Here’s how a famous CEO’s rule of fear brought down a startup named Zilingo

It was in March when the famous Singaporean information technology company and a famous CEO fired its 30-year-old CEO, Ankiti Bose, over allegations of alleged financial irregularities. Within weeks creditors started repaying the loans, more than 100 workers had quit and Ms Bose found herself laid off, despite insisting she did nothing against rules and regulations. The future of the sole proprietorship is now uncertain.

Zilingo’s collapse has rocked the tech sector in Southeast Asia and elsewhere. The start-up has received over US$300 million (S$414 million) in funding from some of the most illustrious investors, including Temasek, a Singaporean investment firm, and Sequoia Capital India, the division of the Silicon Valley company that funded Apple and Google. Celebrity Ms. Bose has traveled the world, speaking at tech conferences from California to Hong Kong.

According to interviews with more than 60 people, including current and former employees, investors, business owners and friends of major figures, Zilingo suffered under Ms. Bose for many years. His subordinates say his management style has alienated workers and hurt the company.

The startup flipped between different sales strategies, including a million-dollar promotional trip to Morocco, consumer loans and a flimsy foray into the United States. According to two former workers, she once developed a fixation on “crazy growth” in a plan to portray Masayoshi Son, the powerful Japanese bourgeois.

The strained relationship between Ms Bose and Mr Shailendra Singh, director of Sequoia India, a long-time financial backer, is behind the company’s demise. According to people with knowledge of their relationship, who spoke on condition of anonymity because the meetings were private, Mr Singh lost faith in the managerial abilities of the young founder he had backed, and Ms Bose thought Mr Singh had betrayed her by forcing her out of her particular company.

According to the sources, the dispute got so heated that Sequoia lawyers ordered Ms Bose to stop bringing charges that would damage the company’s reputation in a court notice issued in May.

Zilingo’s issues bring the culture of internal corporate governance that seems loose and is typical in the startup industry due to a famous CEO. The company neglected to submit annual financial statements for 2 years, which can be a request for any company of its size in Singapore. Zilingo’s 2020 results have not yet received approval from auditor KPMG. While it’s common for start-ups to miss these deadlines, which can result in a fine of up to $600, it’s usually a red flag that the board may need to be taking more drastic measures.

However, in late 2020, investors increased their investment in Zilingo, including Temasek and the investment arm of the Economic Development Board (EDBI). The majority of the company’s shareholders only formally took action against Ms Bose after whistleblower charges were laid earlier this year.

Technical warning

A forensic investigation agency was chosen to investigate with the support of majority shareholders. The company subsequently terminated Ms. Bose for cause based on the results of this investigation following an extensive process that lasted more than two months and included multiple opportunities for Ms. Bose to present documents and information.

The story also served as a warning to the region’s tech industry, which is analyzing the effects of Covid-19, the crisis in Ukraine and global price shocks on the global economy.

According to seasoned investor Jim Rogers, director of Rogers Holdings in Singapore, “Whatever happened at Zilingo which is a startup, there will be many more tragedies in the next two years as the great international recession prevents hot to get money.” I’ve been to this rodeo before.

Numerous internal Zilingo startup documents, emails, messages and other media were reviewed by Bloomberg News, and Ms. Bose participated in two in-depth interviews, one before and one after her firing from the company on May 20. According to the records and those with inside knowledge, the board’s decision to fire her was not hasty, but rather the result of years of tension.

In a statement to Bloomberg News, startup Zilingo and its board said “Board members were concerned about the company’s performance over the past few years and wanted to discuss solutions to review performance. of the business, including cash flows”.

According to an early employee who knew of the occasion and knew of the occasion, it was a complete failure. With every US dollar invested, #ZilingoEscape aimed to add one million new users. The source said the final total was around 10,000. Ms Bose declined to speak specifically about the campaign, but said it was funded by the company’s $10 million annual marketing budget.

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Ms Bose claimed the dismissal proceedings were an ‘unfair witch hunt’ and refuted claims that she was given ample opportunity to react to the accusations. She claimed that the investigation report, which had remained confidential, was not available to her. She responded to make changes saying the team reduced cash burn by 70% between the end of 2019 and the end of 2021.

She said in July that “it wasn’t easy, and we didn’t pull it all off.” Despite the chaos and suffering, we managed to complete the task and did our best.

Zilingo’s founding story is rooted in Southeast Asian startup mythology. While browsing Bangkok’s Chatuchak Market, where 15,000 vendors sell produce from all over Thailand, Ms Bose came up with the idea. She and her co-founder Dhruv Kapoor set out to create a platform for the startup that would allow these small business owners to market to customers across Southeast Asia.

Mr. Singh immediately played a key role. He and Mrs. Bose had worked together at Sequoia, and he was helping a colleague. Mr. Singh began his career working alongside veteran investors Michael Moritz and Doug Leone in Sequoia’s Silicon Valley subsidiary. In 16 years, Mr. Singh grew Sequoia Capital India into the region’s largest venture capital (VC) firm, with approximately $9 billion in assets under management and 36 unicorns in Southeast Asia.

When Ms Bose was 23 and Zilingo was on her fundraising round in 2015, he contributed to every subsequent fundraising round. In an email obtained by Bloomberg News from 2016, he told another venture capitalist, “We think the world of her.”

But like many newcomers, Ms. Bose and Mr. Kapoor ran into difficulties almost straight away. Due to Southeast Asia’s fragmented economy and low average income, which includes a variety of languages ​​and currencies, their consumer-focused fashion website failed. At the end of 2017, they decided to transform Zilingo into a business-to-business marketplace where small producers and distributors could offer their products directly to small local businesses.

Investors contributed $54 million to fund Zilingo in 2018. Nine social media influencers were flown to Morocco for a three-day, $1 million fiesta that included camel rides, a hot-air balloon trip, yoga sessions and gastronomy.

Greedy money

Turns out the company was wasting money. In less than two years, the $226 million that Zilingo had raised from investors had been spent.

The pandemic hit the business hard in 2020 and Ms Bose saw potential in providing personal protective equipment. It signed a deal in April to supply India with 10 million KN-95 masks, worth $22.5 million. Six months later, Zilingo found itself in a legal dispute with the Indian government over the alleged late delivery of 3.2 million masks.

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For Zilingo, the leadership drive may have come too late. A director on the board and an adviser to another shareholder asked Ms Bose about her monthly income of $50,000 about a week after she was suspended. According to those familiar with the situation, her employment contract from five years ago specified that she would earn $8,500 a year. The adviser had only learned that she had been earning significantly more since 2019. Although she claimed the figures were incorrect, Ms Bose failed to mention her salary.

Currently, the company is in disarray and some employees are worried about their future. In June, the board considered liquidating the company. Due to Mr Kapoor’s poor work performance and lack of leadership, Ms Bose called for the suspension of her college friend and chief operating officer Aadi Vaidya after she was suspended in March. Mr. Kapoor and Mr. Vaidya, who are both business representatives, choose not to respond. After working at Zilingo for seven years, Mr Vaidya announced his resignation last week, saying it was “time to move on, clear my thoughts and reprioritise”.

Zilingo has fallen sharply since Ms Bose’s fundraising efforts valued the company at $1.2 billion just five months ago.

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