[ShaileshHinge]

Laid-off employees at food ordering app TinyOwl trapped a cofounder of the company inside the Pune office for over two days, and police were brought in to mediate a settlement, illustrating the flip side of the startup boom in the country.

Read more at:
http://economictimes.indiatimes.com/...w/49680316.cms

2 things coming out of this news
1) instability - i think seasoned SW proffessionals will be aware of the risks of joining a startups. So this wont be a surprise. I would just expect the companies to honor the terms and conditions of the seperation agreements.
Also better plan their hiring better. They wont have hi-fi HR team to manage this and thus the startups may end up hiring lot more during the boom and then fire during down time.
2) I am amazed to read the owners are aged 23 and 25 ! at this age we were just learning the ways of the worlds. and these guys are running product firms. Maturity will come with time to handle these difficult situations..

[Saanil]

I belong to the camp who is just not comfortable investing in start ups and not being able to understand the business models of some of the new start ups. I know many smart VC and PE funds do all kinds of analysis and invest money into start ups but it is sad to really read such things (layoff etc.)

Although I do not know the complete facts about this case, I hope no one was physically harmed and the employees who are laid off get their salaries/severance on time.

One question - do these new companies have all their HR systems in place? Like are there official contracts which list all the employment terms etc? I though these start ups are usually very informal in all these matters - I may be wrong here.

Would love to hear the opinion of experts here.

Just wanted to add a link here for opinions: Link

[arnabchak]

Well, I could share a small story.

I had got a call to lead their Food Services Tie ups-Pan India (AVP level) about 6 months back.

Since I am a food services professional with over 15 years of experience, the bug to join a start up did hit me.

But I am happy that sanity prevailed and I sensed that the start ups are plagued with a couple of issues once the magic wanes:

1) Initial PE infused funds start drying up
2) Difficult to operate at sustainable levels considering the high competition in the e space
3) Companies founded by fresh graduates with ideas are normally not a very safe place to be. Not that I am against the ideas of these young founders. But business acumen is something that is earned through experience.

Start up tend to be aggressive in the boom and the flip side of what happened with Tiny Owl is for every one to see.

As of now, I count my lucky stars that I did not take the plunge!!

[kiku007]

Zomato fired some 300 people recently. Only god knows how they thought scanning Restaurant Menus and having an free app for it was an business idea to generate revenue.

Obviously I use Zomato but the question is how are they getting the money.

[girimajiananth]

What went wrong with Zomato and Tiny Owl ? Poor management ? Lack of funds or misuse of funds ? Over hiring? Are these companies trying to automate something so that they can reduce manual intervention and let go of people ? Are other aggregator industries headed the same way? Have investors lost money with such ventures ? Leaves a lot of questions behind.

[vinit.merchant]

Originally Posted by kiku007

Zomato fired some 300 people recently. Only god knows how they thought scanning Restaurant Menus and having an free app for it was an business idea to generate revenue.

Obviously I use Zomato but the question is how are they getting the money.

The revenue comes from advertisements & giving special preferences to restaurants who pays. When we search for some restaurant, they usually throw a couple more restaurants as suggestions, since these guys paid them.

Little OT, but what I am amused at is the add free Whatsapp which also doesn't charge anything to its subscribers, I will google on how the group used to survive before FB took over.

[Saanil]

Originally Posted by vinit.merchant

Little OT, but what I am amused at is the add free Whatsapp which also doesn't charge anything to its subscribers, I will google on how the group used to survive before FB took over.

Well, Whatsapp used to charge customers some time back (I think it was free on Android but I know some iOS members who have paid for whatsapp). Now I think whatsapp is free on all platforms.

But yes - only time will tell how much money these start ups will make in time to come.

[Samurai]

Originally Posted by vinit.merchant

Little OT, but what I am amused at is the add free Whatsapp which also doesn't charge anything to its subscribers, I will google on how the group used to survive before FB took over.

They were funded by Sequoia Capital, who made a killing when FB bought whatsapp.

