STARTUP SPECIAL .....Lessons from a founder who had to sell his startup

Lessons from a founder who had to sell his startup





The highs came with the lows. Saurabh Goyal, founder of TinyOwl, recalls his roller-coaster experience of running the startup

When a well funded company goes through distress and then gets acquired, it becomes a talking point. TinyOwl found itself in that situation last year, when the food ordering firm was acquired by Roadrunnr, the hyper-local delivery startup. Despite raising $23 million funding from Sequoia Capital, Matrix Partners and Nexus Venture Partners in 2014, it fired 300 employees the next year. In 2016, it shut down its country-wide operations, except in Mumbai.

`We were spending money like crazy'

Looking back, Saurabh Goyal, one of TinyOwl's (now named Runnr) founders, believed that over-hiring and not putting efficient organisational structures in place were some of the issues that took a toll on the company. “I wouldn't really call it [over-hiring] a mistake.If the strategy had worked, we would have needed that many people. We were majorly into growth during the first year and were spending money like crazy. But the problem with that was when you have huge growth targets, like reaching 50 cities in one-and-a-half years, we had to over-hire,“ said Goyal at the TiE SmashUp 7.0 event.

Hiring more people meant organisational structures and hierarchies needed to be put in place. “When things grow, you need some kind of structure to make it more efficient. And when you are growing at such a crazy speed, it's very difficult to form that structure ac cordingly. So that's where we messed up a little,“ said Goyal, who has earlier worked with Housing.com.

`Figure out what are the core metrics'

Adding to him, the firm didn't have (business) leads in every city, which, in turn, led to inefficiency. “Not only inefficiency, even our product took a hit in terms of service. For exam ple, when we were scaling our delivery fleet, we had 1,000 delivery boys. But the kind of scale we had over there, 1,000 delivery boys were not needed. That's where all the unit economics took a hit. So, it's really important for a startup to figure out what are the core metrics you want to first improve on and then go for growth or scale,“ he said.

`Be clear about what kind of money you need'

On funding, Goyal has only one advice -be very clear in terms of your own strategy. Giving an instance, Goyal said, “We were, earlier, doing delivery. At some point in time, we took a call that we won't have our own delivery fleet. We knew our product and the economics would take a hit. But that's where we controlled a lot of our cash burn. So, be very clear in terms of what kind of money you need and what you need it for,“ he said.

rashmi menon

Aug 15 2017 : The Economic Times (Mumbai)