It’s simple until you make it complicated.
Where there’s life, there’s death, and Silicon Valley is no different. There are these endless number of Start-ups that have passed into either laying off their engineers in matching branded t-shirts, closing down their game rooms and leaving heartfelt goodbye notes for their customers on their soon-to-be defunct websites. May they disrupt in peace.
The process is not as easy as movies and television shows have demonstrated them.
In order to become CEO of a successful start-up, you need to sacrifice everything dear to you. In addition to it, you have to dedicate each and every second of your life.
Unfortunately, there is no guarantee that all the hard work will pay off, it may take several years before your hard work can start to pay off. But in the end, it’s the experiences and learnings that matter the most. It’s a life you can join only if you are passionate about it, don’t do it for the money. Let’s begin with the list
TinyOwl & ZuperMeal
Food delivery start-ups have borne the brunt of the yo-yo effect of a funding gluttony last year and starvation this year. The failures of the well-funded TinyOwl and ZuperMeal typify the problems in this space.
TinyOwl raised US$15 million in February last year, followed by a bridge round of US$7.4 million in October to give it an extended runway. But all the funding could not solve the core problems of delivery costs, negative margins, and unreliable food quality and service from restaurants. It had acrimonious layoffs followed by a merger with logistics start-up Roadrunner.
A similar fate befell ZuperMeal, which wanted to connect home chefs with professionals ordering food in cities. It got US$2 million in seed funding from angel investors, including celebrity chef Sanjeev Kapoor. But it
A sudden change in the business environment can sound the death knell for a start-up. This is what happened to Buildzar, a one-year-old marketplace for building materials in Delhi NCR (National Capital Region), is shutting down says co-founder and CEO, Vineet Singh.
Last year, India imposed a clampdown on the use of cash, in a bid to curb black money and digitize the economy. The real estate business, where cash transactions are the norm to avoid various taxes, got hit the most. Suddenly, sellers became scarce on Buildzar and it had to shut down. It did not have a long enough runway to adjust to a new way of doing business.
“The cashless ecosystem will have a positive bearing on this business, but it will take at least three years for the ecosystem to settle in and for the sellers to get aligned with doing business in a new way,” Vineet Singh.
And finally, we have the heartbreak of India’s first Tinder shutting down. Founder Layak Singh started DateIITians while he was a student at premier engineering college IIT Kharagpur way back in 2011. Being a novelty, it quickly went viral but that didn’t translate into stickiness.
The founder then launched a new start-up, Cogxio. This was a dating app that used location intelligence to link up those who were already connected online. It wanted to tie up with consumer internet businesses to provide dating options like places to eat and vacations. But by now, there were already well-funded players like TrulyMadly, Woo, and Vee. Tinder also arrived in India, and so both DateIITians and Cogxio packed up. It just could not get backing in time to build a viable business model.
This was a startup which we all applauded when it made it into the first batch of Google Launchpad accelerator, all ready to scale up. On-demand laundry services startup Doormint, which washed and ironed around 1.2 million clothes for people in Mumbai, Bangalore, and Gurgaon over the last two years had now shut down.
The startup which began as a home services provider in Mumbai had raised around US$90,000 from Powai Lake Ventures and angel investor Utsav Somani in April last year. A round of US$3 million from Helion Venture Partners and Kalaari Capital followed a few months later in July.
Despite several tweaks to its business model, it was unable to scale up without an unsustainable cash burn. “The costs of processing clothes, pick up and drop logistics, and packaging was difficult to recover through prices,” Doormint co-founders Abhinav Agarwal and Naman Lahoty said in a goodbye statement.
One factor that neither the founders nor investors seem to have taken into account is the widespread use of low-cost house help in India. Every neighborhood also has a dhobi (laundry person). An online laundry service has to beat that inconvenience and cost.
In the case of Doormint, the assumptions it made about the problem it was solving and its execution were proven wrong.
AskMe was the second avatar of Getit Infoservices, which was founded three decades ago to list sellers of goods and services in the form of a directory. It went online in 2010 when Astro Entertainments Networks, a subsidiary of Astro Overseas, invested close to US$15 million in Getit. In March, it acquired Infomedia Yellow Pages and AskMe from the Network18 group. The company then wanted to leverage its small and medium enterprise database and use it for an e-commerce platform called AskMe Bazaar.
Harminder Sahni, Founder, Wazir Advisors said before the website had shut down that AskMe was like JustDial, and then it decided to be like Flipkart, and then like BigBasket. “They have lost the plot. Their strategy is changing every three months. In an ideal situation, you change the strategy when you are exhausted. If they are adding new verticals, it shows that the previous strategy has not worked,” he said.
A variety of reasons, from weak technology to aggressive acquisitions, is responsible for the online retailer’s failure.
Bangalore-based Fashionara, which adopted a flash sales model. It could only lure customers with deep discounting. Once the cash ran out and no more investors were in sight, it had to shut shop. This, despite being founded by experienced professionals – former Reliance Trends CEO Arun Sirdeshmukh and former Times Internet CTO Darpan Munjal. US$8 million in funding and a four-year-run went to naught.
This was an unusual shutdown. Used car marketplace Zoomo (earlier called GoZoomo) raised US$7 million in funding, had more than half of it left in the bank, but decided to call it quits. The founding team of three IITians looked at the data and saw the unit economics were not adding up, despite several iterations in the business model. Then they took the tough decision to shut shop instead of burning VC money on an unsustainable business.
“The right thing to do is to treat the capital respectfully and deploy it where there is a better chance to create huge value,” GoZoomo CEO and co-founder Arnav Kumar said.
The problem it set out to solve was the lack of trust in the Indian used car market, where vehicle history rarely has a paper trail. GoZoomo tried to crack this with inspection-based quality assurance for peer-to-peer transactions, keeping car dealers out of the marketplace.
The problem GoZoomo ran into was haggling over price, in a culture where consumers often put a premium on discount instead of quality. Perhaps the market was just not ready for this solution – because without a doubt there’s a problem of trust in used cars, despite the presence of several well-funded players like Cardekho, Droom, and QuikrCars.
So, we should learn from these mistakes and prosper by not falling into the same trap as they did. Work smartly and think wisely.