The TinyOwl Saga: Layoffs, Hostage Crisis, Absconding Cofounder & Jaded Employees

“Lets create world’s best food tech company :)”.

That’s how Harshvardhan Mandad, CEO and cofounder of TinyOwl, signed off in an email to his employees a week before the news of TinyOwl securing $7.6 Mn (INR 50 Cr) from existing investors Sequoia Capital and Matrix Partners had sufficed in the media. The funding was supposed to buy TinyOwl a 12 month runway to manage the turmoil in the company and restructure itself to create a sustainable business.

So while the employees were still soaking in the news of funding and looking forward to a better future, they received a mail (dated 31st October) informing them of a TownHall meeting scheduled for 2nd November to discuss the future direction of the company from Rohit Joshi, General Manager – Human Resources.

And then, without any reason, the scheduled Townhall meeting was postponed from 2nd November, with plans of holding it on a new date.

Flash forward to 3rd November, news flows in that the company has fired 112 employees in Chennai, Pune, Hyderabad and Delhi, as it decides to shut operations in these four cities. Four of TinyOwl’s five co-founders –  Harshvardhan Mandad, Gaurav Choudhary, Saurabh Goyal, Shikhar Paliwal and Tanuj Khandelwal – set out to personally close their chapters in these four cities. Currently, all the founders have switched off their phones and gone underground as angry employees at all offices are caught unaware and left stranded with only post dated cheques of their November salaries.

Is this how a startup intending to be the best food tech company treats its employees? First you assure them of a bright future and suddenly you make a U-turn and leave them in shock with no jobs, no assurances, no deadlines. This vanishing act by TinyOwl founders has shaken the trust of many people working in the startup ecosystem.

Apparently, raising money is “pretty easy” for Harshvardhan Mandan. He said so in an article dated February 19, 2015. When asked about how he manages so many people, he answered, “It is not that hard. You have your priorities in order, decide on the things that are most important and stick to it.” So, maybe he might have thought that firing all these employees “won’t be that hard” – something he might agree to disagree now.

While things were managed peacefully at three location, the situation became a nightmare for Gaurav Choudhary, one of TinyOwl’s cofounders, at the Pune office, where he was held hostage by protesting laid-off employees. The employees at the Pune office, numbering about 25, were demanding full and final settlements. They had been told to follow up with TinyOwl’s Mumbai office for settlements. However salaries which were expected to be credited into employee accounts by 3:30 PM yesterday had not materialised yet.

Many of the protesting employees were also the ones who had been fired in the previous firing rounds and still had not received their dues. The crime branch turned up at the office, asking employees to delete the Whatsapp group formed by the employees to vent their ire and to discuss strategies of protest. The office also saw the turnout by political parties which led to a heated argument.

However, a few hours ago, Gaurav was finally able to leave the office to make his way to Mumbai, after being held hostage by employees for almost two days, reported Medianama.

On being given a chance to speak, Choudhary told the assembled policemen, “What we’ve decided is, in 6 cities, jitna company ka burn hain, woh current funding se nahi ho sakta (At the company’s current burn rate, we cannot sustain with the current funding). We closed the funding on 23rd, so the board decided to shut down 4 cities. Not Mumbai and Bangalore, those will continue operating. Yes, it is a sudden decision, but the market crashed and the money is very.. so we didn’t have the bandwidth to retain people. According to the company clause, the resignation period varies for different employees, managers and above have a 2 month notice period. In case of sudden resignation or termination, the company’s liable to pay the amount according to the notice period, and according to the clause, we have to pay this by the end of the notice period.”

A major source of their discontent stemmed from the fact that they have been fired so close to Diwali and just a few days after the company closed a $7.6 Mn funding from existing investors Sequoia Capital and Matrix Partners. Employees also complained about the company burning almost 200X their returns on customer acquisition and spending lakhs of money on newspaper advertisement which never went live.

Speaking on anonymity with Inc42, TinyOwl employees fired from Delhi, Mumbai, Chennai, and Pune offices laid bare the facts about TinyOwl’s downward spiral.

This is what a jaded employee mailed us, on condition of anonymity.

