Moneycontrol
Feb 23, 2017 11:33 AM IST | Source: CNBC-TV18

Snapdeal fate no surprise, startup model to blame: Mohandas Pai

Speaking to CNBC-TV18, TV Mohandas Pai, the former Chief Financial Officer of Infosys, said new-age startups have no clear strategy and very poor execution.

After Snapdeal confirmed it would cut jobs in a bid to become profitable, TV Mohandas Pai, the former Chief Financial Officer of Infosys, said the development was symbolic of the unsustainable and unprofitable model adopted by new-age startups.

Speaking to CNBC-TV18, Pai said Snapdeal's plight did not come as a surprise and other startups could well suffer a similar fate.

"They had no clear strategy and there was very poor execution," Pai said. "They were egged on by people who wrote large cheques and told them to spend it in the hope they would get more money. And it all blew up."

He said Indian startups had been blowing up cash and were being run by engineers rather than businesspersons. Pai said investors had all believed in a winner-takes-all market, but the Indian market had too many competitors.

He said more markdowns for startups would be the order of the day.

Rahul Khanna of Trifecta Capital said that Snapdeal's case would not be an exception and more companies would pull back in the months to come as startups opt for a course correction with funds drying up.

He said, however, that investors should get credit of graduating a whole generation of customers to the digital universe and getting them comfortable with shopping online. Khanna said that the next generation of startups and investors would learn from past mistakes.

He said that investors need to focus on the personnel they are backing rather than looking at copycat models for sustainable operations.

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