The year is 2035 and jobs are very difficult to come by. My daughter, now of an employable age with a Masters degree, yet unemployed, sitting at home, asked me:
Papa, what did I do wrong?
My throat runs dry and I sink my head in to my palms and tell her, you didn't do wrong dear, I did.
My heart is pounding and I stammer as I tell her, that most of the fifty year old today, in their, thirties were busy creating delivery start-ups & last mile on-demand service apps/companies and most of them failed.
She then asked me a question obvious to her :
Why did you all invest your careers in valuation instead of companies creating value?
I hung my head in shame as I shrugged my shoulders. I tucked her in bed and sat besides her, wondering how many parents like me would have had this sinking feeling as I feel now and no one to blame but themselves.
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Chapter 1. The Year Was 2016
I have this belief - Everything that is gradual is sustainable. It is what I learned from nature. It is what I saw in my life and things around me. Fly-by-night shops/services, certification instead of degrees and many things in the similar patterns are all temporary, because it is all a quick fix and not sustainable. Also, anything growing rapidly makes me skeptical, because it's against the law of nature.
In Feb of this year I penned down my thoughts on the start-up ecosystem, the indifferent culture, the speculation, the glory and horror of it all and most importantly why is this happening. Titled 2016: A year of start-downs. Click here to see.
Point is - This is a 'House of Cards' and like the dotcom burst this too will fall in line. There is a natural order to things and since the start of this year we have seen four imminent fall outs:
- Start ups have pulled down their shutters or been acquired (click for news 1, 2, 3)
- Doing away with anything and everything to control cash burn. They have employed techniques from withdrawing coupons, free home delivery services to calling it quits on campus placements (click for news 1, 2, 3)
- Speculation leading to investors refraining from funding (click for news 1, 2, 3)
- Doing mass layoff (click for news 1, 2, 3)
The house of cards came crumbling down with Tiny Owl fiasco and sooner than the market expected, investment firms, started re-looking at valuations and giving a more realistic number. Flipkart went from a $15 Billion to $9 Billion over night. That in my opinion also is a highly inflated number too.
PepperTap closed down humbly , the co-founder shared his story with the world and what went wrong ,Rocket Internet has clearly failed and lost respect too. The most recent news on Flipkart laying off got emotions high. Many other start ups are in the line of fire, to be executed by sudden death, when the trickling funds go dry.
The immediate repercussions : It is now all sinking in and we all will think twice before joining a company that is either a start-up or running its business purely on the back up of funding.
The students of IIMs who never got the placements they deserved, must be angry and then upset, but I believe it is those students who will also be better prepared for the future. They'd be more sensitive and more invested in the value of companies and not the valuation of it (once bitten).
As for the staff that has been laid off, they must be fanatically looking for a new job for all those mortgages they took for a better life must be due. But the real price at stake is even higher.
The future that could have been, the possibility.
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Chapter 2. The Law Of Unintended Consequences
I believe your future is a derivative of your past and a function of your today.
The difficult future we ought to prepare ourselves for, is not ours but of our kids. They will face the brunt of all that is happening today.
We all (millennial generation), since a decade now have been relentless chasing a dream of retiring by 40, becoming rich overnight, working for ourselves, moving our goalpost each time, trying our hands at any idea that can get us there.
The fallacy of this is - we are not creating products or services to make quality of life better. We are creating companies to become millionaires and that is a fundamental flaw. Like all things which aren't in a natural order, this too will fail.
Come to think of it, Flipkart’s valuation places it ahead of listed giants such as Indian Oil Corp. Ltd, Tata Motors Ltd and Mahindra and Mahindra Ltd.
Snapdeal’s valuation exceeds that of Yes Bank Ltd, Titan Co. Ltd, Vedanta Ltd and Tata Steel Ltd.
The companies that toiled day and night, did things by the book, created sustainable jobs, made life better, touched its consumers, passed on the baton to generations are now way behind in valuation against fundamentally a delivery company couple of years old; its just beyond me.
The law of unintended consequences is at play and it cumulatively governs everything from a small decision we make as individuals to the entire economic behavior.
The jobs we have today are because of the activities and movements that took place a decade or two earlier. What we sow today will show its results in the future to come. And someone had to say this - ''It might not be as pleasant if we keep going after this relentless pursuit of riches and hence, creating companies out of the next possible idea we fancy.''
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Chapter 3. The richest people I ever met
Were also one of the most humble I ever met. This story is important to share, bear with me. (I know this post is getting long, like all my other post and the monkey in my head is up to his funny business by this time, damn!)
The other day I was in the park with my daughter. On the other side of the park was a gentleman with her daughter looking towards me.
Confusing him for someone else I knew from the day earlier, I kicked my football towards him and he passed it back to me. On coming closer I apologized to him for confusing him for someone else. My daughter and his' started playing with one another and I learned that they are just 2 months apart. Both of us as fathers started exchanging notes on our daughters and their eating time theatrics. He also shared a video of her daughter just learning how to speak and stuff. Both our wives also arrived by then, got busy talking to each other and walked away.
In our further conversation, he asked me:
''Where do you live?''
I said - ''Across the lane through the park.''
I questioned too - ''Where do you live?''
He pointed to the house facing the park. (And my jaw dropped!)
It is the best and the biggest house in our neighborhood with ALL the dream cars parked outside.
