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Old 5th May 2017, 10:51   #46
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Default Re: Startup shenanigans (including the TinyOwl episode)

Hi All,

Back in 2014, I also had the startup itch and wanted to work such a setting and I got that wish granted. For a period of over 2 years from early 2014 to early 2016, I worked in a small “startup” company based out of Chennai which basically ran on VC funds. Towards the end of 2015, early 2016 they had major money issues since they had run out of VC funds and could not sell the “product” to sustain the business. The salary that they gave all of us became erratic and by the time I left the company in May 2016, they had to pay me over 6 Lakhs in back logs. When I left, I got it written down in a letter as well with a verbal assurance that things would become better soon but it has not.

Quite a few of us (people who left the company around that time) are still waiting for arrears to be paid out. We are in constant touch with the CEO who tells us that he will pay out soon etc when sales pick up or when new VC funds come into the company. The company is still up and running with reduced employee strength and according to the CEO, barely sustaining through sales. and he is constantly stalling for time.

It has almost been a year since I left and I don’t know what options I have to get my money. Can someone please help me out here? If I have to take the legal route, what can I do? Will it be effective? I will then have to burn my bridge with the CEO if I take that route (relations are cordial now).

Thanks,
Nivatakavacha
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Old 5th May 2017, 11:39   #47
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Default Re: Startup shenanigans (including the TinyOwl episode)

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Originally Posted by nivatakavacha View Post
It has almost been a year since I left and I donít know what options I have to get my money. Can someone please help me out here? If I have to take the legal route, what can I do? Will it be effective? I will then have to burn my bridge with the CEO if I take that route (relations are cordial now).
I'm not a legal specialist but I can give a rough idea of what to expect in practical terms. The letter that you had written down, I suppose it is simply on the letterhead with a stamp and seal? If that is the case then technically it has not much legal bearing, though it is good evidence of acknowledgment of owing money.

Also whatever you get, if at all you get anything depends on the books of the company, they can just as easily show that they have no money to give and then the matter becomes a civil case, the bridge will be burned permanently and from there the matter becomes sub judice. See what happened to Kingfisher Airlines, no one got their money/salaries and they all were stranded for good.

You can take the opinion of a lawyer here or in person and evaluate your choices, a lot depends on how the accounts of the company are and we all know how the numbers can be manipulated, or perhaps the company is in actual trouble - nonetheless it would be the duty of a responsible leader to either admit to monetary troubles and cut down the force immediately (1-2 months max) or to provide the dues before cutting down if the period is longer.

The only other way is to have a conference, the ex-employees with salary backlogs and the firm, and come to a mutual understanding and settlement. Will they pay every paisa back? Possible, but not probable.
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Old 5th May 2017, 15:22   #48
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Default Re: Startup shenanigans (including the TinyOwl episode)

VC is also a business in itself. We can say that VC causes issues but in the end VC are in it to earn money and will sweat the asset.

Point is when a startup takes VC funding then not to look at it as a gift and go buy expensive toys, instead consider it a loan that has to be repaid.
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Old 5th May 2017, 16:15   #49
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Default Re: Startup shenanigans (including the TinyOwl episode)

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Originally Posted by nivatakavacha View Post
The salary that they gave all of us became erratic and by the time I left the company in May 2016, they had to pay me over 6 Lakhs in back logs. When I left, I got it written down in a letter as well with a verbal assurance that things would become better soon but it has not.
Sorry to hear about this.

Go legal. You have a far greater chance of getting your money back while the company is still operational (vs if it shuts down).

Use this letter, hire a good lawyer, give him all the relevant paperwork and file a case. If the person hasn't paid you in a year, he has no intention to.

I wish that this new era of businessmen learns a thing or two about making their companies sustainable...WITHOUT VC funds. I've built two businesses the old fashioned way - my own money & hard work. Depending on VCs to pay your bills isn't something I'll ever be able to understand. I hate debt, and I hate VC funds even more.

Last edited by GTO : 5th May 2017 at 16:18.
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Old 5th May 2017, 17:16   #50
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Default Re: Startup shenanigans (including the TinyOwl episode)

Unlike a few others, I left the company only when I got another job, so financially, it was not that bad for me unlike a few others.

