Two days after the Karnataka Road Transport Office issued a directive to commutech companies against applying surge pricing, Uber and Ola seem to be defying the rules and continuing with higher prices.
Both Uber and Ola have displayed surge pricing as on Sunday evening with as much as 3.5x the normal fare.
On April 3rd, Karnataka became the first state in the country to regulate pricing by commutech companies by issuing a directive against inflationary pricing. Uber and Ola regularly employ surge or peak time pricing to offset its low fares during non peak hours.
The move by the government had met with mixed reactions from public. One set of people believed that the ban on surge pricing flies in the face of a sound economic-driven pricing model of demand supply, and that it would eventually hit the customers as fewer cabs will be available.
Others, who were regular cab users, had expressed happiness at the decision.
It remains to be seen if Ola and Uber will continue to flout the government rules or eventually toe the line. Uber, especially, is known for finding creative ways around government rules as it battles regulators worldwide. In Bangalore, Uber had continued with its UberMOTO service in spite of a government ban on bike taxi services by rebranding it as a bike pooling service.
Wearable devices startup GOQii has named former Google executive Amit Singhal on its board. Singhal, who is also an angel investor in GOQii, resigned as head of Google’s flagship search business in February after spending over 15 years in the company.
GOQii builds fitness tracker “bands” and provides “coaches” to its users through its app to enable them to achieve fitness targets. It has so far operated in India but is now preparing its foray into the US and China markets. Singhal, an MS in computer science from University of Minnesota and a PhD from Cornell University, will help guide GOQii’s expansion into new global markets.
GOQii is led by founder and CEO Vishal Gondal, who had earlier founded Indiagames. Besides Singhal, it counts among its angel investors Google India head Rajan Anandam, actor Madhuri Dixit-Nene and former Microsoft executives S Somasegar and Vijay Vashee.
It’s been a tough few months for Indian startups, but the bigger ones that been thought to be largely doing well. In a sign that even vaunted, highly funded startups are struggling, InMobi has become the latest company to let go of employees. It has fired 100 people from its headcount of around 1000 in Bangalore.
There had been rumblings early this year that InMobi was struggling to meet revenue targets and was finding it hard to survive the cut-throat competition posed by rivals Google and Facebook. Its latest mobile advertising tool, Miip, which the company had bet big on, has met with a muted response, and s Quora thread had said that after the departure of several senior people, the internal teams was disillusioned.
Factor Daily had reported that InMobi’s revenues for the year ended March 2016 were about $320-$325 million, but its losses in 2014 and 2015 were 45 million and $40 million respectively. The company had taken on a debt of $60 million in August 2015, and that left it with little runway to run operations without cutting costs.
InMobi is one of the poster boys of India’s startup scene, having successfully competed with global giants like Google and Facebook in the online advertising space. With its layoffs, it joins companies like Zomato, Foodpanda and Housing who’ve had to let go of employees to remain viable.
India’s home services space has seen frantic activity over the last few years. Firms have mushroomed and raised large amounts of funding on the promise of bringing plumbers, electricians and other household services to urban Indians. These firms have met with some success, though they have struggled with unit economics and profitability amidst the competition. Now a new entrant threatens to turn the industry on its head. It’s Facebook.
Facebook has just made a huge play in the Indian home services space by launching Facebook services. It’s created a separate section, Facebook Services, where it promises to “find local businesses with the best Facebook reviews and ratings.” And it seems to provide the exact same services that Indian home services startups do – there are sections on plumbing, spas, electricians, event planning and even doctors.
We gave it a spin and it looks quite impressive. The services seem to be available in all major Indian cities, and the listings are comprehensive. There is a nifty map that shows the locations on the right, and each firm has a contact us button. These vary between listings – the buttons seem to either redirect to the site of the service provider, provide a phone number, or most usefully, allow you to send a facebook message to the company.
Facebook is uniquely positioned to make a dent in this space. With over 100 million Indian users, it already has a userbase that homegrown hyperlocal firms can only dream of. And with most major business already on its platform through Facebook pages, it also has a ready supply of reviews and ratings that allow it to show the best businesses to consumers.
Impact on Indian Home Service firms
Indian hyperlocal firms such as UrbanPro, House Joy and Taskbob are likely to be hit if Facebook takes this initiative seriously. Where Indian hyperlocal firms can possibly score over Facebook is getting your neighbourhood plumber online, who might not necessarily list his business on Facebook. But given Facebook’s near ubiquitous penetration in India, if Facebook can get local merchants to set up their business accounts, Indian hyperlocal firms might be in big trouble.
