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Big layoffs at India’s online start-ups; is the bubble bursting?
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Big layoffs at India’s online start-ups; is the bubble bursting?
AFP, Mumbai | Updated: Nov 22, 2015 12:28 IST
(Source – http://www.hindustantimes.com/tech/big-layoffs-...)
Hundreds of layoffs at several Indian start-ups have sparked fears the bubble is starting to burst for the country’s e-commerce companies, amid claims by analysts that many of them are overvalued.
Restaurant search website Zomato, food delivery app TinyOwl and property portal Housing.com are all letting staff go, and experts are warning of echoes of the dot-com boom which crashed spectacularly in 2000.
“The valuation bubble is bursting. The valuations had reached levels where they were ridiculous and could not be justified at any level,” said Arvind Singhal, chairman of management consulting firm Technopak.
Wealthy investors boosted by low interest rates have been lining up to lavishly back India’s booming start-ups, with the government hailing the sector as proof of the country’s entrepreneurial spirit.
Prime Minister Narendra Modi views online startups as key to providing jobs to aspirational young Indians, seeking to fuel the sector through a government campaign, “Start up India, Stand up India”.
In September he visited Silicon Valley calling on deep-pocketed investors to turn their attention to India’s thriving start-up ecosystem, with large tech hubs in the cities of Bangalore, Hyderabad and Mumbai.
Yet despite the billions of dollars invested in recent years, most of India’s online startups are yet to turn profits and investments are largely based on speculative future earnings.
“Investors are not looking objectively at the sector. They are just seeing a few success stories and ignoring the failures, just like they did in the dot-com era,” Paras Adenwala, investment consultant at Capital Portfolio Advisors in Mumbai, told AFP.
Adenwala is concerned that once the United States’ central bank starts moving on interest rates, as it has long been tipped to do, investors will be less generous with their cash, making the situation worse.
“You will see a lot of these start-ups falling by the wayside once the US Federal Reserve starts raising rates and funding dries up,” he said.
Dramatic scenes
Recent events at TinyOwl, Zomato and Housing.com suggest that not all is well.
There were dramatic scenes at TinyOwl’s offices in Pune, in the western Indian state of Maharashtra, earlier this month when disgruntled staff refused to leave the building after losing their jobs.
They also held hostage a member of top management, who laid off 300 employees, preventing him from leaving for two days as they demanded the immediate payment of their severance deals.
TinyOwl co-founder and chief executive Harshvardhan Mandad said the redundancies had been necessary to get the start-up on a more sustainable footing.
“This has involved some difficult decisions for us as well, but we believe it’s an integral step for the sustainability and growth of the business,” Mandad said.
Housing.com recently fired 600 employees, according to widespread reports, and on Thursday announced there would be a “reorganising of the company”, although it declined to confirm the layoffs.
Zomato, a so-called “unicorn” startup because it is valued at more than $1 billion, is laying off 10 percent of its 3,000-strong staff worldwide, mostly in the United States.
An official for the New Delhi-headquartered company, which operates in 22 countries, said “the restructuring that led to the redundancies was based on a business call”.
“I do not think that the pace of growth has suddenly slowed. Is the market correcting? Perhaps it is, and I guess it’s about time that happened as well,” added the official, who asked not to be named.
Some signs of consolidation are already evident in the highly competitive market.
Grofers, a “hyperlocal” grocery app that allows customers to order goods from corner shops online, last month made two acquisitions in a week, taking over its shuttered competitor Townrush and meal delivery service SpoonJoy.
And earlier this month Mumbai-based CarTrade, a portal for selling used autos, acquired its rival CarWale for an undisclosed sum.
Singhal, the Technopak chairman, sees the job cuts as part of an inevitable “evolution” of startups, where the early movers lacked well thought-out business models but successors will learn from their mistakes.
“It will encourage new startups with clearer plans,” he said.
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https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2829462
Nice post. Vu + KG.
CC @sidbhai @DealSeeker
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2829495
Interesting..
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2829510
@masthead1 wrote:
Nice post. Vu + KG.
CC @sidbhai @DealSeeker
Very generic reporting I’d say.
Nothing new here. Any company – startup or corporate giants – will have to hire and fire…
Only this time:
Hiring has been aggressive…
And so is the firing…
I do feel for the employees though. Job that was “secure” or considered that way – by many parents and relatives – are now even more dangerous.
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2829515
they forgot to mention onepay :d
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2829533
even tiger global will tone down its aggressiveness in Indian startups
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2829550
@sidbhai wrote:@masthead1 wrote:
Nice post. Vu + KG.
CC @sidbhai @DealSeeker
Very generic reporting I’d say.
