with anyone?” “What are you doing here?” Vats and Mishra explained that they were there just to take a look at the office. The crowd wasn’t satisfied. “Get out,” said one. “Don’t let them enter,” said another. After about 20 minutes of pestering and explaining, Vats and Mishra left. Humiliated.

This was the final throw of the dice in the long-winded and fairly public tussle over the fate of AskMe. A few days later, on 17 August, the senior management team put in their papers. Their resignation brought closure to months of uncertainty and negotiation to somehow wrest control of the company from Astro.

The full story of AskMe’s downfall has not been told. This is that story.

The story of how AskMe imploded and in a way unravelled in just a few months — from being hailed as the next unicorn by the business press to obsolescence. To piece this story together, The Ken reached out to all parties concerned. Astro, the major shareholder of Getit and the management team at AskMe. Former and current employees of the company had a lot to share in private but no one wanted to go on record.

In an emailed response to a detailed set of questions, an Astro Overseas Limited (AOL) spokesperson said:

“AENL made sustained and long term investments in Getit totalling nearly $300 million to date to keep the business afloat during often volatile market conditions. Unfortunately, Getit has not been able to meet its agreed key performance indicators (KPIs) to ensure it’s sustainable, despite these huge investments by AENL. AOL would like to reiterate that the e-commerce market in India is witnessing difficult times. Despite best efforts of Board and management, AskMe, has been unable to meet its plans due to lack of scale, among other factors. An independent review by advisors has concluded that there is little prospect for turnaround and the business is insolvent. AENL intends to appoint a forensic auditor to review Getit’s books and will take appropriate steps based on the results of that audit.

“Please also note that Astro Overseas Limited (AOL) is a significant long-term investor in India and has invested in a number of different businesses over the past 10 years. Generally, these businesses are performing to expectation. The company focuses on investments within the Media & Entertainment space across five categories: Platform and Distribution, Content, IP & Production, E-commerce and Digital Media, with businesses located across the globe with significant presence in Asia, Middle East, the United Kingdom and US. AOL has no current plans to exit India.”

The Ken sent a detailed questionnaire to Sanjiv Gupta and an AskMe spokesperson on September 11, and followed it up with multiple phone calls and messages. But we did not get any response as of the time this story was published.

Every good story deserves a takeaway — a lesson learnt from the successes and failures of the players. While AskMe as an entity didn’t end with a meaningful resolution, AskMe as a story gives us several meaningful takeaways.

The first and biggest lesson is how quickly a seemingly-large startup, one that is almost too big to fail, can unravel completely. While obvious gaps in business models and value propositions can be covered up by the gild plating of funding, this coat of armour is skin-deep — more akin to a patina that a short shower can wash away to leave you woefully exposed.

AskMe came up short. Both, on a clear strategy to build an e-commerce business and the amount of money it would need to fend off competition from the likes of Flipkart and Snapdeal, to start with. And later, when, Amazon, Shopclues and other newer players joined the party.

When this happens, it is tempting to lay the blame on the investors, who tempt honest entrepreneurs to make Faustian bargains. However, as the sad demise of AskMe will prove, it is equally possible that acts of brinkmanship by the executives in charge can lead companies to ruin just as surely. It is easy to forget that the investor-executive relationship is a jugalbandi — a musical duel where each singer matches step with the other and builds up to a rapturous crescendo. This relationship needs to be built and nurtured on trust and mutual respect, irrespective of the percentage ownership of each individual party.

So, what really happened?

It will be fair to say that you should treat the existing, popular narrative with skepticism – the narrative that AskMe imploded one fine day when Astro suddenly decided to turn off the tap. Especially, when it said no to the management buyout offer. No, that’s not how it played out. AskMe had it coming for a while and its slide started way early. It started when nobody quite knew what to do with the company and almost everyone was shooting in the dark, hoping that something will stick. Of course, we will get to that in a while. But first, let a few numbers put the murky turn of events into context.

$300 million – That’s the total amount Astro invested in Getit, over a period of six years. Who is Astro? It is the investment arm of Malaysian Billionaire T Ananda Krishnan’s Astro Holdings. According to Forbes magazine, Krishnan is the second richest man in Malaysia, with a networth of $7.7 billion.

98.5% – As of date, that’s AENL’s stake in Getit.

0 – That’s the return AENL has seen from its investment.

Rs. 1 – $5 million – Depending on who you are speaking to, that’s the amount Sanjiv Gupta offered to buy the company from Astro. A subject he first broached in the last week of May. That and minus Rs. 90 crore of liabilities, dues to vendors and salary of employees. (You may consider this as management buyout)

0.06% – As of date, that’s Sanjiv Gupta’s stake in Getit.

