Team-BHP - Startup shenanigans
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Guys one thing I noticed today was that the smart phones of my hotel staff, who aren't too familiar with the usage, were flooded with apps from these so called startups. So basically these startups, they force install the apps, thanks to apps like uc-browser, app notifications pop up like every second and sometimes by mistake user touches it and they register clicks I guess. Specially in mobiles like intex where there are few pre-installed apps which keep generating full screen pop-ups.

The point of whole post is that these apps are getting download via unethical ways in mobiles of users who can't even register for service. But, in the end the companies have the numbers, that their user database is in millions and increasing consistently. The funds keep flowing in with the number of downloads increasing, but productivity I believe is next to '0'.

Thanks to Jio (it made t-series the most watched youtube channel in the world) these kinds of startups are able to survive till now, but a huge collapse in these 'numbers' would come when one fine day data restrictions will return.

Its kind of cheating, both the investors and common public. The people who aren't familiar with the smartphone usage are the worst hit, they have unwanted apps which clutter their mobile making the whole usage very frustrating. Then they get conned by service center guys for re-flashing the ROM. It becomes a never ending circle until someone disables and force stops the ad generating apps.

I wish there was a survey on these so called IT startups which have huge user database and million app downloads but very low productivity. It could save both the investors and public.

Here is why VC funded startups have to either burn brightly or just die. If you want to start a company and keep running it, keep away from VCs.

https://medium.com/s/understanding-v...t-fc08fcdb32cc

Theranos is undisputedly the most dishonest startup ever. It started with a science fiction product, could never make it work, but they kept going for 12 years before they were caught. I have mentioned the book that describes it all in the book thread. It managed to get $900 million in private investment without proving their product in demos or in the market.

As a product developer, I found the whole episode surreal. Everyone of my clients demand multiple successful demos before giving a purchase order. But Theranos managed to become a $9 billion company with a fictional product. :D

Here is an interesting article on how VC funded startup culture has killed innovation.

I am not fully convinced by it, but it does make interesting points.

1) Entire Start-up economy is a ‘Ponzi scheme’.
2) It’s a wealth inequality hack by the economic elite against the American Middle class.

Article by founder of Web Chutney, a digital advertising firm: he compares boring 'services startup' businesses with sexy 'consumer startup' businesses.

Why 'go big or go home' advice for entrepreneurs is total bunkum
http://economictimes.indiatimes.com/...w/66297342.cms

Quote:

Originally Posted by Samurai (Post 4480676)
I am not fully convinced by it, but it does make interesting points.

Yeah, I read his views on CNBC sometime back.

Quote:

1) Entire Start-up economy is a ‘Ponzi scheme’.
Disagree, because VC funded startups eventually create something useful - after burning through a pile of cash. At the same time, they employ millions of people. Ponzi and Pyramid schemes do not add any value to the economy.

Quote:

2) It’s a wealth inequality hack by the economic elite against the American Middle class.
Agree! (sort of)

This guy makes very good points about why it is hard for Indian startups to remain Indian. Our financial laws are not giving a level playing field to Indians.

https://www.thequint.com/videos/news...igital-dacoits

Quote:

Originally Posted by Samurai (Post 4374969)
Here is why VC funded startups have to either burn brightly or just die.

https://www.financialexpress.com/ind...-year/1397956/

All these once upon a time start ups are burning the VC money pretty brightly. I don't understand how long online industry can stay awake though more and more liquidity infusions without any profit. In fact they incur huge losses like these. I guess exchange rate is the only saving grace here.

No a days start up craze is taking toll on service companies.https://www.thehindubusinessline.com...le25607974.ece

Every one wants to work with a start up which works on AI , BI , machine learning , analytics etc etc. If the anonymously written articles on quora are to be believed, start ups are paying crazy amount of money for crazy amount of work which are yet to monetize.

This happened to my friends friend last year. From a product company he joined start up with 100% hike. He went on a vacation to remote location for couple of days. Came back to office on a fine Monday morning and started wondering "why lights are off and no one is in office" and continued working on laptop. After couple of hours went out and asked security and security said "Saar this company closed last Friday" :eek:

Quote:

Originally Posted by heydj (Post 4193925)
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.

Such a sensible point of view.
Our org is a startup that has slowly surely and humbly become an SME. We’ve been serving the customers and slowly and surely creating value on our route to profitability. A B2B company with a rock-solid value proposition to customer - and over the last few years, we’ve moved quietly into the “Black” - operational profitability.
If as you say, the core teams subscribe to the essential “old world” values of sustainable ethical business and remain humble, then, achieving this with single minded focus, is absolutely possible. Our team comes from the first class Corporate World, so the base fundamentals are rock-solid. No one is a “flighty” type.
Not for us, this madness about short-term greed and high profile build and sell. Whatever we build has to have a legacy to leave behind into the long term.
We all love what we do and we try to do it sensibly. Which is why I am proud to say that we have earned our respect from the customers we serve as well as our funding partners and the industry too. We dont believe in making a lot of noise. We just go about our work with a lot of passion and intelligence.