These stories are simply a repetition of what happened during the DOT COM bubble in the late 90s.

The MO is very predictable. Create a company whose sole aim is to get lots of subscribers. With the right pitch, VCs will jump in with their hoard of cash, which the company will spend on poaching and employing people with right experience for a brief period of time, until either the company goes bust or gets bought by a greater fool. There is very little stability and too much speculation. I often wonder what is the contribution of these fluff service companies to the society. Most of these are nothing but get-rich-quick schemes. At least they are not scamming the public.

[vinit.merchant]

Originally Posted by Samurai

They were funded by Sequoia Capital, who made a killing when FB bought whatsapp.

These stories are simply a repetition of what happened during the DOT COM bubble in the late 90s.

The MO is very predictable. Create a company whose sole aim is to get lots of subscribers. With the right pitch, VCs will jump in with their hoard of cash, which the company will spend on poaching and employing people with right experience for a brief period of time, until either the company goes bust or gets bought by a greater fool. There is very little stability and too much speculation. I often wonder what is the contribution of these fluff service companies to the society. Most of these are nothing but get-rich-quick schemes. At least they are not scamming the public.

But what business sense does it make for FB, paying a fortune for a Cost centre with no direct link to any Profit centre (as we accountants call it). Customer base? or just the "mass big data" that they have at their disposal, checking for people preferences etc?

[avira_tk]

Originally Posted by vinit.merchant

But what business sense does it make for FB, paying a fortune for a Cost centre with no direct link to any Profit centre (as we accountants call it). Customer base? or just the "mass big data" that they have at their disposal, checking for people preferences etc?

The real time data generated by WhatsApp will be useful to analyse trends that help target advertising to the users of FB based on geography and other information. Zuckerberg didn't want a network that could rival FB over time, paying big money for it includes the technology involved which is supposed to be real cutting edge stuff and WhatsApp will eventually evolve over time to be a contact tool for advertisers.

[speedmiester]

I work closely with startups and their investors and as such I am baffled by the way a startup or a business idea is evaluated and funded. As long as the team involved is from the top B schools or IIT's, they are getting funding, it's like getting a credit card from banks. Even without a viable revenue model, such startups are getting funded.

There is a serious dearth of talent pool in India and as such a cash rich startup will be ready to pay any amount to get whatever talent that is available to them. But when the strings get tightened and investors start breathing down their necks, only option is to reduce the headcount and fire them. This is what we are witnessing now.

Even the big startups like Flipkart, Ola aren't making money, they are burning money like no tomorrow. A lot of people will be made redundant once Flipkart goes public. Such mindless discounts and offers to lure customers is not sustainable and always backfire at some point. They have only succeeded in changing the spending patterns and platforms to customers, but they have not invested in building customer loyalty which is far more important for a sustainable business.

[Samurai]

Originally Posted by vinit.merchant

But what business sense does it make for FB, paying a fortune for a Cost centre with no direct link to any Profit centre (as we accountants call it). Customer base?

Originally Posted by avira_tk

The real time data generated by WhatsApp will be useful to analyse trends that help target advertising to the users of FB based on geography and other information.

FB had bigger customer based than Whatsapp, and FB had much more data about people than whatsapp did. And there was huge overlap of customer base anyway. Their main purpose appeared to be denying Microsoft from getting their hands on whatapp.

Originally Posted by avira_tk

Zuckerberg didn't want a network that could rival FB over time, paying big money for it includes the technology involved which is supposed to be real cutting edge stuff and WhatsApp will eventually evolve over time to be a contact tool for advertisers.

Whatapp is no cutting edge technology, FB has much better tech. Anyone remember TIBCO? TIBCO allowed millions of stock traders and monitors all over the world stay in sync, by exchanging up-to-the second stock information instantly, since the 80s. Same thing whatapp does 30 years later using the latest communications technology, but for people. Whatapp has no API for developers even now, TIBCO had it in the 80s.

Originally Posted by wiki

In 1985, Teknekron Corporation, a technology incubator, provided $250,000 in seed capital to Vivek Ranadivé.....

