General, Work

Word of Caution: Questions to Ask Before Joining an eCommerce Startup in India

A word of caution for job seekers in India. I do get messages from time to time in LinkedIn – with people asking for advice. Should I join this startup? Should I take this offer? Will this eCommerce startup survive? Is this Daily Deals company worth joining and so on. I try answering all – in fact, always make it a point to reply to each and every message that I receive.

This blog post is NOT against eCommerce portals in India, or, written against any one specific portal, or against the eCommerce Industry in India. Its a simple post – a few words of advice for job seekers seeking or thinking of taking a position with an eCommerce company in India.

e-commerce_e-bankrupt_261125If you’re currently actively seeking opportunity, or currently interviewing with an eCommerce company, then first of all – best of luck. Having said that – what I can advise is – if you have been selected for the position – and the company makes an excellent offer with a huge salary / perks / bonus / vested-stock options etc. make sure to ask these questions and understand what they all mean –

  1. What are your current markets?
  2. How good have you penetrated them?
  3. What are your current expansion plans?
  4. What are your *near future* expansion plans?
  5. What are your *far distant* expansion plans?
  6. How good is your SCM systems?
  7. Are your monthly order cancellations/returns – better/worse than industry average?
  8. Which VCs/Angel Investors/PE players have backed you?
  9. How would you define your core offering/business in 1 line in less than 5 words?
  10. What’s my future in this company, say, in 1 year?
  11. What’s your exit strategy – acquisition / IPO?
  12. My ESOPs – could I get a yearly performance bonus instead?
  13. How passionate are you (if its the Founder/CEO you’re talking to) about the core offering?
  14. If the core offering doesn’t work out, are you ready to stick to the plan, re-work on a new strategy, and reposition yourself in the market?

These are extremely important questions to ask.
Don’t just jump ship from your current company – to these so-called *super-star* eCommerce portals without proper research.

ONE VERY IMPORTANT WORD OF CAUTION: Its a common trick used by HR managers/executives – from Recruitment firms – when they call you for the first time – they mostly start by saying – “Hey, I’m calling from XYZ. We’ve an excellent opportunity with WXY, which is backed by A, B, C and received around $50 million funding recently……. blah blah blah”. This is what I call the “funding-trap”. These $$$ mean shit – since if they are pledged – like has $300 million pledged for a forth-coming few years, it means, its a bit safe, since till the company runs out of this money, your salary would at least come. On the other hand, if its not pledged, and just part of an initial funding, then if the company fails to live up to its initial hype or expectations, the VCs will force an exit. So make sure you delve deep and ask as many questions as you can ask.

Out of the 200 or so eCommerce startups founded in India in 2012 – 100 so far have gone bust. Most of them finished (read burnt callously here) the amount of capital (funding) received from the VCs, a few decided to close down and not play the ‘last man standing’ game, whilst others were forced by VCs/Angel Investors to ‘get acquired’ and merge with a category leader (of some respect) which has a higher chance of survival in the near future. 2013 will be the year, wherein, 80% of the currently standing eCommerce companies would be wiped outBoys separated from the Men. Was always predicted since end of 2012, now, confirmed by the report from investment bank Allegro Capital (the report can be accessed here).

52 eCommerce companies have raised around $700 million in VC funding in past 3 years.
With around 80% of the total number of companies including these above mentioned 52, in dire need of additional money; and high chances of going bust.

The question then comes up obviously is – Why this bust? We’re hearing so many stories on eCommerce all day long, then why this suddenly.
Click here to read WHY.

I discussed in detail in one of my earlier blog posts – Grow a Thick Skin Before Launching Your eVenture – my interactions with a CEO whilst interviewing for a Senior Marketing position with them. Here’s the excerpt from my post – you could ask the same questions (mentioned above) to the management if you’re interviewing for a Senior position.

I recently interacted with a pretty famous ex-CEO of one of the first startups in India over the phone – whilst waiting to catch a flight at the Bangalore airport. Over our conversation of over 45 minutes, I asked over 25 questions – since the eComm startup he was proposing to float practically didn’t have any USP; didn’t solve any need; and practically had no revenue model to it. Since I had just been out working for an Accel Partners backed eComm startup, (part of the Exclusively.In Group) in New Delhi, which quite didn’t go down well as expected with the company being acquired by a few weeks back; I was reluctant to join another one which didn’t have a solid business plan and a revenue model in place. Anyways, we spoke at length about the offering (another Western-styled chic lifestyle offering for young women in India), the USP, why this brand name, the expected marketing plan, expected channels to target, CPAs for first-time buyers and so on. When he finally asked me – “What do you think? We’re are pretty well funded“. My blunt but honest answer was – “Looks good. But a NO. I don’t feel the need for another western-styled chic-n-sexy womens apparel brand in India. Not convinced about the revenue model – you would struggle to make money. And funding is not a necessity, its a requirement when you wish to scale up!” The person on the other end was quite upset – got angry – and could feel it. Anyways, we bid good bye, and since then never heard from him again.

Was I being too rude to ask so many questions? Maybe YES. But was being honest.

Grow balls.
Ask questions.
Be honest with yourself.

It is your career. The eCommerce player doesn’t bloody care if they close down – the top Management would exit anyways, pocketing millions of dollars in their bank accounts.

So play it safe when receiving a job offer – doesn’t matter how much money they have received in their funding – make sure ALWAYS – that the company has a USP in the market, a good team, has growth potential. Otherwise, don’t join.

Simplest and most honest advice I can give.
Thanks anyways, for reading.

1 thought on “Word of Caution: Questions to Ask Before Joining an eCommerce Startup in India”

Leave a Reply to Rajiv Mathew Cancel reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.