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Originally Posted by dark.knight View Post

The only other way is to have a conference, the ex-employees with salary backlogs and the firm, and come to a mutual understanding and settlement. Will they pay every paisa back? Possible, but not probable.
Thanks dark knight for your comment. This is definitely one step we all need to organize and take before taking the legal plunge. Thanks for your suggestions.

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Sorry to hear about this.

Go legal. You have a far greater chance of getting your money back while the company is still operational (vs if it shuts down).

Use this letter, hire a good lawyer, give him all the relevant paperwork and file a case. If the person hasn't paid you in a year, he has no intention to.
Thanks GTO for your comment. My family wants me to take the legal route but somehow I have been pushing it away for sometime now. But as you rightly posted out, I have a greater chance to get it if the company is still operational. i think it will come down to it now.
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Old 5th May 2017, 17:47   #51
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Default Re: Startup shenanigans (including the TinyOwl episode)

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Originally Posted by rdst_1 View Post
I

I am in the process of setting up my farm. My aim is to come up with a blueprint of a model farm which uses latest technologies and provides reliable source of income for a farmer. I am more inclined towards indoor farming and since that means spending money on infrastructure I have been finding new ways from building fences to even building my farm buildings such that I can save money in every way possible. Also all my customer acquisition will be through direct contact and I hope I won't have to ever pay for online ads or such stuff. I am also hoping to provide jobs to my local people at respectable wages. For the next 5 or so years, I plan to learn and then set up processes that can be replicated and only after that would I even consider looking for VC money so as to accelerate my growth exponentially.
I personally believe that only when one is profitable and running a business with standard set of practices, should the VCs invest the money so that that business can scale up rapidly than stick with the slow organic growth it can accomplish on their own.
Coming from a Agriculture/agribusiness education background, I would say - Farming/Agriculture is THE BIGGEST opportunity to earn billions IF initial investment requirements (which are HUGE, esp land and infra) are met. Its sustainable, tax tree and fairly expandable too. I have been to many farms, professionally run and minting huge amounts of tax free income.

One example - in one farm that we visited during our college days (educational tour, some 12 years ago), the owner told us this (it was based in Uttarakhand) - We have been approached by firms in Netherlands for supply of orchids (flowers which grow in temperate climate), but we don't have that much size of farms. So we apporached numerous "subsistance farmers" in hilly areas who have large lands but only grow wheat, rice, few veg and some minor millets for home consumption. They all refused, for one reason or the other.

He also told us the economies of orchid business. He said the total cost of setting up enclosures, importing seeds, irrigation, land rent, labor charges, cultivation, picking, and exporting to netherlands, comes out to be approx Rs 6000/square ft. The sale price they (from netherlands) were offering was Rs 10000/square ft!! A tax free income of 4000/Sq Ft!!

And that farm was totally self-sustainable. Only outside resource used in running that farm was labor.
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Old 5th May 2017, 18:55   #52
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Default Re: Startup shenanigans (including the TinyOwl episode)

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Originally Posted by nivatakavacha View Post
Thanks GTO for your comment. My family wants me to take the legal route but somehow I have been pushing it away for sometime now. But as you rightly posted out, I have a greater chance to get it if the company is still operational. i think it will come down to it now.
Just a thought, why not ask for some equity. it will be equally worthless right now as the paper you have, but it would have more utility
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Old 6th May 2017, 02:08   #53
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Default Re: Startup shenanigans (including the TinyOwl episode)

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Originally Posted by dark.knight View Post
I'm not a legal specialist but I can give a rough idea of what to expect in practical terms. The letter that you had written down, I suppose it is simply on the letterhead with a stamp and seal? If that is the case then technically it has not much legal bearing, though it is good evidence of acknowledgment of owing money.
Quote:
Originally Posted by GTO View Post

Go legal. You have a far greater chance of getting your money back while the company is still operational (vs if it shuts down).
Quote:
Originally Posted by nivatakavacha View Post
It has almost been a year since I left and I donít know what options I have to get my money. Can someone please help me out here? If I have to take the legal route, what can I do? Will it be effective? I will then have to burn my bridge with the CEO if I take that route (relations are cordial now).
Go legal. Bear in mind it will cost you. They wont shut down communication simply because you have gone legal if at all channels will open further as you have shown your fangs. If at any stage they gave you a cheque which bounced then use that to file a criminal charge. That will get their attention. Bear in mind that the best you will get is a part settlement. If you don't have a bounced cheque then the letter plus your proof of employment is a good starting point. Hire a sharp lawyer. Bear in mind you don't spend over Rs 6L When a company is desperately short of cash the squeaky wheel gets the oil.
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Old 6th May 2017, 12:04   #54
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Default Re: Startup shenanigans (including the TinyOwl episode)

One point which many are missing is why should a person join an startup? These days it seems to be just for the money and not the passion for building the product. You join a startup because you either "believe" in the product and put everything into it or you "gamble" purely for the pay.