....In 1986, Teknekron had a consulting project with Goldman Sachs to develop computer driven stock trading.[10][11] In 1987, the first TIB – for the integration and delivery of market data such as stock quotes, news and other financial information – went live at Fidelity Investments, followed by First Interstate Bank and Salomon Brothers, eventually digitizing all of Wall Street. Teknekron's software bus programming allowed data to be shared between computers using different languages and different applications. Wall Street trading firms used the software for trading systems, and eventually, large-scale manufacturers employed the technology as well. Ranadivé said, "We digitized Wall Street. You had 20 television monitors that you had to look at. What we did was get rid of all that and replaced it with a Sun workstation. All of that information could now be treated as digitized information."

[rahulba]

There was a similar story of Foodpanda owner cheating on its investors few days back. I think there are many people who are just getting into this online frenzy for duping the investors. Thinking of sites like Foodpanda, tinyowl, myntra and jabong etc., I don't think they are going to get much business (at-least from me) when discount dry up. But yes, these are happy days for consumers as they get huge discount which are not available at stores on a regular day. Happy shopping till it lasts

Originally Posted by avira_tk

Zuckerberg didn't want a network that could rival FB over time, paying big money for it includes the technology involved which is supposed to be real cutting edge stuff and WhatsApp will eventually evolve over time to be a contact tool for advertisers.

With Whatsapp, there is always an option of blocking a sender unlike in regular messaging application. The day they are going to remove this feature and let marketing firms bombard you with ads, another Whatsapp will be born. I don't think FB will ever think of killing such a huge data capturing machine by making it a marketing place. They will definitely use this data for marketing purposes at other places. For an e.g. look at Google maps or even Android, they are totally free and Google still makes huge profit by selling ads.

[ShaileshHinge]

I think a real good niche idea, mature leadership and business acumen is needed for a startup to succeed. Every idea a gentleman has cannot become a FB, Watsapp or a flipkart. Success rate might be > 10% i suppose.

Even Flipkart will face the heat from amazon. amazon can run in loss for 2-3 years and flipkat might not be able to withstand that long. Also the blunders like the sale in 2014 will not help.

Ewallets is another sector where everyone is offering cashbacks. Not sustainable i think.

Startups do offer better work, more freedom to take decisions, less process and this does lure people like us who are fedup with the bureaucracy and slow pace in our bigger orgs.

But as arnabchak said we need to weigh all our options and liabilities like home loans etc before making such moves. Other thought comes to my mind is that such liabilities prevent us from signing up for something big

Originally Posted by arnabchak

As of now, I count my lucky stars that I did not take the plunge!!

[avira_tk]

Originally Posted by Samurai

FB had bigger customer based than Whatsapp, and FB had much more data about people than whatsapp did. And there was huge overlap of customer base anyway. Their main purpose appeared to be denying Microsoft from getting their hands on whatapp.

Whatapp is no cutting edge technology, FB has much better tech. Anyone remember TIBCO? TIBCO allowed millions of stock traders and monitors all over the world stay in sync, by exchanging up-to-the second stock information instantly, since the 80s. Same thing whatapp does 30 years later using the latest communications technology, but for people. Whatapp has no API for developers even now, TIBCO had it in the 80s.

FB had more data, WhatsApp had more real time data, basically stuff shared in WhatsApp is more personal, so the potential for data mining is supposedly better. I know TIBCO, never got to work on it though- because our small market support operation was let off when a merger happened.

Originally Posted by rahulba

With Whatsapp, there is always an option of blocking a sender unlike in regular messaging application. The day they are going to remove this feature and let marketing firms bombard you with ads, another Whatsapp will be born. I don't think FB will ever think of killing such a huge data capturing machine by making it a marketing place. They will definitely use this data for marketing purposes at other places. For an e.g. look at Google maps or even Android, they are totally free and Google still makes huge profit by selling ads.

Maybe I should have phrased it better, the buyer has to initiate communication in this case, they can't contact you.