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Has the Indian startup industry not grown up yet?

Has the Indian startup industry not grown up yet?

In what seems like a very long week, the Indian startup industry came under the limelight – for all the wrong reasons.

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After 12 years of trying to make it work, Stayzilla, a home-stay aggregator, shut shop in February. A month later, its co-founder, Yogendra Vasupal was arrested and is now in a jail in Chennai on allegations of fraud by Jigsaw Advertising, a media agency.

Around the time of his arrest, a pre-saved blog post from Vasupal’s Medium account was published. The post had details of several episodes leading up to the last few days and claims that the two co-founders were under duress from the authorities.

The incident highlights not only the strange pattern of startups clashing with local authorities, but also their constant struggle with money. And if the allegations against Stayzilla are true, it brings forth another point of Indian startup founders acting on impulse rather than well thought out plans.

Is this scenario unique to India? It would appear so.

If the Indian startup industry has to survive beyond just the initial phase of being a startup and mature into fully fledged companies, do they really have a plan?

Earlier this year, a former Uber engineer, Susan J Fowler wrote a sordid account of her tenure at the company. Fowler recounted various incidents of sexual harassment and sexism experienced by her and other female engineers.

The very same day, Uber’s CEO Travis Kalanick released an official statement claiming that Liane Hornsey, the new Chief Human Resources Officer will be conducting “an urgent investigation into these allegations.”

On March 12, an anonymous user by the name Indian Fowler, wrote about her time at The Viral Fever (TVF), an Indian online entertainment startup. The Indian Fowler’s post, similar to her namesake’s, was a detailed account of how she was consistently harassed by CEO Anurabh Kumar during her two years at the company.

The company’s curt official statement was almost a threat to bring the anonymous accuser with “severe justice for making such false allegations.” However, the allegations against Kumar kept piling up with several women coming out with incidents of their own, and not anonymously.

When Kumar was asked to comment on these allegations, his response was, “I am a heterosexual, single man and when I find a woman sexy, I tell her she’s sexy. I compliment women. Is that wrong?”

In contrast to Uber’s swift and sensitive response, TVF’s abrupt way of trying to turn the table on the accuser followed by Kumar’s feeble justification leads us to ask a very important question: Has the Indian startup industry not grown up at all?

India’s startup industry has more than 19,000 companies, and is the third largest market for tech startups. In an environment like this, one would expect companies to have an idea of how to go about things. But, apparently not.

Taxi-hailing companies Ola and Uber India have a long history of locking horns with local authorities. If they are not getting banned, their drivers call for strikes over fall of incentives. The two companies came under the law for both bike taxis and ride-sharing services. While the former was discontinued, the latter is still functioning. 

Similarly, ecommerce giant Snapdeal came under the radar when members of All India Online Vendors Association (AIOVA) claimed that the company hasn’t paid them their dues. The sum of the dues stands at around INR 1.2 crores. Additionally, 40 percent of the sellers belonging to AIOVA have logged off from the site.

Prior to this, the company’s founders announced a 100 percent pay cut and confirmed that the company was laying off employees after an abysmal 2016.

Read more: Layoffs in the Indian ecommerce sector in 2016

On March 13, Shopclues co-founder, Sandeep Agarwal took to Facebook accusing the company’s co-founder and his wife, Radhika of altering his voting rights in the company, questioned her credibility, and accused her of an “illicit love affair.” He proceeded to delete the emotional outburst but has now filed a case of defamation against his wife and the other co-founders of the company.

For startup founders to go on Facebook to vent out professional spats is nothing new. Former CEO of Housing.com, Rahul Yadav became viral on social media when he went on several rants against his board, other startup founders, VCs and the media. He was eventually fired from the company due to his behaviour.

Interestingly, incidents of bankruptcy or sexism are not unique to the industry. But would any other industry’s leaders take to social media to deal with these issues?

To have so many red flags raised one by one in the same sector in such a short span of time is alarming. Where are the HR policies, work systems and bankruptcy policies? Why aren’t these issues ever highlighted in an industry fixated only with funding?

According to Abhishek Goenka, Partner at PwC India, "Startups are going through an interesting phase in their lifecycle. While some companies continue to flourish, many others are floundering. This is not unusual and it is quite acceptable that startups will fail."

However, he added that in addition to the government's policies and initiatives for setting up new startups, a simplified process for closing down companies is also required. "This will eliminate several of the long drawn out disputes that arise, and make it easier for entrepreneurs to move on to their next venture, without getting caught up in the rigmarole of closing down their company," he said.

If the Indian startup industry has to survive beyond just the initial phase of being a startup and mature into fully fledged companies, do they really have a plan?

Edited by : Mansi Joshi