HR dilemma of unicorn startups
The greatest challenge for successful startups is reigning in human capital and ensuring ethical business practices
'Startup' is a sexy word today. Mention to someone that you're pushing a startup and their attitude instantly changes to wonder and awe. There is something romantic about daring to believe, following your dream, etc. etc...we forget about the painful years of struggle and think only of the successful picture painted by unicorn startups. An idea that changed the lives of thousands of people and eventually made startup founders supremely rich. There is money galore for many of these blue-eyed startups even as hundreds of others with viable business models go unnoticed by investors.
For investors, especially the ones with unimaginably deep pockets, it is all about the optics of revenues and GMVs (gross merchandise volume). Lose as much money as needed but valuation must be top-notch. No surprise then that five of India's highest funded startups lost over a billion dollars in 2018! Capital is never a worry for 'the startups who have made it'. If they have plans of expansion, all it takes is another funding round to provide them the wings to fly, no matter how much they may continue to bleed.
These unicorn startups, however, have another problem, one that has been brewing for long. Ola, Uber, Swiggy, Zomato's businesses are greatly dependent on human capital, which in India is not easy to reign in. Large conglomerates and industrial behemoths have honed their human resource systems for decades, providing fair work practices and opportunities to their numerous employees. Now, enter these startups with their disruptive ideas creating thousands of jobs for the economically underprivileged. So aggressive are these hires that today we are a country of cab drivers and delivery executives. The greatest number of jobs in urban areas, at least, have been created by startups. But these new hires are neither experienced nor trained; they are absorbed into the startup's labour force simply to keep up with the company's ambitious expansion plans.
Most of these blue-collar workers are ignorant of corporate policies and structures. They take recourse to strikes, protests and simple, yet effective, unprofessionalism when things don't go their way. The startup bosses in their posh glass offices have little experience in handling them as well. The result? Ola and Uber cab drivers threaten to strike; Zomato and Swiggy delivery executives keep refusing orders and so on. The losers? Customers and vendor partners of course. When cabs are unavailable, the customers suffer. When food doesn't get delivered, both restaurants and customers suffer.
The unicorn startups first lured in human resource with the promise of hefty payouts. Ola and Uber drivers today complain that while they were earning Rs 1 lakh per month just a couple of years ago, today their earnings have halved. They complain of high fuel prices, maintenance costs and unfair practices at workplace. It is the same situation for food delivery startups. Since January this year, Swiggy and Zomato have been locked in a bitter race to emerge as the top dog. When Zomato upped its game backed by new rounds of funding, they enticed delivery executives from the competition with the promise of increased earnings. After the initial euphoria fizzled out, delivery executives also complain of lower earnings. The blue-collar worker understands little of the startup game but they do understand that their earnings while high when they joined, subsequently diminish in the successive months of employment.
In all instances though, while customers initially enjoy ridiculously high discounts, they eventually complain of poor service, lack of security and professionalism. The latest caveat to join the startup battle in the food delivery space is price parity, where one food delivery startup is forcing its restaurant partners to forego packaging charges while its competitor threatens the same restaurant with a penalty if prices don't match with its own platform. The loser again are the restaurant partners who have to absorb packaging expenses and ultimately, increase the price of food, which in turn, affects the customers. Startups need to rethink their management of human capital in order to ensure ethical practices for all stakeholders and more importantly, the future viability of their business.
(The writer is a journalist and media entrepreneur. The views expressed are strictly personal)