Entire last week the buzz was about askme.com shutting down the operation with out any notice and leaving 4000 employees at jeopardy and vendors claiming more than 300 crores in dues
Close to few months back askME.com PR team YATAN SOOD was reaching us on continuous basis to get their story published on various launches and nothing seemed very interesting. They even sent the press release for askmebazaar grocery launch. This is the time when all the grocery companies including Groffer, Peppertap, Localbanya and other were struggling to survive as the cash burn was pretty heavy. Multiple small time startups have shut shop in that space and investors were considering grocery is not a right business to be in. Though there was increased consumer purchases due to heavy discounting there is no way that business will give a positive unit economics. Despite this askmebaazar got in to grocery business. We asked Yatin Sood that we would like to talk to askme.com CEO Kiran Mutry on why he believes that he can build a strong business in grocery where everyone is shutting shop. Yatin said he will come back with answers but he never came back. After few day we received a email from him saying that he is moving out of askme.com and we know that something was not right there.
Why Blame ASTRO?
Astro the major investor in ASKME released a statement after the unrest which says that
Astro Entertainment Networks Ltd (AENL) has, since 2010, made substantial investments in Getit InfoServices Pvt Ltd to participate in and support India’s fast growing e-commerce industry.
AENL made sustained and long term investments in Getit totaling nearly USD300 million to date to keep the business afloat during often volatile market conditions. Unfortunately, Getit has not been able to make its business profitable and sustainable despite these huge investments by AENL. An independent review by advisors has concluded that there is little prospect for turnaround and the business is insolvent. AENL intends to appoint a forensic auditor to review Getit’s books and will take appropriate steps based on the results of that audit.
Contrary to recent media reports, AENL has always been a responsible and patient investor in Getit over the last six years making every effort possible to support the business even as other investors withdrew. AENL has at all times been fair, scrupulous and professional in its dealings with the management of Getit. AENL will continue to act responsibly and in accordance with Indian laws over this matter.
It is true that astro kept supporting the venture which was never showing the signs of bounce back. The decisions made by founder to venture in to loss making segments and the poor execution lead to the companies collapse and Investors had no point in continuing support to the venture.
Every business needs capital in some form or other and unless founders treat investors money as their own money there is no point the venture succeeds. A founder in a 4000 employee company holds lot of responsibility and sitting somewhere in Dubai and just watching the story to unfold is a pathetic approach. Employees instead of asking Astro to pay the dues should reach their CEO to answer them on why they were not given early notice to leave and what alternative arrangement did ASKME management did in the case the ASTRO deal falls off?
There is one more question asked by many people after reading this article that if Astro agreed for management buyout(MBO) offered by Askme this problem would have not surfaced. I just want to ask one thing if management buyout is planned who is going to pay the money for buying out the Astro equity. If management really has money why they are with holding employees salaries. Astro would have loved to exit the business even if they get what they invested so far instead of taking the company to bankruptcy and ultimately loosing.
Good example of how startup shutdown should be handled is GoZoomo. This second hand vehicles marketplace did unit economics and shutdown their startup with more than $3.5 M in bank. They treated investors money as their own money and saved investor money before it drowned.