Flipkart’s IIM hiring debacle, Zomato scaling down, Snapdeal top hire quits
Flipkart defers joining dates for IIM grads; Zomato scales back operations in nine overseas markets; Snapdeal's chief product officer leaves
Mint presents a wrap of the developments in the start-up world in the past week that gives you an idea of how the sector is doing. Who shut down? Who is laying off people? And who is pivoting in the search for the right business model?
It’s been a busy week at some of India’s top start-ups. Flipkart faced flak for deferring the joining dates of graduates from various Indian Institutes of Management it hired, Zomato scaled back operations in nine countries, Snapdeal loses its chief product officer and chat-based personal assistant app Helpchat ironically discontinued the chat part of its business.
Hiring, deferring and what happened after
If there was one story that dominated the headlines for most of the week, it was Flipkart deferring the joining dates of the graduates from the Indian Institutes of Management (IIMs) that it gave offer letters to, and the consequent fallout.
On Wednesday, Mint reported this development, and irate students and institutes spoke up on Thursday, saying that this hurts the brand image of Flipkart and makes premier institutes like the IIMs and Indian Institutes of Technology (IITs) think twice about start-up hiring.
India’s two most valuable Internet businesses—Flipkart and Snapdeal—are under immense stress as they struggle to raise fresh funds and compete with deep-pocketed Amazon’s India entity.
Flipkart and Snapdeal have also slashed spending on discounts and marketing, along with hiring costs. Apart from hiring a few senior leaders, hiring at these firms has reduced hiring to a trickle over the past two months in order to save costs, Mint reported on 6 May.
Other start-ups, such as Hopscotch, CarDekho, Roadrunnr and Click Labs, have also deferred the joining date of their hires.
In a separate development, on Friday, Morgan Stanley Mutual Fund Trust, a mutual fund investor in Flipkart Ltd, lowered its valuation estimate of Flipkart by 15.5%, for the second quarter in a row, implying that Morgan Stanley now values Flipkart at $9.39 billion, a sharp decline from the $15 billion it was valued at when it received $700 million from Tiger Global Management, Qatar Investment Authority and other investors in June.
The fault in (some of) our food start-ups
Restaurant search and food ordering start-up Zomato Media Pvt. Ltd has scaled back operations in nine of its 23 overseas markets, including the US, to cut costs under pressure to turn profitable.
Zomato, which has raised $225 million so far, had earlier made a very expensive bet on becoming a market leader in the US and spent $60 million to acquire Urbanspoon, a similar start-up that operated in the US.
Zomato currently gets 45% of its overall revenue from India, about 20% from the UAE and the rest from other markets, and said it will now focus on 14 markets where it claims leadership, which include India, the UAE, Qatar, Lebanon, Turkey, South Africa and Australia.
Most of Zomato’s revenue comes from advertising and food ordering, which are growing at 11% and 30% month-on-month, respectively. However, restaurants on the Zomato platform that pay for advertising account for a mere 5-8% of its total restaurant database. In India, about 6% of total 70,000 restaurants are paying clients for Zomato.
A late entrant into the food-ordering business, Zomato in India competes with the likes of Rocket Internet-backed Foodpanda and Bengaluru-based Swiggy. The company currently handles 25,000 orders a day with an average basket size of ₹ 480.
Mumbai-based food ordering company TinyOwl Technology Pvt. Ltd has on Monday said it would discontinue operations in all locations other than Mumbai, ahead of its rebranding as Runnr, as it merges with logistics firm Roadrunnr.
TinyOwl and Roadrunnr, which so far have raised around ₹ 280 crore in funding since inception, have Sequoia Capital and Nexus Venture Partners as common investors, and hope that with the merger, the new entity will be better equipped to compete with rivals like Swiggy and Zomato Order.
Helpchat shuts down chat
One of the most well-funded companies that operated in the conversational commerce space in India, Helpchat, which raised ₹ 100 crore from Sequoia Capital, said on Thursday that it phased out the chat part of its app. With Helpchat, the premise was that the app would be a personal assistant that would help you perform transactions such as cab-booking, recharge and give you updates, all via a chat-based user interface. Now, the app bills itself as an “app of apps" where you can still do all the above, but without using chat.
The firm also said it laid off an unspecified number of employees that were part of its chat business.
This is the second pivot for Helpchat, which was earlier known as Akosha, a platform where businesses could interact with customers.
Although conversational commerce is one of the most-talked about topics in the tech world, with Facebook opening up its Messenger platform for people to deploy chat-bots, it is still in its early stages, as consumers warm up to the idea of texting businesses to perform transactions. Using chat for chat’s sake won’t, however work, as Dan Grover, a product manager at WeChat pointed out in a blog post. It took him 73 taps to order pizza through a chat-bot, compared to the 16 it took him using a Web interface on WeChat.
Indian chat-based concierge start-ups are clearly feeling the heat with the increased competition, thanks to Facebook Messenger bots opening up the chat-commerce field to newer companies like MagicX.
Haptik, another well-funded chat-based concierge app, which raised $12.2 million from Kalaari Capital and Times Internet Ltd, recently wrote in a slightly bizarre blog post that “when we started Haptik back in 2013, we never knew that one day we’d be welcoming companies like Facebook and Google to an industry we gave birth to."
Sorry Haptik, the idea of using chat bots for transactions has been around since at least 1996.
Snapdeal loses top hire
If last year was about high-profile Silicon Valley tech talent coming home to India to join some of the top start-ups here, this year the story’s slightly different. This week, on Tuesday, Anand Chandrasekaran, chief product officer at e-commerce marketplace Snapdeal, quit the company to pursue entrepreneurship, less than a year after he joined it last June. Chandrasekaran held the same designation at Bharti Airtel Ltd earlier, and also served as senior director, search products, at Yahoo Inc. in Silicon Valley.
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