Figure this: Recently, a veteran in the consumer goods industry received an offer to join an e-commerce major at a top position. He rejected it, summarily.
Another executive identified by a startup to hire as its corporate affairs head suddenly experienced cold feet.
For them, startups meant high instability. Factually, the startups in showpiece e-commerce segment are increasingly getting the cold shoulder from potential employees, as they wade into an uncertain environment. The funds have taken a longer route for the homegrown companies, considering slashed valuations, layoffs and management upheavals, hence contributing to the overall uncertainty in the sector.
As researched by the top executive search firms, namely, Transearch, Longhouse Consulting, RGF Executive Search and Antal International, it’s tough to have candidates sign up for CXO roles in e-commerce companies and other startups. Lately, the records prove a spike of 50% in offer rejections. They pointed out that even when a candidate is ready to join; it’s taking longer to close the process.
An article by ET, dated Feb 25, 2017, affirmed that for senior talent, job security has become crucial than the excitement of working at a new-age company, offering a fat pay package, along with generous stock options, which though come embedded with great prices.
Sharing perspective regarding the employee attrition in startups and what City Link holds for the prospective employees, in terms of its startup culture appeal, Mr. Puneet Prakash, Founder & Director, City Link ( #1 IT-driven trucking logistics platform/startup, that hails a profitable revenue-generation model and is a subsidiary of Jayem Logistics, founded by Mr. R. Jayakumar) voices, “The ET article is highly contextual and reflects the situation prevailing mainly in late stage Cos where avenues of funding are fast drying up and foreign competition is breathing down their necks. So, the hitherto greener pastures do not offer, I would not call it job security, even a 1-2 year horizon for CXOs and senior professionals. Early stage Cos., in contrast would continue to attract talent, given the wide-ranging avenues for personal growth and learning these Cos. offer. The challenges and responsibilities that youngsters get to shoulder at such early stage of their careers are unparalleled. This, coupled with the funding winter beginning to thaw, should see promising Cos. raising capital and attracting talent. At City Link, we are looking to raise our Series A round, post-incubation at Jayem Logistics. We have been able to form a cohesive team of aspiring young Turks, who have been steady with us and have laid a solid foundation, immensely aiding our vision of building a large intra-city trucking tech Co.”
India is quickly becoming a leading global startup hub. Rising numbers of entrepreneurs, incubators, international and local VCs, and multinational corporations are turbocharging the development of a burgeoning tech scene. In fact, the number of startups in India is expected to nearly quadruple from 3,100 in 2014 to over 11,500 by 2020.
In the U.S., startups can secure funding on the basis of a strong concept, often without revenue or a set business model. Companies have the opportunity to prove their value proposition and test products extensively before releasing them to market.
As compared to that, the access to capital in India is more limited, causing startups to focus on monetization, revenue, and lean operations from the outset. Startups are usually funded only after they have a working product and a proven business model, with revenue. In other words, Indian investors are only going to give you money if you’ve already shown you can make money for them.
But, this methodology can result in missed opportunities – i.e., the learnings that benefit many American startups that are willing to sacrifice revenue in their early phases in order to focus on refining the product and gaining organic user growth. Without that cushion of funding, it’s also much tougher for Indian startups to pivot, leaving many companies to flounder.
(Curated by Sana Husain, Corporate Analyst, Jayem Logistics)