Jaisurya Das: Careers at stake as startup financials fail

06 Mar,2017

By Jaisurya Das

 

Yet another robust member of the famed startup ecosystem in this country just announced an 87 per cent cut in its workforce. Almost overnight the HR department handed out pink slips with 90 days’ severance pay.

 

In 12 calendar months starting January 2016, over 11,000 employees of the startup ecosystem have been rendered jobless. Check the headlines: Snapdeal decides to get lean, Flipkart’s valuation takes yet another downsizing…

 

Are we seeing yet another dotcom bubble on its way to extinction or is this much-touted ecosystem just losing focus?

 

It’s interesting how a lot of young entrepreneur startups behave the moment they get their first round of funding. It’s almost magical, the old Accents are replaced with spanking Audis and Mercedez cars, cursory exploratory trips move from Indian cities to NYC and other exotic locations.

 

No, I don’t envy them one bit despite their in-the-face display of opulence.My heart goes out to the investors and VCs who saw merit in a fancily packaged presentation and let their flood gates swing open.

 

Great ideas and slick packaging isn’t a sign of maturity any longer. I wish a lot of these young companies had the ‘sphericals’ to weather the market. Unfortunately, they did not as a majority of them are built on the promise of community building beyond what is humanly possible.

 

For long, valuation was the game and then came the dotcom crash and the ground realities brought people back to brick and mortar. And now, it’s come full circle again with exponential expansion and million in sales numbers bandied around as success.Enter the downsizing era now and every conceivable “successful startup” is busy crunching numbers to figure its relative staying power. What is the perfect business model then? And why do VCs believe in them? Maybe its time to examine the very fabric of business in today’s environment.

 

As a keen marketwatcher, I can say with vehemence that a lot of the companies that are currently figuring the way ahead have majorly flawed business plans and projections. Unreasonable may be too kind a word for the sheer creativity used in their Excel-powered forecasts.

 

All fine for the men at the helm for they have probably encased out but what happens to the thousands who are unleashed into the market in search of new employment? Is it time for regulation to avoid such bloodbaths? I seriously think a lot of this needs a closer look before a few more companies shut shop or downsize to dwarfed numbers.

 

Several crores of rupees are borrowed and spent on higher education and all this seems comes crashing down when the fancy employment is pulled under their legs overnight.

1. At the risk of sounding myopic, today I seek answers to these questions of every startup that’s touted “a success story’.
2. How well do you know the audience of today? Do you know how irrationally their neural networks work?
3. With such price-points, where do you ever see breakeven from a sustainable business point of view?
4. You’re keeping the consumer happy, your brand is all over town but when will you deliver to your VC?
5. How important is your personal gain in this enterprise? Shouldn’t this be linked only to profits and not revenue much like taxation ? Or are you a significant cost that the VCs need to fund despite horrid bottom lines?
6. What is a successful business finally? Shareholder value? Consumer benefit? Employee Satisfaction? Or Principal Shareholder Wealth?

 

To be honest, I haven’t got answers for these questions from all the discussions I have had with eminently successful startups that I have met.

 

Yes, most are armed with fancy cars, internationally designed workspaces and an amazing work culture that comes pre-loaded with a generous wad of pink slips to meet that eventuality, but do they possess the craft and grit to sustain?

 

Right at this moment while I write this, I hear of another telecom major Le-Eco firing 85% of its staff in India and two of its senior most resources have exited with immediate effect.

 

Maybe it’s time they wake up and smell the coffee.

 

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