Start-up breakdown

Ashis Dutta Roy

The questions have always been there. From niggling doubts to profound existential riddles. But as we draw closer to the end of the year, with all of one financial quarter to go, the writing on the wall is clearer than ever. For Indian startups, the grind is real.

The bubble bursts

PepperTap, SpoonJoy, Dazo, DoneByNone, LocalBanya, Fashionara and iTiffin are among the more than a dozen prominent startups launched with much fanfare only to shut shop in the last one year.

After years of boom, the engines of India’s startup story seem to be sputtering. In the latest sign of a downturn, a Bangalore-based firm Tracxn Technologies has put together India’s first Deadpool list, a catalogue of dead or dying startups. The list identifies nearly 800 fading or dead startups in almost every segment of technology, including e-commerce, online education and mobile software.

Scores of headlines in the past month have recorded the slow, painful demise of Askmebazaar — the promising Indian startup that went up in flames but whose intro on the Google search page still hauntingly reads ‘India’s best online shopping site’. The story of Askmebazaar is nowhere near the defining plotline of the Indian startup scene. But it certainly is one of the realities facing the fledgling industry.

Nearly 4,000 employees lost their jobs when Askmebazaar shuttered its doors last month. Several of them say they didn’t receive salaries for months. Vendors of the company, one of the top 10 players in the Indian e-commerce sector, have filed police complaints over crores in unpaid dues.

Flawed strategy

The primary reason for the company’s downfall has been its inability to turn profits despite huge investments. Starting out as a classified portal in 2010, Askme launched its online shopping portal Askmebazaar in 2012 with a focus on small and medium enterprises. But seemingly without a coherent strategy that set it apart from bolder competitors, the company had lately been burning huge amounts of cash to stay afloat in a fiercely competitive market.

But times have not been kind to even those who did have a strategy — if it was the wrong one. Flipkart, one of the first Indian startups to make it big, has been sputtering recently. The company has been pounded this year by a series of valuation markdowns, high-profile executive exits and staff cuts. The hiring fiasco at the Indian Institute of Management, when it hired students but later told them they would only be able to take them in at the end of the year, did not help their cause either.

The strategy to focus attention on its mobile applications (along with that of its fashion subsidiary Myntra) over the desktop and mobile websites backfired. It resulted in the company ceding leadership in desktop and mobile website traffic to Amazon.

That the company expanded its seller base aggressively and outsourced its delivery and logistics handling also made customer experience suffer.

Course correction

Along with the stumbles, there have been more than a fair share of startups which have had to take a long hard look at how they operate. Well-known brands such as Grofers and Snapdeal have been forced to scale down operations, failing to raise enough funding to sustain themselves.

Housing.com, the high-profile real estate listing startup that became famous for its former CEO’s outspoken views, unveiled a dramatic turn to its entire strategy last month. From a flashy website for people looking to bypass brokers while looking for places mainly to rent, it is now a hub for those wanting to buy properties of all sizes.

The story has been similar for online eyewear marketplace Lenskart. While its cousins Bagskart, Jewelskart, Watchkart shuttered, Lenskart announced a move to aggressively expand offline. Faced with meagre success online, the company plans to open some 2,000 franchise stores over the next five years.

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 A ray of hope

If anyone has been an ace at beating the odds, it has been Zomato. After a bumpy 2015, the company finally turned profitable in six of its 23 markets, including India. The key to success has been aggressive efforts at cutting spending and improving business dynamics. The difficult decisions included a 10 per cent cut in the workforce last year and closing delivery operations in four cities where the demand was weak.

Zomato’s story proves how failures are not the end of the game for startups. Failures are good if startups learn to learn from them. And it’s also not a bad thing if they take a beating in the process to make them stronger.

As many critics of this story would prefer, I too wish I could key in a pithier take and conclude with eloquent versions of either ‘the end is nigh’ or ‘haters gonna hate’. But for now, we’ll just have to settle for this: For Indian startups, gone are the wishful days of spinning dreams and sky-high valuations. The brutal era of sky-high expectation is just beginning.

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PepperTap

The on-demand grocery service, once among the top 3, shuttered its operations in April this year. Battered in a high-competition, low-margins market, the company announced it would transform instead into ae-commerce logistics company.

TinyOwl

One of the many food tech casualties, TinyOwl wound up its operations in all cities except Mumbai in May. Since then, it merged its operations with a company called Roadrunnr to become a new delivery (not just food) outfit called runnr.

Fashionara

Launched in 2012, Fashionara was an ecommerce portal that focused on categories such as apparel, footwear and accessories. It closed down sometime around May this year, dying a quiet death after failing to stem the unending string of losses.

TaxiForSure

Acquired by Ola earlier this year, TaxiForSure bid goodbye to users in last month. Operations of the company were integrated with Ola’s. Media reports said the move would result in anywhere between 500 and 1,000 job cuts.

Dazo

In spite of its experienced founders and high-profile investors, Dazo is proof that big industry names don’t necessary guarantee success. It started out as an “internet-first kitchen” and then, became a restaurant aggregator before giving up within a year of launching.

iTiffin

Online meal service provider iTiffin offered meals based on a defined calorie count requirement on a subscription model. But after three years, the company closed down operations in March this year, reportedly saying it will return

Tushky

An online marketplace for discovering and monetising leisure activities, Tushky quietly stopped operations after it failed to scale up and raise further funding. Reports say co-founder Talvinder Singh has now joined Oyo Rooms.

Lenskart 

The three niche online marketplaces — Bagskart, Jewelskart, Watchkart — were launched by Vayloo Technologies, along with Lenskart, an eyewear marketplace. The founders decided to shut down the three brands and focus just on Lenskart after they failed to catch traction.