The move will also affect firms like Lookup who aim to connect consumers directly to merchants – with its message merchant option, Facebook could effectively take over that role.
And Indian home service firms aren’t flourishing in the first place. LocalOye, one of the biggest players, recently laid off employees in large numbers, and there have been reports that it might shut down. With Facebook entering this sector, things could get very hard indeed for homegrown firms.
Kishore Biyani hasn’t been coy about his disdain for online retail. The owner of the Future group, India’s largest brick-and-mortar retail chain, had once predicted that none of the online grocers will survive, and Brand Factory, his clothing chain, has recently run ads asking people to go offline. But as far as home furnishings is concerned, Biyani seems to think that online is the way to go.
The Future Group has just acquired FabFurnish.com, which was one of India’s first home and furnishing online stores. “We will leverage FabFurnish’s online platform and delivery model to grow our presence in markets where we do not have offline stores or have minimal reach,” said Biyani.
While the details of the acquisition were not immediately revealed, Future Group could’ve paid Rs. 15-20 crore for the company, Livemint reported. Future Group will retain FabFurnish’s brand and will use the online platform to take Home Town, its own brand, online.
FabFurish’s acquisition marks the first exit for a Rocket Internet company in India. Most of Rocket Internet’s India’s portfolio has had a rocky few months. Foodpanda has fired 300 employees and been at the center of a corruption scandal, and Jabong has seen several managementshakeups over the last year. FabFurnish too wasn’t without its share of controversy – its founders had quit to launch their own venture, and it had fired 50 people as a part of a business restructuring.
While FabFurnish has raised over $30 million (Rs. 180 crore) from Rocket Internet and Kinnevik, its sale price of Rs. 20 crore might be an indication of things to come in the Indian startup scene.
[This article is a part of our First Person series, in which people share their stories and thoughts about startups, lives and careers.]
I am not even remotely involved with the Indian startup ecosystem. But unfortunately, I read a lot and try to make sense of it in equal measures.
And from whatever I have been reading and observing regarding the Indian startup story, especially in the last 12 months, I feel something is not right. Let me cut to the chase right away. Here’s what I think:
1. Where is India’s Google et al?
Google, Amazon etc. were born out of the first internet wave in the US during the 90s. A decade or so later, China built its own Google named Baidu, and practically drove Google out, which otherwise, has a global search engine market share of roughly 80%. Further, the rise of Alibaba displaced Amazon. Circa 2015, if India has indeed become the third largest startup ecosystem, then where is India’s Google? Facebook? Or Twitter? Or such meta-level startups.
What’s wrong then? With due respect to the Indian innovators, IMHO, most Indian startups aim to be rent-seekers and not wealth creators in the true sense. They are not interested in the bigger picture, in solving genuine problems, creating new categories or trying to become leaders in the existing ones.
Without generalizing, I want to say that most Indian startups by and large look to copy an existing model, and fine tune it to serve the local need. There’s Ola for Uber, Gaana for Spotify, the N number of food delivery startups, and their extended versions delivering just about anything under the sun. InMobi is the only Indian startup that comes to my mind, which carved out a niche for itself. Again, I may not know enough names, but I hope I have driven home my point.
2. The Zuckerberg Syndrome
This is my biggest pain. Ever since Mark Zuckerberg created the behemoth that is Facebook, every 22 year old graduating kid wants to become a CEO. The little things called experience and expertise be damned. And those sugar-coated, half-told success stories floating on the internet haven’t helped either.
What these young graduates often forget is that people like Steve Jobs, Jeff Bezos or the latest poster boy Elon Musk slogged for years, writing codes in anonymity, sharpening their skills to the point of perfection before jumping onto their grand idea. To put things in perspective, Elon Musk took many years to self-learn the nuts and bolts of rocket science and electric automobiles, literally. But all we want to see is the end product — SpaceX and Tesla.
This is where the latest breed of Indian founders falter. They do not want to wait. They have been overfed the idea that an ‘IDEA’ is all you need and you need to move fast, unless someone else beats you. Misinterpreting the overnight success of new age startups like Pinterest, Instagram etc, they do not want to invest in honing their skills or gaining perspective about the sectors they wish to dive in.
The immediate tag of a CEO, CTO, COO (CXO) is way too enticing to let them go through the grind.
They should ask themselves — where is innovation in selling baby diapers online? Or loaning bean bags on rent for parties? Or delivering food from the local chicken-shawarma joint? Creating the most attractive and seamless website/app and hooking up with a local delivery service, while piggy-banking on investor money is NOT innovation. It is not sustainable and definitely not long term. It might be better to call it a normal business instead.
