TL;DR version: There are 7 allegations in all. Two of them are baseless, in my opinion. Three of them are subjective and will vary from one person’s interpretation to the next. The other two — can someone shed some light on the matter?
Let me begin by saying that I don’t believe in rumors. But more often than not, when there is smoke, there is fire. And that is why I’m choosing to write this story.
This is the story of one of the last remaining contenders in the Indian food-tech space. They recently won quite a lot of credulation and praise in the media.
Actually. Scratch that last line. This is not their story. This is a story of someone who has anonymously reported a story about them.
Yeah. Just framing that sentence hurt my head too.
Yesterday, someone created a tumblr page, and has made quite some serious allegations about the startup — how they have been fudging data, cheating both consumers as well as service partners, and a bunch of other stuff. The persons who have written the whole piece (it has been co-authored by 4 whistleblowers) claim to be either current employees of the firm, or ex.
Is there any truth to the whole story?
I haven’t the slightest idea. Someone commenting on that article pointed out — “….Many startups fake the numbers from a very early stage. Have…”
Unfortunately, I know that to be true. I have witnessed startups padding up their numbers to present to prospective investors a more lucrative picture than what the reality is. Be it overdoing the office decor or overhiring to show how they need more hands to support the incredible growth they are witnessing, I have seen all of it. So fudging numbers on an excel or a ppt deck does not seem all that far fetched.
I just read the story, and thought of sharing it with everyone — along with my personal views on different parts of it..
I’ll put up as-is excerpts from the article in codeblocks, just like this one.
ALLEGATION #1 — CHEATING RESTAURANTS
……our core jobs is to sign up restaurants……includes signing contracts that we know we are going to go back and renegotiate every few months……it eats into our conscience, and takes away a little piece of us……restaurant owners are small businessmen and they can’t see how they are being taken for a ride…….We are made to lie about our market share, as well as order volumes…….[on commission] at first it was 5%, then 10% and now nearly 25%. The management wants us to take this to an average of 30% in the future……
I can understand the frustration here. After all, when the restaurant owner would feel miffed, he is not going to write a scalding email to the CEO or other co-founders. He is going to call up the sales guy who had come knocking on his door.
But think about it. Is it really unfair? I don’t know what the numbers at Swiggy are like, so let’s skip that and talk about Uber instead.
At first, Uber had 0 consumers and 0 drivers. Getting consumers was easy. Getting drivers was trickier. You had to convince them to sign up with Uber, without knowing how much workload you’ll be able to give them. And the fact that the rates being offered to the commuters was ridiculously cheap did not help either. So they improvised. They offered drivers incentives — bonus on EACH trip. The drivers went crazy, the media went crazy, and so did the startup pundits. It was apparently quite apparent that Uber is just burning investors’ money and they can’t survive like this. Like Uber didn’t know that. What Uber was essentially doing was give the drivers cheese enough to have them hang around while they worked on the other side of the equation and focused on increasing the number of ride requests every minute and every hour. The result? Increased fill rates. The downtime of drivers was low and they were getting X times more ride every month than they were getting a couple of months back. So Uber changed the model — Complete Y trips every day and get a fixed lumpsum bonus. This translated to lesser incentive on each ride, but the drivers didn’t mind because they were still making more money than what they were used to make earlier. Not to mention the fact that Uber was giving them a consistent flow of business, and they did not have to deal with the uncertainty and wait of the phone to ring.
Since then, Uber has changed its ‘incentive scheme’ a number of times. The drivers are, for obvious reasons, disgruntled. After all, they are making far less money than they were making in early days of Uber. But they are still sticking by. Why? Because it is still profitable to them.
Now, let’s circle back to the Swiggy story. Would it be better if Swiggy followed a slab based approach? 0–50 orders a month, we take 5%. 50–200 orders a month, we take 10%. 200–500, 15%. More than 500, 20%. More than 1000, 30%? From what I would assume, in a way that is exactly what they have been doing. First enabling the business to grow bigger —
powered by their platform’s robust tech and ops (this is crucial and imperative) — and then they want to grow as well. Why shouldn’t they? You scratch my back, I scratch yours.
The downside for the restaurant owner? They are making less money on each dish than they used to. But they are now processing a much higher number of orders than they had ever witnessed in weeks and months of distributing pamphlets and buying ad space in yellowpages. So the restaurant owner sticks around.