The reason startups offer high remuneration ( salary + equity in various ratios ) is because of the risk involved. People joining it also should take that into consideration and take an informed decision.

One cannot have the salary of the startup and security of the large established companies. Its like demanding 25% tax free returns from a bank fixed deposit just because some small cap MF or direct equity investments did so for a certain year.

To Nivatakavacha, you need to go back and think why did you join the startup in the first place. Then you would also get your answer on the next steps.

I totally agree with GTO that VC funding has screwed up the full startup scenario. People seem to be starting a company to sell it 1-2 years down the line rather than build a sustainable business.
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Old 6th May 2017, 13:38   #55
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Default Re: Startup shenanigans (including the TinyOwl episode)

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@V.Narayan:

.....but it's very obvious that there aren't nearly enough people like you in charge of either businesses directly, or people funding them today.

Your last comment about people falling for short-term highs sacrificing long-term viability - not just for themselves but sometimes the entire segment they operate in - is just sheer common sense, but then you know what they say about common sense.
Dear Chetan Rao, Your point on not enough funding being available in India for a brick & mortar business rings true. PE funds don't understand it as valuations do not grow 3X in 5 years - that is the floor level norm three PE's wanted from us or we buy back their share! Real life doesn't work that way. On the other hand I have a large industrial group who invested money 10 years ago and have never asked when is the return coming.

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Originally Posted by Samurai View Post

While some of us love to build something and keep it running, financiers (VCs, PE fund) generally have a very different agenda. They just want to grow the money for their investors. They won't stay and fight to make something work. Their capital will fly where they see maximum ROI. This is the reason we always keep away from finance companies.
Very very true. The investors into the PE funds set the unreal expectations.

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Originally Posted by Saanil View Post
This first line of yours caught my attention. I too believe in your theory - the people behind VC investing may be Harvard/Stanford Graduates but in my opinion, experience is something which can never be replicated. Businesses are not so simple that they can be analyzed in a spreadsheet. Somehow I feel running the numbers in an excel sheet gives a misplaced sense of confidence to the people who want to invest large sums of money. I understand that going through the numbers is an essential step but there are other non-quantifiable things about a business which only experienced people can understand.
Interestingly from the first VC/PE boom of 1996 to 2000, in India, only a handful made it to adulthood. Some names that cross my mind are - MakeMyTrip, Naukri.com, Bharat Matrimony ... maybe a few more out of the tens of thousands that got launched in those years.
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It's a shame that I find the word startup mostly associated with an IT based firm. Either it is a delivery service, an aggregation service or a 'post your ad service'.
Secondly, I hate that these so called startups only worry about capturing the market share. I feel the reason behind it is, since they are usually just a medium between producer and buyer, all they ever worry about is revenue. They don't have to worry about production costs etc. and so they splurge by moving into fancy offices and providing huge salaries. I really hate it, that these businesses never worry about profitability from the get go. For them, the dream is only to capture a huge market share so as to get acquired by a bigger firm. This mentality might work in a few cases but for me, that isn't entrepreneurship.

I am in the process of setting up my farm. My aim is to come up with a blueprint of a model farm which uses latest technologies and provides reliable source of income for a farmer. I am more inclined towards indoor farming and since that means spending money on infrastructure I have been finding new ways from building fences to even building my farm buildings such that I can save money in every way possible. Also all my customer acquisition will be through direct contact and I hope I won't have to ever pay for online ads or such stuff. I am also hoping to provide jobs to my local people at respectable wages. For the next 5 or so years, I plan to learn and then set up processes that can be replicated and only after that would I even consider looking for VC money so as to accelerate my growth exponentially.
Best of luck with your agro venture. I am thrilled to see young Indians take up such openings. God bless and God speed to you.

