A Rant: Startups, Layoffs, Winter

Skewed opinions on startups, layoffs and winter in general across social media is wearing us down. Let's talk about the most-hyped subject of layoffs first.

Every career opportunity, right from entrepreneurship to signing up for a job, is a risk-reward proposition. It is always a trade-off, which we all seek to optimise. You barter either time, efforts or skills in exchange of a compensation in the form of money, favourable lifestyle or self-actualisation. It is the same story across the board.

As far as the story with startups goes,every stakeholder associated with a startup - right from investors, suppliers, creditors to employees are aware (or ideally should be) of the risks associated with a startup versus a firmly established counterpart. There are stories about how the livelihood or lifestyle of thousands of laid-off employees hang in the balance as they struggle to find a job that matches their current salary or, in some cases, find a job at all. Sure, such stories are heart-wrenching. However, while the episode does bring to fore the inherent risks that startups carry, it also exposes the true state of employment and employability.

If there are people who are unable to land a job after being laid off from a company (startup, in this case), it is due to either of the reasons - startup's optimistic belief in the person's potential, lack of accessible opportunities by industries excluding startups or skillsets misaligned with what the world needs, in general.?

If people are finding it difficult to find a job that barely matches their salary at the startup, then it is because either of the reasons - being overpaid by the startup (or compensated for the career risk; think about a risk premium), being underpaid by the non-startup firms or simply being assessed basis fair market value of what they bring to the table.

Either way, in context of startup employees, the least that the startup community deserves is gratitude for an opportunity or a compensation that nobody else was willing to offer. My heart goes out to those who are facing the brunt of an unfortunate economic crisis - irrespective whether from a startup or established corporate. The affected deserve understanding and empathy but, as most from this lot will agree, not sympathy.

Sure, some startups are conducting mass layoffs to extend runways in a gambit for survival. But, how is this different from industries that got caught on the wrong side of an economic crisis. The pandemic induced mass layoffs in high-contact service sectors. The GFC brought along mass layoffs across financial institutions and those directly affected by the subprime crisis. The dotcom bust affected digital technocrats across the pyramid. While, through the years, many large unorganised players have been going belly-up.

Here, there is a gambit for survival. An attempt at living to fight another day. The resurrection, as we know, will once again bring about a wave of employment and opportunities.

The startup community, including those who have had to shut shop, those who have seen a markdown in valuations, those who are trying to brave the storm and the ones who are able to stand strong, must be credited with contributing to the nation and its citizens' growth and development.?

There are layoffs, but is a % of aggregate employment generated directly and indirectly. There is a markdown in valuations, but that is a % of the value created out of nothing (when the startup had not started up). Fresh investments are declining, but from a peak that put India in global spotlight. I'm sure you have faith in the fact that posting a couple of bar-charts with data pasted all over it will also lead to the same conclusion.

I can empathise with the "I told you so" guys who kept throwing the textbook at every startup they came across. However, I can only empathise and not stand by them. Revenue, cash flows and profitability strategies are lovely topics to debate upon but continues to primarily remain a subject matter of growth, not development. Startups are the revolutionaries that have enabled the society to dream big, act progressively and attach to missions larger than life. There are a few who will die while in the line of duty, a few who will live to tell the tale and then the ones who will lead the new world.

Quite often businesses suffer due to fast pace of operating which often slips across the line that recklessness is. But, let me assure, this is not a phenomena exclusive to startups. We can talk about how useless it is to burn cash to advertise a mobile app across all conceivable media, while being a silent user of the same. We can talk about how cashbacks and freebies will destroy a business without remebering that our first sign up on an app was because it promised scratch cards.

It was all fun and games for all, till it was not.?

How many believed that they could actually switch to Ola/Uber for everyday commute? Do you still feel the same about it? Is your current feeling justifiable? Is it their fault?

The primary objective of a business is to maximise shareholder wealth, fiduciary responsibility is to serve in the best interests of consumers. The startup community is working hard to draw a fine balance and deliver upon both. In a world where banks are reeling under pressure from corporate loan defaults, government trying to bail out corporates, large corporate debts being restructured by lenders to help them survive, asset reconstruction companies being set up to manage defaulting and bankrupt corporates at scale - we have startups who are trying their best to retain as much employment as possible while honoring responsibilities towards investors and consumers.

Every business, startup or not, is exposed to the risk of failing.?

We can empathise with the ones losing but should also celebrate the value creation and opportunities for all stakeholders - which was not even accessible to many before the startup wave. What has happened is not a black swan event, but an inherent risk that has played out.

Winter is a season, spring's right around the corner.

Peace Out.

P.S.: You may hate the idea of 10-minute grocery delivery, but you will use it.

(Views are personal and any references to companies, persons, currencies, things and beaches are for illustrative purpose only)