Keep korma and curry on: hostage drama at TinyOwl as India’s food startups stumble

(Photo by Alex Kehr)

This week’s hostage crisis at a firm called TinyOwl has dragged it and other food startups in India into the spotlight. The co-founder of TinyOwl, Gaurav Choudhary, was allegedly held against his will for two days by some members of staff angry at being suddenly laid off, reports The Times of India.

The incident comes in the wake of layoffs at Zomato, Dazo shutting shop, and Foodpanda being accused of faking it.

Are India’s food startups going sour? Not quite. Amid hyper growth, inadequate revenues and high investor expectations, individual performers in the sector are simply hitting speed bumps on a narrow road, say industry insiders.

Inexperienced

Take Mumbai-based TinyOwl, for instance. Charges of reckless spending, layoffs, and non-payment of salaries have flown thick and fast against it in the past week as the company tries to restructure.

“It’s a case of young, inexperienced founders who did not know how to manage growth amid high investor expectation,” an industry insider to explained to Tech in Asia.

The TinyOwl hostage situation occurred amid layoffs at the company’s Pune office. 24-year-old Gaurav emerged from the building Thursday evening.

An employee was quoted as saying by MediaNama, “They’ve splurged recklessly and vendor payments are pending. They’re least concerned that we’re jobless and it’s Diwali.”

At this year’s IPL cricket tournament, TinyOwl had partnered with the Mumbai Indians team as part of a marketing campaign. TinyOwl is up against a number of similar app-based food delivery services.

The startup earlier this week announced US$7.67 million in fresh funding. In February, the company revealed plans to expand rapidly to over 50 cities across India.

Reality check

But then came the bitter pill.

TinyOwl laid off 160 people two months ago and then over 100 people in October, according to MediaNama. It is shutting down in four cities and plans to operate only in Mumbai and Bangalore, leading to the stand-off drama that eventually ended Thursday.

“We’ve been able to resolve this and have immediately started working on considering the demands beyond the terms of employment, placed forward by other employees from other cities,” Harshvardhan Mandad, co-founder and CEO, said in a statement.

On the long road to success, lessons are being learnt the hard way.

The big picture