How did high-flying TinyOwl Crash?

Have you ever heard the word TinyOwl? What actually does TinyOwl do? Is it a bird name or a startup? This name sounds fascinating, doesn’t it? well, TinyOwl was an Indian startup that revolutionized the restaurant business and connected restaurant owners, chefs, suppliers, and customers under one roof. It was growing four times faster than Zomato and had garnered crores of funding in a single year, but there is a famous quote that says "Every problem is a gift - without problems, we won't grow". In this blog, you will see what problems TinyOwl was facing, and because of its inefficiency, this high-flying startup crashed miserably.

Introduction

TinyOwl was an Indian startup founded by five IIT Bombay graduates: Harshvardhan Mandad, Gaurav Choudhary, Sourabh Goyal, Tanuj Khandelwal, and Shikhar Paliwal.

It was an extraordinary idea in a growing market of the restaurant business, it was something that was the need of the hour and investors were looking to invest in such unique ideas. The idea was to connect restaurant owners, chefs, suppliers, and customers in a single chain. They had received over USD 25 million in 4 rounds from Sequoia Capital, Nexus Ventures, and Matrix Partners.

TinyOwl's business was growing at the rate of 200% every month. They developed a very user-friendly Android application where you can get the details of your ordered food including quantity, extra items, and even the details of the cook also. It detects the customer’s location and shows the nearby restaurant to them. Harshvardhan Mandad was a great salesperson, he was solely responsible for raising funds from investors and the other co-founders were handling the marketing, human resource, and operation departments of the company.

They were targeting the subconscious mind of customers by using neural programming which results in their favor because 40% of the customers were referring TinyOwl to other customers as well. TinyOwl was having a special initiative known as “TinyOwl Homemade” where customers can also sell their food in the market by using the app and can generate the required income.

So, the question is what went wrong if everything was in their favor? Here are the five reasons Why the high-flying TinyOwl Crashed.

1.   Inexperienced Co-founders

TinyOwl was founded by young entrepreneurs (age group between 22-24 years) who were inexperienced in this market, and the founder's ideas did not align with each other. Their internal disputes were coming to the public notice and this was not only tarnishing the image of the company but also affecting the funding of investors. They all had different views of the company's future.

2.   Fast Growth Attitude

Nothing comes overnight. If you have a vision then work on it, put your efforts into it and improve the quality of your product. Don’t focus on quantity before quality. TinyOwl had expanded its business model in more than ten cities within one and half years including Mumbai, Bangalore, Pune, and Delhi-NCR without focusing on the problems they might face in other cities. Instead, they should try out their product on a smaller scale, spot the problems, and then scale the products.

3.   Inexperienced Recruitment

In a company, an individual is recruited for a specific position, and their positions are specified before they join the company but TinyOwl made a mistake here, they were recruiting in bulk but don't know where they will use their employees. They hired employees in bulk and fired around 600 employees within 6 to 8 months of their recruitment, which lead employees to protest in Delhi and Pune also. There was a lack of a strategic hiring roadmap.

4.   Heavy Cash Burn

There was a time when TinyOwl was facing high COCA (cost of customer acquisition) negative margins, Due to irresponsible recruitment, the company was facing negative cash flow, which ultimately resulted in a cash burn process. In December 2015, he appointed Akash Saxena as the CTO of the company with a salary package of 1.5 crores, which did not bode well for the company.

5.   Lavish Spending habits

When you have a great idea to rule the market, take full advantage of this opportunity and spend money on your vision, not on your desires. They were spending money on their own needs and desires without focusing on the core metrics of a company that drives all its operations. There was a time when the company was running out of cash but they were recruiting a CTO with crores of package. Instead of an over-hiring and over-expansion policy, they should efficiently focus on managing employees and funds.

Conclusion

There is a saying about problems that "the longer you delay, the more it grows", the same thing happens with TinyOwl as well. They were ignoring the problems happening inside the company and as time passed their troubles grew faster than improvement, which eventually led to the company's closure. Instead of focusing on core indicators of the company, they were focusing on over-hiring, over-expansion, and grand spending habits.

So, this is how the high-flying startup TinyOwl finally crashed. Don't forget to use the comments section to mention your reasons that caused TinyOwl to fail.

Thank You! ❤