3. The dichotomy of VC and Angel Funds
It is interesting to note that most of the first generation startups in the US and also in China were bootstrapped. That played a huge role in their successes. Why? Because it is human nature which drives us that extra bit when our own money is involved.
However, the Indian startup scene right from the beginning is heavily marinated with huge VC and Angel funds. However ironic it may sound, this is what I feel is rotting the entire system. Young, creative, enthusiastic professionals leaving their jobs, higher education etc, drawn by the charm of easy investor money and an imaginary million dollar idea. Well, any idea would seems like a million dollar shot when funding is a non-issue.
Add this to what I discussed above and you can see a reasonable argument in why this generation of Indian innovators do not want to wait. The grand vision gets restricted to building a workable model of any existing idea, get funded and then hope for a million dollar exit. This is the purported life-cycle of most Indian startups.
To an outsider like me, the Indian startup ecosystem resembles a large casino where Mc-Daddy VCs come to play their bets.
4. Forcing western models in Indian markets
Let me explain by quoting an example — online grocery delivery makes sense in the US, where the nearest Walmart or Kroger might be miles away. Secondly, most food items there are frozen with a longer shelf life. Thirdly, from personal experience I have observed, a US family has a more or less fixed weekly or bi-weekly grocery list with strong brand loyalties.
The Indian system is as opposite as it can get. There’s a Kirana (mom and pop) store at every nook and corner, complemented by the rapidly expanding supermarket chains like Food Bazaar, Big Apple to name a few. But even more important is that we Indians largely consume fresh food — vegetables, milk, fruits etc. Indian mothers won’t cook in peace until and unless they’ve handpicked their vegetables.
Thus, the Indian market for online grocery shopping gets restricted to the young and working population in urban centres, who are anyhow increasingly eating in office or outside. My point is that there are many such startups in India, trying to fit a western model into Indian markets without fully working out the ground level movements. That’s why they hit a roadblock when it comes to scaling, and end up being the proverbial frog in their respective wells.
5. The mind numbing valuations
I am old school. Hence, I believe that profit is the main driving force behind any venture. And that any venture should be valued according to how profitable it is presently, or might be in the definite future. But when a startup with no profit to show in the near future, and a multi-million cash burn rate, get valued in billions, a layman like me fails to understand the equation being worked out, even after factoring the much talked about cost of customer acquisition. To be fair, this is a more global phenomenon and not just specific to Indian startups.
It almost sounds obscene when Uber is valued at 60 billion $. That might be more than the GDP of some countries.
The problem is exacerbated in case of India because nascent startups lose the plot in the glitz of inflated valuations, even before they get a hang of their basic modalities. VC firms often end up sucking out a major portion of total equity in the bargain, leaving very little for the original founders to play around with. Except for the paper tag of being freshly made millionaires, if not more.
6. The Talent or the lack of it
I wanted to keep this point for the end, because it might surprise a few. Dare I say this — I feel the potential of Indian graduates is being oversold. We are relying on the past laurels of the IIT-IIM system, when it used to be relevant.
With the mushrooming of sub-standard engineering colleges, a major chunk of the talent pool of freshly graduating students is barely employable, let alone equipped with the powers to create a truly disruptive startup. It is no secret that the Indian education system lays little emphasis on practical training. Thus, what we end up doing is building poor products by copying existing codes/tools available on Google. In defense of early stage startups, they just don’t have the resources and time to train an employee whose sole aim might be to make a quick stopover, while on his way to greener shores.
I want to conclude by accepting that it is easier to rant and pick up faults. The likes of Google or Amazon had the first mover’s advantage, backed by strong and developed national economies. In comparison, the task is cut out for anyone starting now. The world order is far from just, and the bigger players do every bit by arm twisting developing countries to their advantage. The Indian startup ecosystem faces somewhat similar problems in its limited domain. Having said that, I do wish to see Indian startups someday working on truly cutting edge technologies in areas like defense, space, automobiles and opening new vistas, not just for India, but the entire world.
[ The author Nishant Rao describes himself as an amateur writer and a professional bridge designer. He has an MS in Structural Engineering from Uni. of Michigan Ann Arbor, and bachelor’s from IIT Guwahati. The article was originally published on Mediumand has been reproduced with author’s permission.]
Things are getting pretty sordid in the Indian startup world.
After Uber had approached the Delhi High Court accusing the company of making fake bookings on its app to sabotage its business, Jugnoo has followed suit with similar claims of its own.
