OYO is laying off staff. Ola is doing it. Zomato is doing it. Uber is on it. I just received a Twitter screenshot giving us a bird's eye view of layoffs by the so-called Unicorns – the startups valued at a billion dollars or more. What I liked about it was the black humour in questioning how a company that raised hundreds of millions of dollars in funding could not keep their staff in service for a couple of more months. What I did not were the series of responses from Twitterati who were quick to see a Great Moral Flaw in the startup founders, the fallen poster boys.
Here is the problem: I see a mix of hypocrisy and stupidity on both sides, but my first advice would be to those who think startup jobs are dream jobs. The fact is that they are considered dream jobs but carry the inherent risks of a startup trying to shape a new company usually in a new industry.
If You Think RISK Is a Four-Letter Word, Stop Glorifying Startup Jobs
The word ‘disruptive’ has become an attractive one, but how is it that employees of ‘disruptive’ industries and companies do not like to be disrupted? Two can play this game, and sometimes the disruptor is not your competitor but Mother Nature, as it has happened in the post-COVID-19 universe.
If you think RISK is a four-letter word, stop glorifying startup jobs.
Furloughs, layoffs, pay cuts and uncertainties are a part of capitalism, and startups are the ones leading it from the front.
If you did not know this, you are, well, stupid.
Now for the employees who question the startup's poster-boy founders: By all means, call their bluff. It has become fashionable ever since the IT revolution began four decades ago, to glorify knowledge workers and sing praises for intellectual property and passion. Actually, it is a part of the motivation strategy in which no one tells you about the downside risks. At least mutual funds tell you in fine print to read the offer documents carefully. ‘Red Herring’, after which the Silicon Valley's famed business magazine was named, is a reference to the details in an IPO prospectus that mention potential risks in gory details.
Unfortunately, there are no ‘Red Herring’ prospectuses for employees. There ought to be one: I would love to start one with a short sentence: “You Signed Up For The Risk”.
A Genuine Problem – Valuation of Startups
Startup employees, unless they are pretty savvy ones, are like teenagers in a phase of infatuation described as ‘love’. We live in strange times where millennials are conscious about relationship statuses but they transfer their infatuations to their careers. Same thing, actually. A heartbreak is a heartbreak is a heartbreak, be it work or relationship.
Wake up and smell the coffee. Not the free one in the bustling startup office but the one you have to pay for. Life is not a Starbucks lounge.
Even if it was, remember that the so-called free Wi-Fi is billed through the coffee you pay for, whose price is a multiple of what it costs them to make.
But there is a genuine problem – that of the valuation of startups. This is where we shift from Smart Alec founders promising the moon to eager young employees, to venture capitalists doing pretty much the same to the founders themselves. Unicorn valuations are part of the game in which zeros added to your potential wealth on the right-hand side of a number are part of the motivation strategy: Part of it goes to enthuse employees and founders, and part of it to impress media folks (many of them young, dreamy and as gullible as the employees). You see, they start building a corporate brand for an IPO or an acquisition long before the first customer has signed a cheque or made a digital payment.
Skills, Commitment, Risk Appetite, Alertness: What Makes ‘Real’ Startups Different
For the record, Silicon Valley is in the same state as Hollywood. Show business, Hotel California. Get the picture. Roadshows for IPOs are no different from beauty parades or actor auditions. CEOs are often celluloid figures in silicon packages. Smart journalists sometimes go the extra mile, like one did about how SoftBank's OYO strategy was part of an attempt to boost or save itself.
Often, valuation hypes are part of an attempt to turn a corporate brand into a consumer brand to lure in future investors.
Venture capitalists are giant fish. Some are whales and some are sharks. You often don't get to see the inside of their mouths that otherwise talk a lot. CEOs/Founders are big fish. Employees are small fish often made to feel like big fish to help them gain swimming speeds. Cynical? Well, what do you expect from someone who has seen the dotcom bubble?
VCs increasingly play 3-to-5 year cycles for entry and exit. Venture funds are often just mutual funds for big boys with huge risk appetite. Their game is a complex one. In an ideal world, great venture funds reduce risks for future investors by building futuristic companies.
In an ideal world, enthusiastic, high-skilled employees put in long hours to be part of the process.
But if you are just a guy or gal who likes a bandwagon because it reads well on your LinkedIn profile, think again. Hint: real growth hacks don't describe themselves as one.
Meanwhile, remember that skills, commitment, risk appetite and alertness are what make real startups different. If you just like the glamour and the goosebumps but suddenly crave for old-fashioned job security, try safer territories.
(The writer is a senior journalist who has covered economics and politics for Reuters, The Economic Times, Business Standard and Hindustan Times. He tweets @madversity. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)