Nothing new here. Any company – startup or corporate giants – will have to hire and fire…
Only this time:
Hiring has been aggressive…
And so is the firing…
I do feel for the employees though. Job that was “secure” or considered that way – by many parents and relatives – are now even more dangerous.
read this on live mint around 3-4 days back
I feel this is just the beginning ; many startups are soon to be buried into dust in the coming days ; and I guess these ill managed and implemented hyperlocals would be the first one to face the heat once they automate everything 
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2829571
@sidbhai wrote:@masthead1 wrote:
Nice post. Vu + KG.
CC @sidbhai @DealSeeker
Very generic reporting I’d say.
Nothing new here. Any company – startup or corporate giants – will have to hire and fire…
Only this time:
Hiring has been aggressive…
And so is the firing…
I do feel for the employees though. Job that was “secure” or considered that way – by many parents and relatives – are now even more dangerous.
Grofers, Peppertap . Do they have sustainable business model ?
Even kirana shop and vegetable vendor provide home delivery to their customer. they are into very thin margin business. their operational expenses ( salaries, it support, promotion, adv cost and so on) are quite high as compared to their local competitors.
will they able to retain customer once promotion and offers over?
Same is true for tinyowl, foodpanda and zomato ( with new food delivery business).
hyperlocal business model, valuations are really hard to understand for me.
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2829601
@ssarvesh wrote:@sidbhai wrote:@masthead1 wrote:
Nice post. Vu + KG.
CC @sidbhai @DealSeeker
Very generic reporting I’d say.
Nothing new here. Any company – startup or corporate giants – will have to hire and fire…
Only this time:
Hiring has been aggressive…
And so is the firing…
I do feel for the employees though. Job that was “secure” or considered that way – by many parents and relatives – are now even more dangerous.
Grofers, Peppertap . Do they have sustainable business model ?
Even kirana shop and vegetable vendor provide home delivery to their customer. they are into very thin margin business. their operational expenses ( salaries, it support, promotion, adv cost and so on) are quite high as compared to their local competitors.
will they able to retain customer once promotion and offers over?
Same is true for tinyowl, foodpanda and zomato ( with new food delivery business).
hyperlocal business model, valuations are really hard to understand for me.
Foodpanda was actually a good idea trying to provide and and bring all the small hotels and restaurants that couldn’t manage an online presence by themselves to a common platform
Providing own food delivery services was a good step as well.
Foodpanda looked like the next step after zomato and was similar to bookmyshow [in some ways]
It would have been successful as well if it had an overall better management and copy – cats [read zomato , tinyowl etc.] didn’t jump into the market trying to trace foodpanda’s footsteps
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2850002
Bubbles are bound to burst. 
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2850045
Not every startup is a bubble , some have created real value.
Overall I agree valuations are insane, but some very creative solutions have come about.
Ex. : Paytm has created a mammoth from nowhere! from a recharge shop to Alibaba!
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2850065
Aisa khuch nahi h online market mast ja raha h
4 Me
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2850108
Every sector goes under churn and consolidates itself around top 2-3 players .. and these players are determined by the service forked out by them..the service includes everything from customer delight to robust systems, efficient supply chain to quality work force, trust by investors / shareholders to exemplary leadership, etc.
i sincerely hope that each company demarcates itself by some niche offering so that the workforce and customers do not have bear the brunt as brought out by the news report ….
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2850123
The only ecommerce site that has stood the test of time is ebay IMO. That’s a really old site.
Sites with their own retail wing(flipkart, snapdeal, amazon etc) will not survive in the long run. That road has only one destination. They will eventually end up undercutting each other and make the margins meaningless. On the other hand, sites like ebay and shopclues which allows sellers of unbranded goods to market on their site will keep going and going.
Ecommerce sites have for the first time in indian market, allowed unknown brands to challenge branded goods without the need for expensive marketing moolah. We may soon see successful small brands that will solely be marketed on ecommerce sites and none on TV.
Video killed the radio star
Here, ecommerce will kill big brands
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2850172
@aniln_85 wrote:
The only ecommerce site that has stood the test of time is ebay IMO. That’s a really old site.
Sites with their own retail wing(flipkart, snapdeal, amazon etc) will not survive in the long run. That road has only one destination. They will eventually end up undercutting each other and make the margins meaningless. On the other hand, sites like ebay and shopclues which allows sellers of unbranded goods to market on their site will keep going and going.
Ecommerce sites have for the first time in indian market, allowed unknown brands to challenge branded goods without the need for expensive marketing moolah. We may soon see successful small brands that will solely be marketed on ecommerce sites and none on TV.
Video killed the radio star
Here, ecommerce will kill big brands
What you have said here is absolutely true sir ?
