The Start-Up Perception

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Recently, while going through articles on how Swiggy & Zomato will see marginal growth in their business after hiking tariffs (from membership costs to packaging to surge fees).

But what amused me is that a large number of people are literally dissing these ventures. Some common outbursts/keywords are:

• Start-up bubble will burst

• They will lose business if they do not give discounts

• Their future is dark if they stop freebies

• Such companies are not innovations, because we always knew eateries around us, so no big deal

Let's take one point at a time.

1. There is nothing like a start-up bubble, there are some great start-ups which have made a positive impact on society. But there are also many who burn investors money & vanish. Mr. Ratan Tata, a regular investor in numerous start-ups, spoke only yesterday that startups that burn investor money and disappear won't get a second chance. Remember, not just a start-up, any organization which is badly managed can vanish, recent case being Jet Airways.

2. Discounts are not a business model any company should work on. One has to create a meaningful platform which delivers what is missing and works as a bridge. Deep discounting have hurt & still hurting businesses from all sectors - Oyo, Flipkart & MakeMyTrip.

3. The future of any start-up/legacy organization depends upon how they manage their business & people. It does not depend on how much you market yourself or the freebies you give.

4. Innovation is inventing something. It is also about organizing sectors which have both potential & demand. Ola & Uber do not need to design a new car, they gave a platform to commuters & drivers. Similarly, the food industry in India was/is largely unorganized. It was high time a player created a platform where you get to order food from a restaurant which is not even close to your home and have it delivered at midnight. Swiggy & Zomato (and Foodpanda/UberEats) made it possible.

Is their business model perfect? No. Are they wrong in cutting down discounts? No. Should they exit from their business? Absolutely no. Because, remember the days when you used to depend on your regular taxi (not everyone has contact with a regular taxi also) for your early morning flight and something goes wrong. Or your dependence on public transport which is not always convenient. The Olas & Ubers have bridged that gap. Same is with food delivery Apps or Medicine delivery or groceries.

Start-ups must always stick to the fundamental rule of having some positive impact. But at the same time, they should run a profitable business from day 1. The challenge here is the mindset of consumers. You can not give them a 50% discount on your services and then keep reducing it to zero and then add a premium for your survival. You build the habits of your customers, not the other way around.

Less focus on discounts & more on making life convenient should be the only way forward for any business. Customers will pay, trust them.