Era Of Devaluation! So What?

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The flavor of the season seems to be devaluation by institutional investors such as Morgan Stanley/T Rowe Price and HSBC for @Flipkart and @Zomato respectively. This is just a start and perhaps there might be more companies in line for de-valuation.

Execution is Key

If execution can be fixed on ground level along with some smart and stringent cost cutting measures, overall these companies could be valued much more than what they currently are. India is a huge and diverse market with the potential. That potential has to be realized sooner than later by these companies. Of course certain regulations, market conditions,  and customer sentiments need to improve as well.

Honestly – these de-valuation means nothing to companies right now because they are not up for sale in the market. In down economy, real estate is de-valued. The impact is lower taxes and nothing else unless the real estate is up for sale.

They just need to focus on execution. They have had a great run so far and these are testing times. Many companies would dream of such situations because, the companies that can emerge from these situations can become really large companies.

As the saying goes, what goes up has to come down. It is not like these companies expected to be in VC funded hyper growth mode all the time. CAC will increase, new entrant will take over the marketshare and perhaps due to lack of organized execution and easier availability of free money, certain process in execution is not optimized. Give them a chance and I think stronger companies will emerge from situations like these. The weaker ones will vanish or innovate to something else.

Layoffs are eminent

We cannot be in denial mode. It is quite evident now that layoffs are just around the corner in these startups. Major spend in a company’s expense is always payroll. That fat needs to be cut substantially. Just cost cutting might not be great idea, but automation with process optimization will lead to elimination of jobs or reorg.

Having seen the worse of layoffs in bay area during dot com bust- getting laid off in India is not that bad. It is time for introspection and perhaps improving skills and come back stronger.

We are rooting for you @Flipkart, @Zomato and so on.. Come back stronger.

(Image Credits: freepik)

About The Authors:

sudhiSudhi Seshachala & Babu Jayaram are founders of B2BSphere – Global Marketplace for buyers and Asian Suppliers. With 50 years of combined experience and 2 decades of experience in exports, they founded B2BSphere with a vision to make India $1 Trillion exporter in merchandise, which currently stands @ $322 Billion.

(Disclaimer: This is a guest article contributed on Techstory. Techstory is not responsible for the content in the article.)

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