Looking at the way Flipkart is going I seriously doubt if it would last more than 3-4 more years
The are way past the start-up phase and have already received tons of money across various rounds of funding
Where competitors are working on customer delightment Flipkart is struggling to provide even a basic customer support
These guys spend a large amount on recruitment and still fail to get employees with basic common sense.
They have poorly implemented systems in place and have no idea how those works and are completely clueless when questioned about the same.
God knows how they managed to come all this way ; Anyways now onwards things are only getting to get worse for flipkart
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2850721
@ishandon wrote:@aniln_85 wrote:
The only ecommerce site that has stood the test of time is ebay IMO. That’s a really old site.
Sites with their own retail wing(flipkart, snapdeal, amazon etc) will not survive in the long run. That road has only one destination. They will eventually end up undercutting each other and make the margins meaningless. On the other hand, sites like ebay and shopclues which allows sellers of unbranded goods to market on their site will keep going and going.
Ecommerce sites have for the first time in indian market, allowed unknown brands to challenge branded goods without the need for expensive marketing moolah. We may soon see successful small brands that will solely be marketed on ecommerce sites and none on TV.
Video killed the radio star
Here, ecommerce will kill big brands
What you have said here is absolutely true sir ?
Looking at the way Flipkart is going I seriously doubt if it would last more than 3-4 more years
The are way past the start-up phase and have already received tons of money across various rounds of funding
Where competitors are working on customer delightment Flipkart is struggling to provide even a basic customer support
These guys spend a large amount on recruitment and still fail to get employees with basic common sense.They have poorly implemented systems in place and have no idea how those works and are completely clueless when questioned about the same.
God knows how they managed to come all this way ; Anyways now onwards things are only getting to get worse for flipkart
Kuch bhi!
Poorly implemented systems?
Bro, tell me a smoother experience 5 years ago? Most offline store are sh*t! Sales guys are clueless “Yeh le lo, mast hai!”
Most people in India think internet shopping = flipkart or snapdeal may be amazon!
To build a brand so huge and widely accepted in such a short time is a feat!
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2850997
Oh and I just remembered…
ebay was called bazee dot com back in those days. Internet was still running on 52kbps modem. It used to take 45mins to download a 4-5mb song from napster. Bazee dot com had video commercials that aired on tv. Then ebay came into india and bought bazee, I think they even ran a commercial on tv for this name change.
Anyone else here lived through this? 
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2851033
@aniln_85 wrote:
Oh and I just remembered…
ebay was called bazee dot com back in those days. Internet was still running on 52kbps modem. It used to take 45mins to download a 4-5mb song from napster. Bazee dot com had video commercials that aired on tv. Then ebay came into india and bought bazee, I think they even ran a commercial on tv for this name change.
Anyone else here lived through this?
Have been in time when used to look at bottom green colour status of webpage to check how much the site has loaded.
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2851118
Layoffs not applicable to travel companies !
Read expansions in that area .
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2851182
http://www.rediff.com/money/2004/jun/26baaz...tm
more info here.
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2851287
Interesting to know 50 million curiosity that time.
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2852031
@B@R_0_0_D wrote:
Layoffs not applicable to travel companies !
Read expansions in that area .
--
@ZIZER may u find the views of @ishandon helpful.
links to some interesting reads please
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2852056
@ishandon wrote:@B@R_0_0_D wrote:
Layoffs not applicable to travel companies !
Read expansions in that area .
--
@ZIZER may u find the views of @ishandon helpful.
links to some interesting reads please
U need fraud protection or masala ?
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2852077
@B@R_0_0_D wrote:@ishandon wrote:@B@R_0_0_D wrote:
Layoffs not applicable to travel companies !
Read expansions in that area .
--
@ZIZER may u find the views of @ishandon helpful.
links to some interesting reads please
U need fraud protection or masala ?
Grama gram 
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_2852226
“I do feel for the employees though. Job that was “secure” or considered that way – by many parents and relatives – are now even more dangerous.”
“I feel this is just the beginning ; many startups are soon to be buried into dust in the coming days ; and I guess these ill managed and implemented hyperlocals would be the first one to face the heat once they automate everything”
Not every startup is a bubble , some have created real value.
Overall I agree valuations are insane, but some very creative solutions have come about.
“Ex. : Paytm has created a mammoth from nowhere! from a recharge shop to Alibaba!”
Arey wah!!
“Have been in time when used to look at bottom green colour status of webpage to check how much the site has loaded.”
#Nostalgic!!
https://www.desidime.com/discussions/big-layoffs-at-india-s-online-start-ups-is-the-bubble-bursting?page=1#post_3037773
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