Quote:

Originally Posted by Samurai (Post 4503646)
This guy makes very good points about why it is hard for Indian startups to remain Indian. Our financial laws are not giving a level playing field to Indians.

https://www.thequint.com/videos/news...igital-dacoits

Agree 100% with the author. Thank you Samurai San for sharing. The archaic equity alternatives in our Company Law are a function of the out dated thinking of our IAS and senior Govt. officials who draft these laws. Many of them still see the world through Nehruvian lens of the bad profiteering exploitative dirty private sector who need to be kept in check. The concept of encouraging the risk taking risk investing entrepreneur is often times not on their horizon. The concept that the entrepreneur who creates jobs and pay so much in direct & indirect taxes needs to be protected and rewarded through dividends and retention of control is alien to their thinking. When the new Company's Act was in formulation [almost forever] a lot of us through the chambers of commerce had tabled this issue several times but to no avail.

Off Topic a bit: The attitude of these Govt officials is on display in the infamous ILFS implosion where they are indicting the independent directors [which they should] but shielding the nominee directors from the PSU institutions all of whom are shareholders and were members of the various over sight committees and some of whom were responsible for blocking equity capital infusion which might have saved the day! Because they are Govt employees or PSU employees they are being shielded in contravention of Company Law.

Quote:

Originally Posted by V.Narayan (Post 4504991)
The archaic equity alternatives in our Company Law are a function of the out dated thinking of our IAS and senior Govt. officials who draft these laws. Many of them still see the world through Nehruvian lens of the bad profiteering exploitative dirty private sector who need to be kept in check.

Agreed, this is a big problem in India. IAS officers are intelligent and smart, but what they don't understand is business and entrepreneurship. They presume business people are all crooks. For some reason we retained the legacy of civil service officers, who are chieftains for life, at every level of our government. These guys often run PSU companies, where profit and efficiency are given the last priority.

Consider this supremely stupid statement from a RBI director, recently appointed by the government.

“it is high time that apart from printing MRP on products, companies should also start giving the (manufacturing) cost of products. Only then, will we really know the margins of profit.”


When I read it, I thought that cost accountants would seriously consider jumping out of tall buildings just to unhear that statement somehow. Then I read where he made that statement.... Addressing an event of the Institute of Cost Accountants, he sought to drive the point of excess profits being made by companies.

Oh dear god....:Shockked:

Does he really think Profit = Sale price - Manufacturing cost? Does he know about the cost of finance, branding, marketing, inventory, transportation, etc.? Does he know the difference between fixed/variable cost? Does he know what cost accountants do? Was he aware of the shocked silence in the room, that must have surely greeted his statement? And he is now a RBI director. :Frustrati

Besides, if profit is to be controlled by government, why bother with entrepreneurship? Is he aware of the relationship between risk and gain? If the gain is to be limited, nobody will take risks.

This character apparently founded and ran a cooperative bank... kind of makes sense. I know lots of bankers who have very limited understanding of business and entrepreneurship.

I read this Ken article, sorry it is behind pay wall. The business model of OYO is really stupid. My FIL owns a hotel, so I have some domain knowledge. Their model appears to works only because of the huge VC funds they are throwing the problem.

They tried to be the Uber of hotels. They caused disruption alright, but it will only be temporary ripple in the pool.

Quote:

Originally Posted by Samurai (Post 4552064)
They tried to be the Uber of hotels. They caused disruption alright, but it will only be temporary ripple in the pool.

Now it is the turn of Zomato/Swiggy to be Uber of restaurant business.

Here is an excellent article on the Zomato's acrobatics.

The conclusion of the long article is ominous. Highlighting is mine.

Quote:

Zomato and the other delivery platforms, targeting higher valuations for their next round of funding, have inflicted irreparable losses to the F&B sector. While Deepinder Goyal is not interested in earning a profit; valuation being his sole intent, the Restaurateurs are collateral damage in this war.

Restaurateurs are by and large, small to medium-size enterprises, with fixed costs that they have to recover from their customers. Deepinder Goyal might be a successful raider, but has not created value for the society at large at the scale that the Mom & Pop restaurants have done, some since many generations.
Recently, the best restaurant in my area got out of Swiggy. I can imagine why. But they are happy to home deliver food using their own staff, so I am good.

Quote:

Originally Posted by Samurai (Post 4641692)
Now it is the turn of Zomato/Swiggy to be Uber of restaurant business.

Here is an excellent article on the Zomato's acrobatics.

The conclusion of the long article is ominous. Highlighting is mine.

Recently, the best restaurant in my area got out of Swiggy. I can imagine why. But they are happy to home deliver food using their own staff, so I am good.

Was about to post the same article, you beat me to it.
Both Zomato and Swiggy are trying hard to shore up their valuations as their next round of funding is due soon.
A friend of mine who runs an upscale restaurant considers them an necessary evil, but has also been wary to not sign up for the Zomato Gold option just for the reasons stated in the article.

We will be seeing similar "Logouts" from Oyo and other aggregators soon.

Edit:
Just came across this article
Amazon-readies-new-spread-to-lure-eateries-away-from-zomato-swiggy
Amazon is getting ready to enter the food delivery business as early as this diwali. This will be interesting as Amazon with it's huge cash reserves can bring Zomato and others to their knees.

Looks like free food delivery will also be part of the Amazon prime subscription.

Something that deserves to be here, probably one of the biggest & quickest falls in the startup world.

From a valuation of 45+ Billion (higher than Airbnb/SpaceX) in the first quarter of 2019 to less than 10 by now.

Things got so bad that softbank had to bail it out with 9.5 billion, after which its valuation stands at 8.

Quite a fall I would say

Here's the video

https://www.youtube.com/watch?v=X2LwIiKhczo

I think in recent times, award for most "hated" Indian startup can go to WhiteHat Jr.

I am also one of the hater of this startup. There is so much wrong about Its concept and business model.


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