The aggregator model sadly adds only limited value, has low entry barriers and usually very thin margins. You are essentially a broker. My nephew is 25, 3 years out of engineering. One day he was feeling low and on prodding by me said "I am 25, by now I should have launched at least two start ups one of which should have crashed and burned"Some of his batch mates launched start ups on passing out and one even managed the crash & burn gymnast flip - all in 3 years!!! Of course I sat him down and very kindly walked him through what is realistic in life. The way newspapers go gaga over these wunderkind stories one would think the IT aggregator start ups have driven the economy up. I'll stop here before this starts to sound like the rant of a middle aged codger

Last edited by V.Narayan : 6th May 2017 at 13:41.
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Old 6th May 2017, 13:59   #56
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Default Re: Startup shenanigans (including the TinyOwl episode)

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One cannot have the salary of the startup and security of the large established companies. Its like demanding 25% tax free returns from a bank fixed deposit just because some small cap MF or direct equity investments did so for a certain year.

To Nivatakavacha, you need to go back and think why did you join the startup in the first place. Then you would also get your answer on the next steps.
I totally agree with this sentiment.

About 25 years ago, I worked for a small software company which rarely paid salary. They didn't have the money. Whenever we were too broke to eat or buy petrol to commute, we would get some emergency money to cover it, provided you are a key employee. This was the case with many small software firms then. I had colleagues who slept in the railway platform because they couldn't pay rent. Since I lived with parents, I didn't suffer that ignominy. Attrition was very high, and the company didn't care much either.

I eventually left the company and joined TCS. My reason for resignation was I will need regular salary. Two years later that company started doing well. Then I walked in and was paid the full arrears amount without any hesitation.

The prime responsibility of any company administration is to make sure salary is paid on time. It is usually the biggest outlay every month, and everything else is secondary. Any responsible company will ignore this at their peril. No company wants to have the ill-repute that they don't pay on time. Then they won't be able to attract any good talent. This is especially true in this time of social media, where bad news travels fast.

Therefore, if you are dealing with a company that didn't pay salary for few months to all the employees, it is a deadbeat company. Suing it won't help, unless they have assets that can be sold during the bankruptcy process. If the company doesn't have assets, it is pointless. Assuming it is a private limited company, their liability is limited only to the company assets.

Keep in mind that legal process is not cheap and can drag on for years.
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Old 26th July 2017, 12:28   #57
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Default Swiggy-An Insider's Perspective

Not sure if this topic would be appropriate here but since a lot of us use food delivery services such as Swiggy and this community is home to many entrepreneurs (experienced and budding), I felt this would be an interesting topic to discuss:

https://swiggysales.tumblr.com/post/...house-of-cards
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Old 28th July 2017, 10:34   #58
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Not sure if this topic would be appropriate here but since a lot of us use food delivery services such as Swiggy
Swiggy's CEO posts a detailed response - link.
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Old 28th July 2017, 22:35   #59
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Default Re: Startup shenanigans (including the TinyOwl episode)

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I eventually left the company and joined TCS. My reason for resignation was I will need regular salary. Two years later that company started doing well. Then I walked in and was paid the full arrears amount without any hesitation.
....
Therefore, if you are dealing with a company that didn't pay salary for few months to all the employees, it is a deadbeat company. Suing it won't help, ...
Keep in mind that legal process is not cheap and can drag on for years.
Wholeheartedly agree with all these points. I too was a project manager in the Indian subsidiary of a small US-based, NRI-owned software co. I must tell here that they did pay me my frugal salary in time, but perks and rises are unheard off and PF dues were enormous and motivating my young team was a Himalayan task. After setting up my own small business somehow (I still don't know how!) I left the employer one fine morning very cordially with the realization that I'll never get my PF and other dues from them. That was in 2009.

I received a call from them in 2013 asking for my bank a/c details. I asked them why and was told that the company is now in a position to clear off my PF arrears and it will be deposited the next day.

@ Nivatakavacha, keep your cordial relations open repeatedly remind them about your predicament. Also send them a notice through a lawyer but don't escalate and try off-court as much as you can. A court may award you a judgement but as Samurai said they can honor it only if they have money.
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Old 28th July 2017, 23:03   #60
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Default Re: Swiggy-An Insider's Perspective

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Swiggy's CEO posts a detailed response - link.
Be foolish to take sides in an unsubstantiated argument, but the CEO's response sounds a bit too much 'believe me, we're great and we never lie'.
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