Over the past few years, Indian economy has been flooded with startups - some of them braved the storm and established themselves as trends, while others face the reality check with failures. More than successes, the entrepreneurs behind these startups faced issues which they couldn’t deal with, and their business ventures closed even before they could gain foothold in the market. Investors in the food-based ventures were upbeat about the entire online food business. But the recent layoffs in the biggest app-based Zomato and then TinyOwl increasingly show that startups are dealing with major strategic mistakes. Fancy words like funding, growth or success stories are not helping these ventures anymore. While startups hire with great gusto, they are also quick with firing employees. It’s time that these ventures make a reality check. Addressing issues and finding solutions to the mistakes will help the startups tide over the difficult times.
Cost cutting is the major reason why startups often lay off employees. The same is echoed by Tanuj Khandelwal, Co founder of TinyOwl said, “the elimination of certain positions in the company have been made on a strategic level, to increase efficiency, productivity and re-direct our diverse talent to focused departments, providing the best innovative offerings to our customers. We appreciate the contributions of all the employees in making TinyOwl an amazing growth story. We see this development as a positive move towards growth, and will continue to hire informed talent across the country, to provide our customers a seamless food ordering experience.” The word which Khandelwal emphasised is ‘hire informed talent’. It has been startups biggest problem - hiring everyone and anyone when the business is being established - in order to attract investments. Once the investments are in place, the strategic team look for loopholes to close. And that’s when they realise the futility of employing a certain number of people. Mistakes like poor job descriptions that attract lesser potential candidates are often hired in a hurried interview process. To ensure efficiency in recruiting the right candidate for the right job, a consistent interview process must be created, as clear job descriptions attract quality candidates.
Zomato on the other hand have a different reason to offer. Dipender Goyal, Zomato CEO, said, “slow economies or small markets cast their shadow on operations as opposed to the ‘Full Stack’ sectors. Therefore they require smaller operations in these areas, fewer people will be the requisite. In these areas of ‘enterprise’, they will mainly concentrate on transactional businesses pertaining to mainly booking reservations and advertisement. Thus they will be cutting costs and stabilizing their businesses in this sector region.” Once the ventures start to expand, the company gives less importance to employee training. Since the startups run on operational costs most of the time, or till they see the face of profit, employee training is least of their concern. But what these ventures fail to realise is, providing new opportunities of growth for employees and ensuring the new recruits also learn the tools of business in the right possible way will have a far greater impact on the companies’ growth and success stories.
A number of startups have bucked the failure tag, and have raised funds to continue their business. So, is the trend of startups going to end soon? Well, going by the number of new businesses being established every single day, it seems not. But the point is, these layoffs are surely indicating the need for major overhaul in the processes how a startup works. Needless to say, correcting wrong strategies mid-way or in the earlier days are much better than continuing with the wrong ones.
The reasons given by the two chiefs of the startups Zomato and TinyOwl will be a benchmark for other new ventures to think over successful and workable strategies for preventing layoff and sustain the business for a very long time.