Why m(not) fine?
Dr. Saurabh Bhatia
SUCCEED WITHOUT BURNOUT - I will help you succeed using THRIVE method | Executive Performance Expert | Trusted Advisor to Leaders | Creator of THRIVE Book and Method | Author of 9 Books | CEO & Founder of Zenskriti.Com
According to the data in public domain, mFine has fired about 800 employees which forms over 50% of their erstwhile strength. The numbers in public domain are varying between 500-1000 (and 50%-67%) so these figures are guesstimates, at best. It is also being said that mFine had raised at least 34 M US$ 8 months ago (about 230 Cr ?). (Some mention it as 48M US$, 356 CR ?). I have mentioned the sources* at the bottom of the post.
There is widespread criticism and statements hinting at unpleasant conclusions about how this 230 Cr injection was handled. I did a back of the envelope calculation and would share the results.
If mFine had 1500 employees, at an avg salary of 1L per month, then they have genuinely spent 120 cr in just salaries in last 8 months. (not to mention the severance package to 800 employees would add another 8 Cr, at least)
Add to this the cost of employee offices, and it runs into another 8-12 Cr in last 8 months. So 140 cr accountably spent.
Add marketing, cost of doing business (software licenses, machines, cloud hosting etc) and the figure would be an additional 30 Cr. easily. Therefore, in my honest opinion, they have genuinely spent over 170 Cr of the 230 they got and at the current burn rate, this would have lasted them just 3-4 months more.
A massive layoff and restructuring was definitely the need of the hour.
What went wrong? (in my partially informed opinion)
Now we also need to learn from their experience. Where did they go wrong? Of course, they’d do an internal investigation and all but from outside, there seems to be a few things I’d like to mention, which, in my opinion, led to this fiasco.
If you visit their website, you will see a plethora of things they were doing. In fact, it seems it was 7-8 companies rolled into one. See the offerings
You can see that this single company was trying to do the work of 8 companies. Get the drift?
And the revenue, at Owler estimates in public domain, was 1.6 M US$ (10-11 Cr ?)
Practically, they spent 10 US$ for every 1$ they earned.
What can we learn from this:
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My message to startups to learn from this debacle would be to understand that casting the net too wide may spread you too thin, distract you from making your main biz vertical successful, and end up as ‘Also Ran’ in multiple verticals instead of becoming the market leader of the one you value most.
Another lesson would be to not get carried away when you get funding and start spending on things like content creation, which has to be served for free and will never make revenue. There is a case for it that it promotes footfall, but in healthcare world, the careful (read expensive) curation needed by expensive experts for healthcare articles outweighs the benefits of footfall. It's not like a travel blog, you know.
Marketing also needs to be in check. There can be a tendency to act like corporations and publish full page/ half page front ads in leading newspapers, and they cost a bomb.
My Own Conclusion and Learning:
Startups are a different biz model than conventional businesses. There is a need to create value, prove it is needed by generating solid traction (even if no revenue) and get funded from VCs. Then use that money to grow so fast that either some corporate is forced to acquire you (coz you are playing in their backyard now and winning) or you become the market leader and go for an IPO. But in this frenzy, it is important not to lose the focus of your company’s vision/mission because then, (you got it, right?) the startup opens too many fronts simultaneously and ends up not having enough soldiers on any front.
Thanks for reading thru
Dr S Bhatia
Author
CEO and MD, HCit Consultant; CEO and ED, LYNK AmbuPod Pvt Ltd
2 年This is what happens when investors, who have no clue about healthcare, apply the same parameters applied to funding IT projects. Hello... Healthcare is very, very different from IT! On the other hand, if the aim is to grow a startup by showing huge revenues while burning a larger amount of money so as to exit the company with a profit, some may call it a win, but I call that a scam. That's because other than the initial investors no body gains, not the public, not the poor saps who buy its shares nor the clients it is supposed to serve. So what's the point of a service that does not actually serve!? And remember, healthcare projects are meant to serve, even the profitable ones.?
Managing Director at Oy Trinnect Ltd.
2 年In fact, if properly audited, I suspect many/ most corporate hospitals would also crumble like a deck of cards
Advisor Medical Devices Technology
2 年Excellent Analysis. This is something that each and every start up should understand. I like every bit of what the author stated.
These guys raised $100 million over 7 rounds and 8 lead investors. My questions: forget mFine; what does this say about the so-called "investors"? What does it say about the quality of VC investment? Now, don't claim "portfolio risk". That's bs.
Managing Director at Oy Trinnect Ltd.
2 年There are quite a few Hmm points: i) True, they opened a number of fronts. Yet, a workforce of 1500 is staggering. Very very staggering. I don't know how they would have used this kinds of workforce on a month by month basis. ii) 30 Cr for sw licencing, cloud space etc? That is the technology part? I believe 30Cr. could have taken them for coming 300 years with all these components! And if SW needed to be licensed, and not developed in house, then what is the need for 1500 people? I will be happy if someone can provide me to understand these two simple components that went unquestioned (so far).