“TinyOwl Technology Pvt Ltd has fired (complete city operations), no official email was sent for termination or resignation was procured from us for the following locations:

Delhi – 52 ppl
Pune – 25 ppl
Chennai – 20 ppl
Hyderabad – 21 ppl

All or most of these employees have been working in the middle or top level in the management structure.

A few days back Harsh Mandad (co founder, CEO) has sent a mail to all employees stating that the company has been able to secure funding, and a good future ahead for all employees.

On 2nd November a townhall meeting was scheduled in mumbai for all employees to be connected, which was abruptly cancelled.

On 3rd November ALL employees of the above mentioned locations were called to office, for a personal meeting with one of the co founders. It was announced that all the employees are now no longer working with tinyowl, and that all employees will have to leave.

No clarity has been provided regarding FNF formalities, or any severance or notice pay for these employees.

Clarity was sought from Harsh Mandad regarding this, and all employees were told by him on call that a board meeting is scheduled today(4th nov) morning with investors and a decision will be reached today.
4th November – since early morning, the co founders are not contactable or traceable, nor available in any office, or even their residences. All their mobile numbers are switched off.

All these 118 employees are now left with nothing, and no info/clarity is available from anywhere.
Company has also released a statement regarding this, but there is no closure or any clarity of pacification for any of these employees (including me) who have lost their livelihood.

Outwardly they are trying to show that all is well while inside things reflect a different story, things look bleak for us.

Situation today is the same, got mail from co founder to send us what our demands/expectations for this separation process are, and we have submitted the same to them but they have not replied with anything concrete, just that they would be finding a solution at the earliest.

They want us to nominate a representative who will then have to travel all the way to Mumbai to tinyowl HQ to discuss.

We are not really keen on doing that and waiting for them to send us their proposal post their meeting with the investors/board. They have not clearly said anything till now.

Things in Pune got out of hand, and we kind of knew they were pushing it too far, and if an amicable solution is needed in this case we need to get it done with cordial methods.

In the news, it has been falsely mentioned that Saurabh Goyal was held hostage in Gurgaon office, he went back same day along with all employees, checked in to his hotel as well, and from there he went missing.”

Delhi

A Delhi employee, where the company had started operations this year, on condition of anonymity, sent across a mail expressing the entire scenario.

“It was going well. We were hired to start the operations in the new city. We launched the city in a month’s time. We made TinyOwl a renowned brand in the market. Suddenly in August end they fired around 200 employees from all cities, stating it was strategic decision and that they had made a mistake in hiring. Prior to that, few people from top level (the VP and City Head) had already left the company.

Many a times, we had received mails from the CEO stating things are going well. “We are proud of you. Let’s make TinyOwl a best food tech company”. Just last week, we even received a positive mail from him stating that TinyOwl was on the verge of closing funding and that he was looking forward for the growth of TinyOwl with us.

Suddenly on the night of 2nd November, we received an email from headquarters stating one of the co-founders is coming to meet all of us to discuss the growth of the company. Then Saurabh Goyal came and told that “we are shutting our office today. And today is your last day.”

It was a shock for everyone as no one had thought how can they do this as just a few days back, they had closed the INR50 Cr funding. They have sent out a false PR stating that they are firing people when instead they are shutting down their offices. This move will destroy our careers.

We questioned Saurabh about a lot of things but he was numb. We asked him mainly-

1. This is not a sudden decision, then why were you sending mails that everything is going well?
2. What was your business strategy?
3. Where have you spent the INR 100 Cr funding raised in the last round in just 8 months?
4. When no money was spent any marketing in Delhi-NCR, how can you expect business to grow here?

He was numb all the time. After a lot of discussions he told he will come to office tomorrow and he will attend the board meeting from Gurgaon office. Later he went to his hotel where he had booked his hotel from 3rd November to 6th November. He ran away from the hotel without informing hotel people. People say he ran away in the night. When the hotel staff opened his room, the ac was still working. Every co-founder is still not reachable over the phone.