As expected, Astro balked at the management buyout offer. A showdown ensued. And the end result?

4,000 – the total number of people out of job.

3,600 – the total number of sellers affected. About 60 sellers have outstanding dues of more than Rs 10 lakh each

Now, back to the story.

“You have one year to make this work”

Getit Infoservices wasn’t born to disrupt how people bought goods and services online. Founded 30 years ago, Getit meant to list sellers of goods and services in the form of a directory. First on paper, like Yellow Pages and then when print became less lucrative, it went online in 2010. During those days, the sheer volume of sellers became Getit’s calling card to trumpet digital transformation. The idea? We have the biggest directory of small and medium entrepreneurs (SMEs) in the country; let’s sell them digital services and bring them online. Unleash their full potential.

Astro was sold on the dream — building a digital, SME led powerhouse in India. Astro was so sold that Getit even launched a listings portal in Malaysia. It was called FINDIT. (The website is now dead.) In 2010, Astro invested close to Rs 100 crore in Getit. The first tranche of its many rounds of investment. In the next three years, Getit tried every possible idea in the playbook. Let’s make people’s websites. Let’s make people’s Facebook pages. Let’s sell them Google ads. Let’s sell them Facebook ads. Doesn’t work? Okay, let’s sell them Microsoft CRM suite. Let’s sell them an inventory solution. Well, nothing stuck. Either it didn’t stick or there were no margins.

“When you move from print to digital, the yield per user drops drastically,” said a former Getit official, who requested not to be named because he didn’t want to be publicly identified as speaking about his former employer. “There is very little money there unless you have a niche like JustDial. Because you have a largely free and premium listings business but the costs are high — 40 branch offices and 4,000 strong sales force.”

Sometime in 2013, when e-commerce was truly taking off in India, Getit too decided to go big. In March, it acquired two businesses from the Network 18 group — Infomedia Yellow Pages and AskMe. Soon after, Getit leveraged the AskMe brand and started a marketplace called Askmebazaar. What was the idea? We are an SME listings company; can we bring every shopkeeper online? From making his catalogue, fixing his pricing, managing his inventory in his godown, delivering it, helping him understand that the money will come only after the customer pays.

“While everyone was moving from warehouse to marketplace, we started at the bad and deep end of the pool,” said a second former official of AskMe, requesting not to be identified. “Soon, we realised that it is not possible to train the sellers. They have no accountability. They will say no, they have no inventory, they can’t pack, they don’t have the wherewithal to wait because they have very short credit cycles and if something breaks or damages, they expect you to bear the cost.”

Simply put, it was a squeeze. A bad one. But the top management took solace in the one true but much-abused metric of e-commerce. At least, there’s gross merchandise value (GMV) to show for.

Even as all this was happening, AskMe started another business division called Next Day Delivery (NDD). In mid-2013, it was an iteration of the ‘let’s do something with our SME sellers’ idea. The rationale: A merchant wants to go online because his customers are online. But, he only wants to cater to HIS customers, in let’s say, 2km radius. So, all AskMe had to do was list the merchants and do local pickup and local delivery. Simple. The merchant was happy because he got his money back on the third day. Plus, AskMe was just a layer to facilitate the transaction and make a little something in the process. What could go wrong?

Well, the customer didn’t give a damn.

All that any customer cares about is: Where can I get this at the lowest price possible and can I get this soonest? None of the SME sellers were willing to offer any discount. AskMe didn’t have any money for discounts either. So, back to square one — squeeze. But AskMe persisted with the idea. And not just persisted, it went big. The company grew its NDD business to 53 cities in India. In the first year, it passed on orders to merchants and asked them to deliver. Merchants struggled. In 2014, AskMe started working closely with merchants in terms of listing and delivery but then gave up on the idea altogether.

It tinkered with the model again. Forget merchants, let’s just work with distributors of branded goods above Rs. 1,000 — televisions, refrigerators, washing machines, generators, coolers, fans, gold coins — anything that doesn’t need an explanation. “We set up that infrastructure in 53 cities,” said the second official quoted earlier. “Then we said, we are confusing ourselves with too many cities, let’s just do nine cities. In value, GMV terms we were at par with the national marketplace. But number of transactions was super low. National marketplace —3 lakh transactions a month. NDD, 3,000 transactions a month. There average sales price (ASP) was Rs 800, here the ASP was Rs 13,000. Unfortunately, we had no money for this business because we were chasing GMV.”

