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This TinyOwl Dares To Dream Big As It Slips & Stumbles In The Stormy Food-Tech Sector

This TinyOwl Dares To Dream Big As It Slips & Stumbles In The Stormy Food-Tech Sector

In an emotional outpouring, TinyOwl’s co-founder Harshvardhan Mandad, today spoke about the difficult steps the food-tech startup had to take and might take towards achieving the “big dream”. Mandad was referring to the recent restructuring Tiny Owl took by laying off over 160 employees across Pune and Bangalore followed by the one it takes today by laying off another 112 employees from sales and human resources teams at Delhi, Hyderabad, Chennai and Pune.

He started off by outlining their growth story from being a five member startup to being one of the youngest food tech companies as follows-

No dream, however big, is unattainable – and TinyOwl is a testimony of the same belief. From being a five member startup to being one of the youngest and leading players in India’s food ordering space today, TinyOwl has grown immensely in the past year. The big dream to take the brand to greater heights yet remains, as our efforts continue to be focused on strengthening the brand’s position in the market.  But as it’s said, no great achievement or success comes without its set of obstacles, and unfortunately, we are no exception.

He moved on to explain how TinyOwl has had its share of hits and misses during its journey-

Every business goes through its own unique journey, with some hits and definitely some misses. We have had our share too. But the important aspect is to learn from your journey along the way and continue to do what is best for the brand. Keeping this in perspective, while we continue to establish our foothold in the market with great customer feedback, the current strategic focus for us as a company is to now attain a viable business model working towards the ‘big dream’.

It’s here that Harsh clearly states on what TinyOwl’s focus is going to be-to attain a sustainable business model. Is this statement a subtle allusion to the fact that despite raking in funding of  $3 Mn from Sequoia Capital and Nexus Venture Partners in December, 2014, followed by INR 100 Cr. in Series B funding round from Matrix Partners, Sequoia Capital and Nexus Venture Partners, and the latest round of $7.6 Mn (INR 50 Cr) from existing investors Sequoia Capital and Matrix Partners, the startup is still trying to figure out a more sustainable business model? Is this a problem with just TinyOwl or it points to a deeper malaise in the food-tech startup ecosystem where the rate of cash burn is lesser than the rate of acquisition of newer customers?

Referring to the restructuring, Mandad says it was difficult, but was necessary to increase efficiency and productivity-

“As part of this process, we have restructured the organisation to increase the organisation’s efficiency and productivity, involving eliminations of certain positions from the company. It indeed was a very difficult step for us. But I believe some difficult steps need to be taken for the best interests of the company and to stay true to its vision in the longer run. As part of our efforts towards refurbishing the brand in the current scenario, our focus is to optimise our current resources and move towards a better ecosystem of business management, with a strong and robust backend. This development, however unfortunate, is a step towards sustainability and growth.”

Mandad points out the from now on, the focus will be on optimisation of current resources. Clearly, it will be, as the employee count of TinyOwl has reduced to 650, dropping from the original 1,000 employees it had earlier this year. In the direction of resource optimisation, TinyOwl will make its operations more tech-oriented on account of thin margins in the food business. In the pipeline are plans of a new operational structure in Mumbai and Bengaluru, where it is making processing of orders and delivery more “automated.”

Going further, he reveals that TinyOwl will scale back operations from 4 cities and make a move towards the e-sales platform to support customer needs.

Every company goes through its set of difficulties in its journey, and in my opinion, we are fortunate to see these hardships in our earlier days itself. It gives us a chance to adopt the learnings, imbibe the same in our business model and lay stronger foundations for the brand from a long term perspective. We scale operational resources back from 4 cities and will move to the e-sales platform going forward to support customer needs and supply and logistics requirements. Our current focus remains to be building TinyOwl as a sustainable, profitable and scalable business, with the aim to add more value to our partners and continue to offer the best of food ordering experience to our customers.

This revelation is a bit of a let-down in the growth story of TinyOwl which a few months earlier was planning to expand in 50 cities by the end of the year! And it closely follows Zomato’s announcement of laying off 10% from its employees from its current 3000 strong team, raising questions about how sustainable are models of food-tech startups to survive difficult times. All of them mirror a similar story of unbridled expansion and hiring, fund raising, restructuring and layoffs, pointing out to a possible bubble in the sector and the inability to figure out a sustainable revenue model.

While startups understandably have to go through a lot of churn in the initial years till they hit upon the most bankable growth model, yet the growing turmoil in the food-tech sector raises serious questions as to how long the blood bath will last and how many more will be sacrificed at the altar. The troubles at Dazo, Spoonjoy, and Foodpanda, followed by TinyOwl and Zomato point out to widespread problems in the food-tech sector –namely of scaling, cash crunch,  and productivity issues. All eyes now will be on our zealous entrepreneurs who will now have to seriously focus on not letting things get out of hand. While fund raisings and big ticket valuations make glamorous stories for a while, it is the real growth stories about sustainable models which last the test of times that make for a classic startup tale.

We hope this is the big dream TinyOwl is referring to, inspite of being stalled by its temporary obstacles.