Little did I expect him to be such an open, humble and grounded person. We spoke of a number of topics, mainly around his business and my job though. We exchanged many views and most on how companies now don't think long-term at all. It has all become a short term bet.
I inquired from him, if he has any stake/investment in any start up. To which he responded - ''No, and never will!''
In his words "do they even know how many zeros are there in a billion? They all are investors and valuators themselves, I stay away from it"
This gentleman (aged 32 years) told me he dealt in the manufacturing of pharma drugs. Further, he surprised me by telling me that his wife is the daughter of Mr. Juneja, the Mankind Pharma owner (a 4000 Cr company, founded in 1995). This one of a kind real experience left me humbled.
Over the years, they created value, created around 12000 direct jobs and about three times that in, in-direct jobs, created products and services that actually made a difference. As I waved him good bye, I felt respect for him and his family. This family in a span of 20 years have created so much employment. Sustainable employment.
The respect was for two things. He created value and yet is grounded. I caught myself in that moment and realized; there are very few like him and many unlike him caught up in the start-up culture.
A culture that might be responsible for fewer jobs in the market in 20 years from now.
What are the millions and billions being invested in?
On delivery companies of other products, aggregators of online menus, on-demand plumbers, on-demand cabs, home delivery of groceries, and so on and so forth.
Seriously! Have we really come down to just creating companies monetizing on convenience?
The other two people I know (33 & 35 years old), one that made an app in the category of logistics, and the other on better IVR experience. Both received funding and the first thing they did is buy themselves a Beamer and the other one, a Jag and a few other bucket list items. I asked them - 'Is this it?'They replied - 'No, the charm is to know when to exit and how to take it from thereon.' I wasn't left with any respect for those two.
Will all these start up companies outlive their creators? Will their companies be sustainable? Will these companies create their own value? (Most don't care, it is all about the money and the exit plan!)
- None of them are making profits, why is that OK?
- They get funding on the basis of value of goods sold - XXX billion! Well, if you are making losses per transaction on every transaction, why is that OK?
- They believe they have an XXX million base of customers and hence they are a fundamentally strong company. Really!, what ever happened to the: Tiny Owl clientele? To all the PEPPERTAPpers? To all the LOCALBANYAites? To all the AUTORAJAs? To EASYMEALers? And so many others gone overnight! why is that OK?
All this effort and time, all the hard work, all the dreams and the butterfly effect of the jobs they created, all gone!
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Chapter 4. The Lies We Want To Believe In
It's good to be ambitious and progress. But, let us get real about it. Let us create things that will be of fundamental value. It starts with being brutally honest to ourselves, cause the lies we tell ourselves are the biggest lies of all:
- Overnight success & riches. No such thing! It is not a natural order of things. There are laws of how things work and how they are governed. We only see the best shots in porn; we don't see the menial work and preparation gone into it, the tedious activities around it.In the same way media floats around and celebrates the best of many, like Mr. Bansal in edits. Only success stories and the glory is shown to us, not the bad, the gruelling backstage of all that, the failures, the ones that never made/make it.Sachin Tendulkar isn't an overnight success. Beethoven wasn't an overnight success. Jay Z isn't an overnight success. Apple wasn't an overnight success.Mahindra wasn't overnight success. Tesla isn't an overnight success.The new ad from Under Armour tells us just that. The protagonist Micheal Phelp's life was and is all about hardship, success, dope charges and his comeback, all of which took all his life efforts. All the entrepreneurs have worked hard, no doubt.But if it was hard enough, the start up ecosystem wouldn't have come down to this.
- The Underdog. We start believing in this story when someone we know represents this underdog story. Trust me, it is all bullshit. That 'someone' was preparing and working his way up, it is only now that you all noticed him. Believe in the underdog story but with the humility that comes attached with it, telling us:We have to try harder.We should accept gradual growth. We are responsible to the people who work with us to give our dreams wings and being sensitive to them.
- The Status of a Co-Founder. This is a common designation now on LinkedIn and desired by many, BUT what does it amount to? If we are suddenly doing mass layoffs, shutting business, getting devalued, killing dreams of people dependent on you, are you really worthy of being called a co-founder?
- Its OK to fail, lets give it a try. I have failed in my own business venture and of most things, it was emotionally devastating, it controlled me and as time went by it gave me a lot of clarity and I realized what all I did wrong. I gave my 3 employees 6 months salary and a heads up, one had then just got blessed with a son, their life didn't change, they got new jobs and they will join me back when I restart. Its cause of what I did, it was right to do. I will redo the entire business and this time around I will go all in again as before and keep at it, till I have found success at it. Cause its not OK to fail. Like Al Pacino said in his movie, Any Given Sunday "I'll tell you this, in any fight it's the guy whose willing to die whose gonna win that inch. And I know, if I'm gonna have any life anymore it's because I'm still willing to fight and die for that inch, because that's what living is, the six inches in front of your face".Don't go in thinking its OK if you fail, you will then. If you fail, repeat, until its not OK.
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That day in the park, meeting him, I realized, its all about RESPECT. Money is secondary, my father keeps telling me this all the time, it didn't hit me, until that day.
Its not ok if start-up fails, its not ok if there is a mass lay-off, things need to be accountable. Their is a price for all to pay. Lets get out of this mindset.
Our kids will have more opportunities in 2035, if we HENCE invest in value and not valuation. We owe it to them, to us
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