Rocket Internet’s Zalora loses co-founder and MD amid uncertain future

Zalora, the fashion-focused e-commerce site backed by Rocket Internet, has lost two top executives. Singapore-based managing directors Harry Markl, who is also listed as a co-founder, and Avni Pundir have departed the company, TechCrunch understands.

The company, like others in the Rocket Internet portfolio, has a fairly unorthodox executive structure with five joint managing directors overseeing the business over the past few years. Markl and Pundir’s exits indicate unrest and leave the remaining management stretched and under-experienced in some areas, sources inside Zalora told us.

Markl’s final day was last Friday, while Pundir — a long-time fashion retail exec who previously worked in the U.S., France and India — quietly left “over a month ago” to pursue her own business. (Markl and Pundir’s LinkedIn profiles still list both in their Zalora roles.)

Markl is said to be weighing up starting his own company, but multiple sources inside Zalora told TechCrunch that his exit was triggered by ongoing tension with Global Fashion Group (GFG), the umbrella company Rocket Internet set up to manage its fashion e-commerce sites across the world, including Zalora.

We contacted Markl but he declined to comment.

GFG, which raised $35 million last year at a $3 billion valuation, is run by former Amazon France head Romain Voog and it is comprised of five companies: Dafiti (Latin America), Jabong (India), Lamoda (Russia and CIS), Namshi (Middle East) and Zalora. All in all, it claims to reach 23 countries worldwide.

A source inside Zalora told us that while GFG provides benefits, such as financing — Zalora is not about to run out of money, as had been speculated, with GFG as its parent — there is disagreement on its approach to markets. Zalora executives, we’re told, view Southeast Asia as a long game that can be won, but GFG’s management team is more inclined to focus on markets that can return their investment faster — such as the Middle East, where Namshi is showing promise.

That provides some context as to why Zalora is selling off its business units in Thailand and Vietnam for a relatively paltry $10 million a piece, as we reported last week. GFG considered them too nascent and, with TechCrunch understanding that there are plenty of suitors offering to take both businesses off their hands, the parent has decided to sell.

That runs against some of the management’s belief that Zalora is on the cusp of breaking through.

“We are 1/3rd of Zalando in terms of traffic, we are 1/15th in terms of revenues,” Markl wrote to Zalora staff in a leaving memo obtained by TechCrunch. “Hence, we have a lot of potential to grow and as a result we/you should aspire Zalora to be a 1bn EUR company in the next 2-3 years.”

Rocket Internet’s latest financial results show Zalora’s revenue rose 78 percent to €208 million ($234 million) in 2015, but its net loss increased 36 percent to €93.5 million ($105 million.) Its current valuation is unclear since it is part of GFG.

Zalora is currently run by Group CEO Michele Ferrario and (another) MD Tito Costa. (Magnus Grimeland, the fifth long-standing Zalora exec alongside those two, Markl and Punir, moved over to GFG — Rocket Internet is quite the management circus at times.) But Markl’s exit, first announced internally in late 2015, has seen a string of high-ranking employees follow him out of the door, including former CFO Cooper McGuire, who is now at Ensogo and Zalora Singapore head Dione Song.

Zalora isn unlikely to land a mega investment deal like Lazada, its $1.5 billion-valued Rocket Internet sibling, which ran landed $500 million from Alibaba last week. But, we hear that the outlook is comparatively rosy thanks to high margins and the security of GFG. However, with changes at the top and some country units for sale, there’s a sense of uncertainty at the company. That could apply to investors, who put over $200 million into Zalora’s coffers, too. Lazada’s backers got modest returns for their money, and it’s even less clear what those who bought into Zalora can expect.