Jugnoo is a Chandigarh-based auto aggregator that competes directly with Ola, which also has its own auto booking service. It alleges that Ola employees have been creating fake accounts over the last 10 days to book and make cancellations on Jugnoo’s app leading to loss of revenue for the company and also affecting the income of auto-rickshaw drivers.
The company has now published proof of Ola’s alleged foul play. The company in a heartfelt and a no-holds-barred note alludes to Ola as the big player who fears the rise of small players.
“A competitor who can do much better than resorting to lame tactics. A competitor who doesn’t have to be a bully.”, says the note, pointing to Ola.
Jugnoo’s prime accusation against Ola is that the latter has hired a team of people especially to make these fake bookings on Jugnoo’s platform, and cancel them immediately, causing loss of revenue and inconvenience to actual users.
Jugnoo was able to track this occurrence down to a pattern and a screenshot of these bookings are brought up, establishing the presence of foul play.
The note also insinuates that this is not a one off case against Ola, and the company is known to engage in underhand tactics to usurp competition and establish dominance in the fierce commutech space.
Ola is the leading cab-aggregator in India, but also has autos, bike taxis and now e-rikshaws into its fold. Ola currently has 75,000 autos in its fleet, and is looking to expand. In the autos categories, the Chandigarh based Jugnoo is Ola’s only competition, albeit much smaller.
While Jugoo hasn’t pressed legal charges, the company has wilfully decided to go public with these accusation against Ola. Meanwhile Jugnoo ends the note on the following advice for its competition.
“Focus on enhancing one’s customers’ experience than disrupt others”.
Last night, a prominent media house had reported that local services provider LocalOye was on the verge of shutting down. The report had cited unnamed sources and used examples from a Quora post to show how LocalOye was beset with profligacy, systemic mismanagement and “too much partying”, and the Tiger-backed company would soon shut shop.
Today morning, LocalOye founder Aditya Rao posted a heartfelt 15-tweet tweetstorm talking about the report and the problems at his company. In an unusually honest and brutal assessment of his company, Rao admits that while Localoye is “wasn’t in the best of situations”, it will live to fight another day.
LocalOye had been accused of hiring and firing indiscriminately in an anonymous Quora thread, which had claimed that people had been fired within a week of their joining. Rao doesn’t seem to deny this claim, but says that everyone who was fired was given 3 months salary as compensation.
Rao gets contemplative in his next series of tweets. He admits that while mistakes were made in running the company, and says he’s been doing some soul searching about his personal role and his leadership skills.
Rao seems to defend one of the chief accusations in the Quora post – the too much partying. “The very first few days of funding was just about partying. The entire tech, marketing and hr team used to sleep in the CEO’s house. They would drink and smoke the whole day and were just blowing away investor’s money.”, the anonymous poster had claimed. Rao says that that partying wouldn’t stop. “We will NOT stop partying hard”, his tweet says. “If you can’t have fun after working for 14 hours, then entrepreneurshIT is not worth it :P”
You know the time for green initiatives has truly come when the country’s prime minister lends his support to one.
In a major win for the environment, and Ola cabs, electricity powered e-rikshaws will now be available to be booked on Ola’s app in the Delhi-NCR region.
“A total of 5,100 Ola e-rickshaws will be launched in partnership with Bhartiya Micro Credit (BMC) at the event and will be deployed across Delhi, Gurgaon, Noida, Faridabad and Ghaziabad. This will be further scaled up in the coming months to more small towns and Tier III cities,” Ola Chief Operating Officer Pranay Jivrajka said in a press statement.
The initiative was launched in partnership micro-payments organization BMC and was flagged off by prime minister Narendra Modi himself at a Startup India event in New Delhi today. The prime minister is gung ho about this initiative and believes that it will help transform many lives including the ones of its drivers as well prove to be a saviour for new Delhi’s worrying pollution levels.
Delhi had been recently ranked as the most polluted city in the world. The government had sat up and taken notice, and amongst other initiatives, launched the odd-even vehicle rule which had met with moderate success. E-rikshaws have been running in the region for a while, but being available to book on Ola, might just give them the much needed fillip to ply more. The e-rikshaws can run up to 90 kilometers on a single charge.
Ola will charge the E-rikshaw drivers a commission of 10% on the bookings, while there will no convenience fees charged to the users. The base fare for the e-Rickshaw will be Rs. 25 for the first 2 kms and the per km charge would be Rs. 8km.
Ola is currently the market leader in cab bookings in India and also has under its fold bike taxis, shuttles, and shared rides. With the inclusion of e-rickshaws and the prime minister’s blessings with the project, the company seems to have all bases covered in the commutech space.