[comfortablynumb]

Yet another example of how a megalomaniac CEO, lack of governance and toxic work culture can ruin a promising (so-called) startup:

https://www.ndtv.com/indians-abroad/...akdown-3223166

[m8002?]

https://www.financialexpress.com/opi...-foot/2648632/

While some of the points are debatable ( how much of profits can be shared with employees) some of the points the author makes are valid. The kind of salaries being offered by startups to people is not sustainable.

What is even more shocking is I have come across 3 candidates in the last 3 months, who were recruited at more than 100% hikes and let go after 4-6 months because the business couldnt afford it. Shouldn't these startup companies known that before making the offer?

[speedmiester]

This is the state of most promising Edtech startups.
One can wonder what do their students learn?

Byju's is reconsidering how their revenue is recognized, isn't this basic business knowledge?

Byju’s readjusts revenue for FY21 to Rs 2,280 crore, losses swell to Rs 4,588 crore

In other news, Vedantu and Unacademy are forcing their teaching staff to shill for courses on Youtube and social media.

https://the-ken.com/story/out-of-opt...-sell-courses/Out of options, Unacademy forces teachers to sell courses

The above link is beyond a paywall, but the abstract gives a sense of the hardship the teachers have to go through at these places.

Meanwhile, SEBI is asking for details on how VC/PE firms decide on valuation of a startup. This comes on the backdrop of retail investors losing money to overhyped startups going public.

Sebi seeks details on startup valuation from PE, VC funds


Sad state of affairs at some of the most "valued" startups.

[Samurai]

Originally Posted by speedmiester

Sad state of affairs at some of the most "valued" startups.

Finally some proof that the so called Unicorn is just common corn.

[thanixravindran]

Originally Posted by Samurai

Finally some proof that the so called Unicorn is just common corn.

Given what they are doing (delaying audited financial results repeatedly), it is more like common 'con'

[V.Narayan]

While on Ed Tech start ups here is some data from Money Control. Losses more than revenue. This seems to be the standard private equity model - burn cash - buy customers at deep discounts - hope to get them addicted to your product - jump the valuation on GMV and such other IMHO fake measures - sell to other private equity sucker because the capital markets will see through you in a short while aka PayTM. This to my mind is a gross waste of capital which could otherwise have been deployed to create more jobs and spread sustainable employment. This is a cult of praying at the altar of the short term private equity shareholder instead of a balanced perspective of a business that all stakeholders must receive a fair {not equal but fair} share - equity holders, customers, employees, creditors, suppliers, Government, civil society. Sadly our ignorant non-thinking journalists keep writing about these so called unicorns and decacorns as if they are heroes of some sort. The journalists don't even bother to study the balance sheets in detail. If they did they'd learn a few lesson on creative accounting. It only needs one global event to sort these out into the dustbin.

[Samurai]

The Ken story reveals more about Byju's shenanigans...

Thanks to the above auditing changes, the $22 billion edtech company saw its revenue grow only 4%. Don’t forget, it was a year when Byju’s made head-spinning acquisitions and garnered head-scratching valuations.

When we had asked the company in June about the filings delay, the spokesperson blamed a lack of audit bandwidth—after all, the company had seen a 5X scale in size.

Well, that size largely reflects in its losses—15X.

https://the-ken.com/story/the-seven-...y21-financials

Obviously, when the auditor decides to be honest, the company has no choice but reveal all the truth. This is not always the case, when auditor is also getting consultancy fees from the company they are auditing.

However, I am wondering about the investors of Byju's. Don't they get to see the accounting books, independent of the auditors? How could they keep pumping money into a business with imaginary revenue and real crippling losses?

[am1m]

Originally Posted by m8002?

What is even more shocking is I have come across 3 candidates in the last 3 months, who were recruited at more than 100% hikes and let go after 4-6 months because the business couldnt afford it. Shouldn't these startup companies known that before making the offer?

Have come across a couple of similar cases too. What was sad to hear was the HR of those startups actively went after the candidates with promises of growth, career progress, stock options and money. I mean how bad is your business planning if you say you are flush with cash one day and just 9 months later lay off people because you think you might run out of money? Without even any major business-impacting event occurring. Goes to show how clueless everyone except the founders of such startups are.

To be fair though, I've also seen several big, decades-old established companies do this as well. Hire people one quarter and then let go of several other people another quarter, and then re-hire for the same skills later.