And as far as the statement — “
restaurant owners are small businessmen and they can’t see how they are being taken for a ride” — is concerned, I don’t buy that for a second. The small businessmen that are being talked about here do possess the most basic business principle (and unlike startups, they are absolutely stringent about it) → Don’t spend more money than you earn. So unless he is making profit, and in all probability a much bigger profit per hired employee as he used to in pre-Swiggy days, he would not have had any problems in delisting himself from the platform.
ALLEGATION #2. COMPETING WITH PARTNERS
…..what’s worse? …..started intentionally routing all the users to order from Bowl Company — our own private label kitchen……This just directly hits at the heart of restaurants we “partnered” with….
You’re kidding me, right?
Walmart, Big Bazaar, Shoppers Stop, Pantaloons — every single retailer would be painted in red on this parameter. That’s what private labels are. You start an in-house brand because you want to leverage the high footfall you have and make a healthier business on top of the higher percentage margin private labels offer.
Forget about the higher profit margins. Retailers use their private labels to negotiate (strong-arm) brands into giving them a better margin, better deal for their consumers and what not. Wake up!
However, there was something alarming in this segment.
On top of this, the sales team is asked to tell our restaurant ‘partners’ that Bowl Company doesn’t compete with you. We have never lied so blatantly in my life.
If that is indeed the case, then that is definitely unethical and should be discouraged. “TBC is an experiment our business team is conducting. I don’t have much visibility on it. It is just like any other restaurant you see around you. We have thousands of consumers. Do you see a dip in your order numbers?” There are a number of better answers. Lying, if that’s happening, isn’t the right way to go about it.
ALLEGATION #3. CHEATING THE USERS
…..good reviews…..planted and paid for…..genuine reviews (which are usually bad) get immediately removed and buried……Instead of working on customer support, we hide customer reviews on social media…..Instead of offering customers redressal, we hide behind TnCs and clauses to protect ourselves.
Yeah. This is outright ugly. Unfortunately enough, I am not having a tough time in accepting the possibility of this happening. So much so that the last story I wrote on Medium (last night) was on this very topic (waiting for it to get published on Hackernoon).
ALLEGATION #4. LYING TO INVESTORS
……lied to investors about our order volumes during the latest fundraise….January 2017 order volumes were less than December 2016…..they have shaved off the December numbers in the slides in order to show a linear growth curve……see, the dip in January is not visible in the investor slides…..any investor would not have invested in a startup which had a decline in order volumes at such a young stage……lying about order volumes to potential investors highlights our true culture — in which the management will do anything and everything to move ahead in life…….unit economics presented to investors and the team do not contain all the costs…..
Yeah. The numbers do back up the claim. I tried to see if they have eliminated any particular city or done something of that sort to come up with a presentable figure, but from the data I can see in front of me, I could not figure out what they have done. May be they eliminated 10% or 20% of the restaurants — the ones that performed the poorest in that period. Or maybe they have simply fabricated the data.
No matter what they did, this is something that can’t and shouldn’t be defended. And why lie? Because of a month’s dip? No investor is going to hold that against them.
ALLEGATION #5. LYING TO EMPLOYEES
A lot of us were made false promises about equity and bonuses that were never paid. They just need bots who are available 24/7 and if you are not, you will be put on a PIP in some pretext or the other and be out of the door before you know it.
At any given point in time, 10–15% people are always on PIPs and showed the door. There’s so much churn, and so much dissatisfaction. The job market is bad, and the management is making the most of it. All the hiring in the last year is done just to cover up the numbers for the press.
The HR team here is the worst. I have friends who have quit or were fired and after repeated follow-ups, were not paid their final settlements or bonuses. They also keep changing the policies subtly to avoid paying variable salaries to the employees.
The company and its people policies are a shit show.
I guess this would be largely perceptive, subjective and vary from person to person, but if a seventh of your workforce on PIP, then that’s a hard call to revisit the hiring strategy.
ALLEGATION #6. POLITICS, EGOMANIACS ON TOP
No comment from my side. I am not touching that with a ten-foot pole.
ALLEGATION #7. LYING TO THE PRESS
Yeah. Not touching that either.
I know Rahul Jaimini from my Myntra days. From whatever limited our interactions were, I heard good things about him from people who worked with him day in and out. I haven’t had the chance to meet Sriharsha Majety/Sriharsha Majety, but once agan, haven’t heard negative things from people who know him. But as I said at the very beginning. I don’t know if there was even a shred of truth in that article or not, but there were some points of concern for sure.
Other than that, barring few friends working there, I’ve no connection to Swiggy whatsoever. I haven’t even been a customer for more than a year. :-p