THE RISING FALL OF TINY OWL

 

Around 2014, there were many startups who were looking for the opportunity to maximize the customer-centric business that would transfer the traditional business into techno-friendly business. In that, there was one startup that was into the food delivery logistics business known as TinyOwl.

TinyOwl, regarded as one of India's most prominent startups, began operations with five members: Harshvardhan Mandad, Tanuj Khandelwal, Gaurav Choudhary, Shikhar Paliwal, and Sourabh Goyal. They wanted to create an app that combined food and technology to provide outstanding food delivery alternatives. The company intended to enter the market at a period when investors were eager to invest, and the Indian market was relatively new in this field.

In the initial period, they were doing very good as they were able to raise four different funding rounds from 2014 to 2015. Investors aided them by financing $27.7 million by the end of 2016, giving the company a promising start. With a large pool of money in their pocket, they went all-in on hiring, scaling, and expansion, regardless of their capacity. As a result of their careless approach, the company now has operations in 11 locations, employing over 600 people.

So, what led to the company downfall from being an investor’s eyeball- Here are some reasons according to me that lead to the downfall of the organizations:

1. Charging high margin rate: Tinyowl used to charge 20% to 25% from the restaurant and hotels per order but the problem was that they were not able to bring as many orders as the hotel and restaurant has expected. The order volume was low that lead to dissatisfaction between hotels and restaurants.
2.  Scaling up the business: whenever we start the business, we need to check whether the business is feasible in the long run. Can it give a good profit in the long term? There was a lack of clarity in Tinyowl, without measuring it they started to expand the business in other cities.
3.  Immature management: All of the co-founders were under the age of 25, and when they got the money, they blew it all up since they had 600 people and different cities to manage, but there were two things missing: education and experience to handle it all. With so much money coming from the investor the founder’s started to live a lavish life, as they were immature to handle so much money.
4. Hiring more than required: With such a large investment in their hands, the company and its founders were under a lot of pressure to deliver, and they decided that the best way to do so would be to hire more people and spend more money on more resources. They overhired and overexpanded, but didn't have the necessary management systems in place.

These were the reasons that led to the downfall of Tinyowl and in mid-2016 they got merged with the logistics company Roadrunnr as both have the same investor in both companies.

Now according to me, they might have survived if they would have followed these strategies:

1.    Product-Market Fit: For any organization who wants to grow higher fastly they should first check their product in a limited market. This would give them a good idea of how much their product is valuable in the market. In the case of tinyowl, the same goes with them they didn’t check their product in a niche market and went on to expand in various cities.

2.  Human Resource: Human resource management plays a big role in the success of any organization. How efficiently the H.R management is using their employees is a prominent factor in the success of the organization. In their case, they were hiring without measuring the workload factor and when things didn’t go their way they started firing people, this led to a bad impression of the company in eyes of its employees.

3.  Vision Alignment: one of the major factors of organizational success is vision alignment where every employee of the organization working in a single direction under one leader. This was something that was lacking in Tinyowl which can be seen in the hiring and firing of employees, the tussle between the founders in the various decisions.

About The Writer

Vinit Prasad

Pursuing PGDM at IMT, Hyderabad

A keen observer, love to read geopolitics and investment strategies, talks about TinyOwl