News-in-a-minute
News in the global start-ups’ industry has been full of news of reduced perks, reduced valuations and all-out collapse.
Twitter recently reported weak revenue growth, but keen observers could have seen warning signs in late 2014 - when they stopped ordering ping-pong tables. The Wall Street Journal reported that sales of ping-pong tables were roughly correlated with venture capital deals made, or how well a business was doing. Yahoo, for example, hasn’t bought recently, while Google has. A high end ping-pong table can cost more than US$2,300.
Start-ups went crazy with perks (like ping-pong tables) during good years, but that trend has slowed. Dropbox has cut perks worth about $25,000 per employee per year. With 1,500 staff, that’s around $38 million per year. Dropbox is not responding to an immediate need to raise money, but rather a desire to be a less wasteful business (and more attractive IPO target). Start-ups like to ‘move fast and break things’. When you’re disrupting medicine, however, this can have serious consequences. Theranos was a medical startup valued at up to $9 billion based on private investment. They promised drastically cheaper medical tests using just a pinprick of blood. A Wall Street Journal investigation, however, showed that their testing essentially didn’t work - delivering wrong results, often by using diluted samples on regular machines. The company is now under investigation and its main lab is close to being shut down.
Zomato is an Indian startup centered around food discovery. It was valued at around $1 billion but HSBC’s brokerage arm has slashed its valuation to $500 million. The report said “"Zomato is present in 23 markets so early on and none is profitable, which implies that to address both the investments in last-mile delivery and losses in international operations, fund-raising will be a continuous phenomenon”. Zomato recently pulled out staff from Sri Lanka. As a full disclosure, the author’s company YAMU competed with Zomato here.
The Indian government issued a proposal to make it illegal to create or share geospatial map data without a government license. As drafted, this would interfere with or crippled apps like Google Maps, Uber, etc and would also make it illegal for end users to share their location or upload a geo-tagged photo. The government reasoning is that maps can reveal military locations or the ‘wrong’ borders for places like Kashmir. Campaigns have already begun to prevent the bill from becoming law.