It was also the year when AskMe started getting some visibility. Thanks to television commercials featuring Bollywood stars such as Kangana Ranaut, Ranbir Kapoor and Farhan Akhtar. It was Sanjiv Gupta’s brainchild to rope them in. A strategy he had learnt and honed from his two decades of working at Coke and Hindustan Unilever. “The idea is that you need credibility with small sellers and buyers,” said a third former AskMe official, who requested not to be named. “So it was Sanjiv’s idea to get the celebrities. And it worked. People started talking about us.”

Despite all the noise, business wasn’t doing that well. As of 31 March 2014, Getit recorded revenue from operations of Rs. 42 crore, compared to Rs. 25 crore as on 31 March 2013. The company’s loss though jumped significantly, from Rs. 99 crore in March 2013 to Rs. 180 crore as of March 2014. Where was the company burning cash? Adding new people, and promotional expenses. Worse, despite the high burn rate, AskMe wasn’t anywhere close to becoming a dominant e-commerce player in the Indian market.
Sometime in January 2015, Astro reached out to Gupta with a clear message: “This is our last year. You have one more year to make this work.”

Astro’s rationale was simple. We’ve waited four years but now we are running out of patience. We will fund this for one more year but if it still doesn’t work, then shut shop. Of course, if you can, bring in another investor. That’s when Sanjiv Gupta started actively seeking out investors. Little did he know how hard it would be.

“Do I look like a fool?”

Most of the meetings with potential investors were unfruitful. Why? Well, think about it like this — A conversation between someone representing Astro and a potential investor:

Astro: Yeah, so we are looking for an investor.

Potential investor: Great. Are you willing to dilute 100%?

No.
So, how much will you give?
20-30%
Really, then who will have the balance?
Obviously, me.
Okay. So, let’s understand this. You will have 70% and you are the principal investor. I get 30% and I am in minority. You have boatloads of money, $1 billion in investments and what not but you don’t want to fund AskMe anymore. So, I have just two questions for you: A) Do I look like a fool? B). What the hell do you need me for?
BRB…

Now, play out this conversation again and again. That’s exactly what happened with Sanjiv, every time he approached a potential investor. “Astro wasn’t pitching the business to anyone. It was Sanjiv slogging his butt off,” said the second former AskMe official quoted above. “A large private player which owns the company, nobody wants to become a minority investor there. Everybody was like, if Astro is not putting in any more money means there is trouble.”

Even as all this was happening, AskMe kept growing. Acquiring small companies and adding a whole host of new businesses. The same mindset — let’s do everything, and see if something sticks. That’s how it ventured into grocery, selling furniture online and payments. “I’ve never quite understood what they were trying to do,” says a fourth former AskMe official, who requested not to be named. “When I came in, I found that 90% of AskMe’s traffic was referral traffic. It is not a good sign. Hardly anyone was coming directly to AskMe to shop.” Of course, nothing clicked while AskMe’s burn rate continued to be high.

As of 31 March 2015, Getit’s revenue from operations was just Rs. 43 crore, up by a paltry Rs. 1 crore, over 2014. The company’s loss, however, had more than doubled to Rs. 300 crore as of 31 March 2015, compared to Rs. 180 crore in March 2014. During this period, AskMe spent about Rs. 68 crore in advertising and promotional expenses, up more than four times.

Then again, in the months of October and November, the festive season in India, the company was burning close to $10 million every month. All of this, when the top management knew that the party wasn’t going to last for long. Events reached a head, sometime in January 2016, when Astro told the top management that it had had enough. The team had failed to raise any money. It had failed to even be reasonably profitable. It didn’t look like AskMe would make money anytime soon. So, let’s pack up. It is time to go home.

Except Sanjiv persisted and convinced his Board to hang on. Just for a few months more. They agreed but with a deadline — 31 July would be the last day.

“All hell broke loose when the salary got delayed by four days”

In February, the mood inside AskMe was glum. Despite the overt display of optimism to the press. First, AskMe laid off more than 600 people in just one month. Second, the company stopped spending, on anything, other than salaries. There was no money in the bank and Astro had made it amply clear that it will only wire money for the salaries, and nothing more. As work slowed down and morale dropped, the entire organisation kept hoping for a miracle. Sometime in the last week of May, Sanjiv flew to Malaysia. To meet Augustus Ralph Marshall, the non-executive deputy chairman of Astro Malaysia Holdings. He had a simple offer. ‘How about I buy you out?’