Now these people are playing games over the email. We don’t have any hopes now. We don’t trust these people as they have run away and no timelines have been promised from their yet. They furnished the office in Mumbai, and have wasted money on useless stuff. They never acknowledged our ideas and suggestions to grow the business. It looks like they didn’t have any plans to grow which is the main reason for the top management leaving the company in 4-6 months.

They should have been mature enough given that they are hiring 1200 people. Every co- founder is unreachable and has gone underground. People in Pune office are in police station to keep one of the co-founder in office. We only wanted the CEO to come here and give things in writing. We want 3 months of salary as no one was notified of the shutdown. We are asking them the timelines and there is no reply from their side. All they told us that we are doing board meetings and pushing case in front of the board.”

Another employee from the Delhi office who spoke to Inc42, confirmed the turn of events.

He stated that extra security had been employed at the office when Saurabh had arrived at the office. The company had issued post-dated cheques for 30th November which had been refused by the employees. Though the employees were impatient but nothing untoward happened at the office. Saurabh had affirmed them that there would be a con-call with company board members the next day to make the final decision. Employees had requested him to show up the next day and not let them down. However, he went absconding. His phone was switched off the other day, and the hotel guys confirmed he had checked out of his room. Instead of his appearance as he had promised, all he left his employees was with mail asking for their demands. In his reply, he stated, “We will get back to you in a couple of days.”

Chennai

In Chennai, where the TinyOwl office had started operations this July and had close to 20 employees, the firing proceeded in a relatively peaceful way. All the employees were laid off and were told to be compensated with a month’s income in the form of PDCs. However the employees are demanding two month’s compensation. Discussions are still going on between the employees and founders and the office is expected to remain open till all the dues are cleared by the company.

Hyderabad

In Hyderabad, TinyOwl had started its operations in May this year and had close to 20 employees on its pay roll. It was Tanuj Khandelwal who came to deliver the news of the layoffs and gave post dated cheques to employees. Here also, there were no agitations by the employees and things were handled smoothly. The employees are still in discussion with Tanuj and an employee representative was asked to come to Mumbai for the same. However, the employees denied this request and want the negotiations to happen in Hyderabad itself.

With the current layoffs, the employee strength will now reduce to 500 by December with operations restricted to only Mumbai and Bangalore.

Harshvardhan stated in a media statement, “We have had a long day in resolving a critical situation in Pune wherein two of our employees had been made to stay back in office for over 48 hours. We have been able to resolve this and have immediately started working on considering the demands beyond the terms of employment, placed forward by other employees from other cities. We request you to please give us some time to first address our employees concerns. Post that we will be more than happy to answer any queries you may have.”

Aditya Narayan Mishra, director and CEO of Ciel HR Services and former president-staffing of Randstad India, believes that such communication should have been handled with sensitivity as it concerns the lives of so many people – their careers, aspirations, dreams, emotions and financial commitments.

“Such situations are likely to be few and far between. Normally entrepreneurs value the contribution made by their employees while they(entrepreneurs) try to fulfill their own dreams and give shape to their ideas. Such aberration isn’t going to dampen the spirit of risk-taking and co-traveling towards a destination that’s not discovered yet. With the changes in our socio-economic situations, more people are open to taking the risk and being adventurous,” he added.

As working for startups can be unpredictable, Aditya believes that employees should take extra effort to track their company’s performance on an ongoing basis; watch out for signals in the market such as addition of new customers, new employees; tone and body language of the promoters; exits or changes of senior management and mood of the senior folks in the firm.

TinyOwl’s hiring and firing tale becomes the latest in the series of those happening in the startup ecosystem. Zomato, HelpChat, and Housing are the other startups who first raised fundings at dizzying valuations, hiring at breakneck speeds, and then resorted to sudden firing.

This trend raises serious questions about how equipped are startup founders to make their business scalable and sustainable. They may have raised millions in funding but are they prepared enough to gainfully utilise that amount of money?

TinyOwl’s hostage drama and the firing bloodbath puts serious questions on the efficacy of Indian startup founders to turn a well-funded business into a sustainable one.

[The earlier version had errors – We had earlier misquoted Medianama by stating that “According to Medianama, the politicians helped resolve the conflict.” and have therefore removed that portion.]

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