Snapdeal to sack employees, Freecharge CEO quits: Stellar Indian startups are losing sheen?
- The year has begun on a low note for the most celebrated startups of India.
- The e-commerce space, particularly Snapdeal and Flipkart, have been hitting headlines for wrong reasons.
- In the latest, Snapdeal plans to sack 500 - 600 employees and FreeCharge CEO has quit.
Demonetisation was marred with chaos, but it did help shift the focus on mobile wallets that have been lingering around for some time now. One such wallet is FreeCharge, which was acquired by one of the prominent Indian e-commerce startup Snapdeal roughly two years ago.
Now, within two years, Govind Rajan quits from the position of FreeCharge CEO. Rajan was previously the chief of Airtel’s Payments bank and has been instrumental in changing the coupons app into a wallet for digital payments.
The mobile wallets market suddenly seems on a shaky ground. Firstly, the payments banks by Airtel and Paytm would be coming soon, and UPI-based apps like BHIM and the newest BharatQR are believed to slowly yet steadily cannibalise mobile wallets.
FreeCharge's parent company Snapdeal, just like others, has been striving to stay afloat. In the most recent news, it is believed to be sacking 500- 600 people across Snapdeal, Vulcan and FreeCharge. And, amid the sacking comes the news of FreeCharge chief quitting the company. Snapdeal has said that it has been taking these steps to 'drive efficiency', in the bid to become a profitable company while its locked in a battle with biggies like Amazon and home-brewed Flipkart.
On the other hand, it hasn't been a smooth ride for Flipkart either. All through last year, Flipkart had been grappling with issues, be it the valuation markdown, keeping up with Amazon or trying to make profits. Amid these issues, came the handful of exits at top management and the failed strategy of going app-only. We saw Manish Maheshwari exit to join Network 18, while Punit Soni, the Chief Product Officer, who had quit Motorola to join Flipkart also decided to part ways.
By November 2016, Flipkart saw almost four markdowns in 9 months. We saw Morgan Stanley slash Flipkart value by 38% to $5.58 billion. Flipkart also made some 'performance-based' layoffs last year while Sachin Bansal stepped down as the CEO. Earlier this year, former Tiger Global Management executive Kalyan Krishnamurthy was elevated to the position of CEO at Flipkart, replacing Binny Bansal.
The most stellar startups have begun to lose their sheen. This is a pattern we've being seeing over the past one year. If reports are to be believed then there has been a drop in startup hiring as funding has slowed down. The hiring at startup is said to be dropped by 10-50 percent. Fingers have been pointing out at startups in sectors like food, grocery, logistics and e-commerce. So, are we slowly yet steadily inching closer to the much talked about 'bubble burst' moment.