Recently had the opportunity to interview with one of these 'hot' startups. I wasn't looking for a job switch, but since a very good friend was heading one of the departments, he insisted that I at least go through the process. What scared me off was the fact that every person I spoke with at the company focused on the funding and valuation aspect- "we're already a unicorn" "the first unicorn from xyz state" "we want to be a decacorn" "we have x million as a war chest". There was no information forthcoming on the domain, type of work, what exactly I would be doing. Also googled and found some financials and quite frankly, the revenue and increase over the few years the company has been in business didn't seem (at least to my GenX mind) to justify the valuation. Not to mention almost every single review of the company on Glassdoor complained about the lack of a work-life balance!

So more than ever, as much as companies check up on candidates, candidates too need to do due diligence on the companies they are considering joining.

[sunilch]

Originally Posted by Samurai

However, I am wondering about the investors of Byju's. Don't they get to see the accounting books, independent of the auditors? How could they keep pumping money into a business with imaginary revenue and real crippling losses?

FOMO, more so when the market is flush with easy money for investor.

[airguitar]

I needed a place to vent my frustrations on many of these startups and one look at this thread's title that contains the word "Shenanigans" I know this was the right place

An extremely unhealthy trend of "paying for potential" has happened in the last few years. You hire someone that costs a bomb, the person whiles away his/her time( but smart enough to know what to say to stay afloat, show occasional glimpses of their intelligence - akin to scoring a 100 once in 25 matches to ensure a spot ) and gets by. By the time they are intentions are found, they have another offer lined up and repeat this. I call this "hit and run" - you have moved on before your mistakes / incompetence / intentions are found out.

Unrelated, someone needs to show the mirror to some of these startup rockstars - heck even the kirana stores on the gullies aim at being profitable as the primary goal. When I talk about these bloated evaluations and non-sustainable business models and extremely trivial problems that are posed as the "next big thing" by some of these guys - I'm told to shut up as I'm a "salaried person" and have no right to talk about these things. Sure, you take more risks and it deserves a reward, but be realistic and honest about the non-sustainable shenanigan you are! Heck, most of the ideas aren't even original, but a carbon copy of someone else's. And on top, we have people that call themselves "serial entrepreneurs" well that almost sounds like a "serial killer". These are the new age self-proclaimed Monarchs - that take pride in acting weird and mavericky because they got $$

While I'm full of respect for people that create and run their own business that deliver something meaningful for the society - largely because it takes guts to do it and also because you are providing livelihood for hundreds of others - some motormouths should take care not to claim unwarranted credit for copied ideas or boast about small achievements while trivializing mistakes - it's given a new name these days "lesson" so as to reduce one's accountability for it.

I also think that if this startup-boom of young people wanting to have their own businesses had happened before the services/support boom, it would have been very healthy for India's talent - some really talented people would have been running their own companies instead of writing shellscripts or SQL for most of their careers. But then again, such startups wouldn't have affluent consumers that can pay for their services - the software services industry created that class of consumers in the last two decades.

[V.Narayan]

Attached here is what the Byju's CEO has to say. No remorse, no apology for allegedly fudging the books and just plain cockiness & impudence, in my eyes at least. The problem is that thanks to large PE funds there is too much money chasing these tech/e-commerce deals. This is so partly due to too much of global slush money which gets legitimized through PE funds and second because IMHO many, though not all, PE funds do not quite understand how to identify a true tech deal with potential. What they do understand is valuations and how to quickly up the valuations so that they can get out. At least that has been observations through the two businesses I built and the 4 that I am/have been closely associated with where I had to work with about 7 PEs in all. It is what it is. The smugness and apparent lack of integrity of this worthy is frightening. It reminds me a bit of the loud statements Harshad Mehta made in 1991 before his collapse.

[Samurai]

Raising $300M in a week simply means there are enough clueless investors out there. I would be impressed if he generated $300M in profits in a year, let alone in a week. Instead, what he has achieved is $570M in losses in a year.

[condor]

Wonder how much money he has blown on sponsoring the cricket team, and who's money is that. Guess his balance sheet would have been much better with out that, but .. It could well be another money conversion tactic - someone sponsors him to sponsor the cricket team.

[Eddy]

Originally Posted by condor

Wonder how much money he has blown on sponsoring the cricket team, and who's money is that. Guess his balance sheet would have been much better with out that, but .. It could well be another money conversion tactic - someone sponsors him to sponsor the cricket team.

Cricket? They are the title sponsors for the FIFA World Cup 2022. About 50 million dollars, IIRC.

[sagarpadaki]

Originally Posted by Eddy

Cricket? They are the title sponsors for the FIFA World Cup 2022. About 50 million dollars, IIRC.

Byju is a bigtime football fan. I am not surprised by this extravaganza. But spending money on FIFA, Cricket when the business is under loss, I do not know what to say for that