The great Startup bubble has burst finally or so the Experts would like us to believe as the evidence (as per them) is mounting day by day. Around 1500+ employees at various startups in India have been laid off. One of the Founders was held hostage in Pune and the worst of all, the biggest proof, a certain CEO had to send a strong email to his sales team on missing their quarterly sales target. No, it’s not any ordinary sales target, it was QUARTERLY SALES TARGET. Generally, in other sectors, companies fold up when they miss their targets, but damn this VC money, such non-performers are still in business despite missing their top-line goal.
So missing sales targets, 1500 jobs lost and angry employees laying a siege of the CEO!!! What more proof do these moron VCs need, wonder our expert commentator(s) / analyst(s). Interestingly, all these armchair experts, with all their analysis, comments and advice are nowhere involved with startups/VC world in any manner, (barring few angel investors) but nonetheless have great insight/perspective on everything startup, be it business models, path to profitability, unit economics or any other thing under the sun except probably as what makes these dumb VCs from la la land to give millions of dollars to these kid entrepreneurs who are still learning ABCD of business. ( signs of time, our experts will tell you).
The bubble discussion is no longer a matter of perspective but has now acquired the shape of definitive reality, where judgment has already been delivered. Now everybody in the crowd is just waiting with bated breath for big bang slaying of the unicorn, while the experts like seasoned matadors are taking their time and using data to bring the Unicorns down, with noises getting louder and louder with chants of “End is nigh” filling the air.
So is the bubble really bursting or are we all over analyzing things? An email or for that matter any communication by a CEO to his sales team about missing quarterly or annual sales target is not a bubble. It is a routine dressing down or pumping up of teams as any sales director or CEO will tell you and missing of sales targets or decline in numbers, don’t bring doom as GAIL or NIIT CEOs can attest (GAIL profit dropped by 66% in second quarter this year and NIIT has also seen some swings in its quarterly numbers in last 15 years, and no bubble has burst yet). Same way losing 1500 jobs is sad but a routine affair and is almost like a tiny drop in a big country like India where one startup is starting every day and some 600 startups have raised capital in the last 18 months.
Hence these incidents are not a sign of the bubble but signs of the next phase in the life of these startups as they meet the reality of the business world and enter an adolescent phase of life. Some will flourish, some may die and some will just hang around but that is a usual Darwinian world about survival of fittest, not a bubble burst!!
The Other two parts of this articles are at this link
Part 1: Anatomy of coming Startup bubble: The missing argument – Part I
Part 3: Theory of Asset Bubbles: Its all about Colour of Money! – Part III