His logic: Anyway, you’ve decided to shut shop. Take care of the pending liabilities and salaries and allow me to buy you out. At a mutually agreeable valuation. I have a whole host of investors lined up, who are willing to invest in Getit, post the buyout.

The Ken could not independently establish what transpired in the meeting. There are conflicting stories. One, Astro didn’t take kindly to Sanjiv’s offer. Two, Astro said okay, come back with a firm plan and we will consider. What’s amply clear though, is what happened the moment Sanjiv got back to India.

Usually, Astro credits money by the fourth of every month and employee salaries are paid by the seventh. In June, there was no money in the bank on the fourth. Astro had missed the tranche. Sanjiv was livid. When employees didn’t get any salary on the seventh and started questioning, the top management asked them to write to Astro officials directly. Emails. On Facebook. Twitter. Motto: complain and embarrass them. Teach them a good lesson. (The tranche finally came in on the eighth of the month and was credited to employees by the eleventh.)

In hindsight, several former AskMe officials believe it wasn’t the best strategy but then they had to resign to the fact, that that’s Sanjiv. “If somebody arm twists him, he likes to arm twist them back,” said one.

But not always to the best outcome. The fallout of the public backlash was swift. All Astro representatives on the Board quit, starting the first week of June. The management team at AskMe stepped up the tempo. It started issuing statements in the media. Like this one:

“Astro which owns 99% of Askme through various shell companies is trying to flee the country without paying employees and vendors and statutory authorities in Askme and other companies. They are already chargesheeted for fraud and arm twisting by CBI and ED in the 2G case. They have been harassing and intimidating and threatening top employees to aid in their illegal acts which they have resisted and resigned.

Employees have given an MBO offer to save the company and various new options which Astro is trying to block and place totally unreasonable demands from the management and their new backers. We request Indian authorities to ask Astro to pay their dues as per written commitments and let the MBO happen for the future of the company”

And then early in August, AskMe asked all its vendors to write directly to Astro for money.

And the email continues, with a list of email IDs and numbers of the top officials at Astro; most of them in Malaysia. Needless to say, the issue is a mess.

Soupcon of legal threat and emotional drama

Earlier this month, Sanjiv filed a case against the Board of Getit Infoservices at the Company Law Tribunal in New Delhi, seeking a stay on the appointment of the two new directors, Vats and Mishra. The Ken has a copy of the court order, where the tribunal refused the petition. To quote from it:

“…we are unable to accept the same because the petitioner herein has only 0.06% shareholding and the shareholders having 99% shareholding in the company cannot be allowed to overawe at the instance of the petitioner. Moreover, the day to day affairs of the company cannot be brought to a standstill…”

When The Ken reached out to Sanjiv’s lawyer Vipul Ganda, he said, “Sanjiv Gupta was forced to resign and we appealed it. The Company Law Tribunal refused the appeal. Now the board has two Astro nominees. Yes, it is not the best scenario. The dispensation of salary should be of prime importance. There are several blue-collared workers who need their pay to run their households.” The court has fixed a date of 17 October for the next hearing on the case.

During its reporting, The Ken was made privy to one potential reason why AskMe, despite its woeful past and grim future, might still hold a lot of value to potential acquirers. A senior source within the company said AskMe had service tax credits amounting to over Rs. 1,500 crore. If true, this would mean any acquirer could use those to offset its own future service tax payments.

However, The Ken was unable to independently verify this claim based on our scrutiny of AskMe’s publicly available financial filings, which last represented the year ending March 2015.

As things stand today, the mood inside AskMe is glum but foolishly hopeful. While almost all in the top management have resigned and almost no one is reachable, those lower down the pecking order are holding on to their jobs. Some hope that the company can be started again, others believe that if they give up and leave they won’t get paid.

One employee said that she had a few medical expenses coming up for which she needed to be officially on AskMe’s rolls. “I am not sure if the premiums have been paid. If they haven’t, these expenses will be prohibitive. I can’t quit until I am done with my procedure,” she said. She refused to come on record as she didn’t want to invite trouble.

“I still believe the company could run again. Even the tribunal ordered that the company function as normal but the emails sent by management asked us to ‘work from home’. Even if I refused to follow the email, the offices are locked,” said another, one of the few remaining management-level executives. He, too, refused to speak on record.

And then there are some employees who are leaning towards pressuring Astro by emailing suicide threats. Yes. This mess is far from over.

• AskMe
• Astro
• E-commerce
• Longread
• Sanjiv Gupta