Webinar :Register now for Commodity Ki Paathshala webinar on ‘FPOs & Agriculture Marketing-The Beginning of a New Era’ on January 22, 4pm
you are here: HomeNewsBusiness

Hot startup Livspace faces backlash from angry customers, vendors and ex-employees

Home Truth: A peek inside Livspace reveals a trail of commitments that have not been honoured, leaving several customers, vendors and ex-employees livid. Why is this home interior design startup, which has the likes of Ikea backing it, struggling to live up to its promise?

November 30, 2020 / 01:17 PM IST

When he decided to renovate his kitchen and living room earlier this year, Tanmay Sonawane, a 28-year-old Mumbai resident, had no inkling that he would end up shelling out over Rs 2,00,000 and be left with his home in shambles.

Akshay Patel (name changed for anonymity), a 25-year-old software developer from Mumbai, who set out to do up his new 2BHK flat, similarly lost about Rs 1,20,000 in September. Little work had been done in his home even after months of design talks and negotiations.

Both Patel and Sonawane had hired Livspace, a Bengaluru-based startup that seeks to take the hassle out of the complex process of home interior work and renovation. Livspace promises an end-to-end, one-stop-shop alternative by bringing all the involved parties, including vendors, designers and furniture suppliers, onto a single platform.

But while Livspace — it recently raised more than $90 million and has notable backers, including Ikea — has remained an investor-favourite, its customers, contractors and freelancers have had to endure agonising experiences grappling with what they and former employees describe as a broken and indifferent system.

Livspace’s concept is simple and a no-brainer for office-goers who can’t afford to constantly peer over the shoulders of carpenters, labourers, electricians, designers, and others while getting their homes done up. With Livspace, all they need to do is tell the assigned designer and manager what they want and the startup, in theory, takes care of the rest.

Close

How it works

When you book an appointment, Livspace assigns you a designer (usually, a freelancer) and a manager. Once the design and budget are finalised, Livspace picks a third-party vendor who oversees all the interior work and corresponds with the designer to execute the contract, in line with the customer’s requirements.

Many bought into Livspace’s tech-enabled idea, which promises to deliver in “45 days” with a “100% in-house team”.

But not everyone got the handover at the finish line.

Faced with endless delays and frustrated by the lack of communication, Sonawane and Patel could not take it anymore when they were quoted three times their budgeted amount and realised no work was happening. Both gave up their advances and switched to a local contractor to complete their homes. Although Livspace has a refund policy, Sonawane and Patel didn’t get back any money and are no longer optimistic about it.

Even for people who somehow managed to reach the handover stage and endured the rising costs of living in a temporary apartment, the experience has been nothing short of a nightmare. Rishabh Poddar, 27, whose project was supposed to be completed by June 2019, said his flat was finally “usable to live in” in January 2020, minus two of three components he wanted to renovate.

“It’s a frustrating experience. Most of the items I requested are of different colours and materials but I don’t have the energy to deal with them anymore. No one listens, no matter how many emails and calls you make,” he added.

A Livspace spokesperson claimed, in a statement, that the company has so far completed 20,000 projects and has the “necessary infrastructure to effectively redress any concerns if and when they come up”.

“The inputs you have received are malicious to say the least. We have a reputation of meeting our obligations well and on time,” the spokesperson added.

Vendors given short shrift

It’s not just customers. Dozens of vendors say they haven’t been paid in years and have lakhs in dues from Livspace projects. Sudharshan, a Bengaluru-based vendor who has been carrying out interior work for Livspace for the last five years, has about Rs 10 lakh worth of pending invoices and hasn’t been able to get in touch with his Livspace contacts in over eight months.

Sudharshan feels he’s stuck in a vicious cycle and every time he tried to get his invoices cleared, he said Livspace would ask him to finish another project to receive payment. “It’s blackmailing. Even though I helped them when they had no funding and put money out of my pocket, they are now exploiting me,” he added.

Sudharshan’s business is now on its last legs because of the added pain of the pandemic and he is borrowing money to keep the lights on.

Sachin Jagdhane, a 32-year-old vendor from Pune, had an identical experience and after 10 Livspace projects, has nearly Rs 3 lakh in dues, going by invoices viewed by this writer. Jagdhane, like Sudharshan, is being stonewalled by Livspace’s managers and he says he will soon have to proceed with legal action — along with a couple of his fellow Livspace contractors.

Freelancers, whom Livspace refers to as design partners, faced a similar fate and the startup is now blocked by many designer groups. Karan, a 30-year-old interior designer from New Delhi, who requested anonymity as he is waiting for payments from Livspace himself and manages one of the largest designer associations and Facebook groups, said he no longer allows Livspace advertisements for design positions on his page and advises freshers to avoid them.

Karan says that at Livspace, designers are supposed to act as salesmen and convince customers to pay the amount in advance. If freelancers fail to secure the deal, which can go on for months depending on how many revisions the client requests, they don’t get paid at all as Livspace does not offer any base compensation. “They trap new freelancers because they don’t have any leads and are desperate,” he said.

Riya Solanki, a 26-year-old freelance designer from Bangalore, said managers often ignore her calls and after three projects, she has nearly Rs 1,00,000 of unpaid invoices lying with Livspace.

“All they want is a salesman, and they hire a designer; it just doesn't work that way. A designer understands the client's needs and gives them what they want to fulfil their desire,” says Siddharth, a former designer at Livspace, who left the company earlier this year, and requested that his last name not be used. “Livspace wants wealth. They ask us to sell and sell — stuff that you know is a criminal waste, but still you sell to meet your targets. It’s not why I chose to be a designer.”

In response, the Livspace spokesperson said: “We have a high degree of commitment towards all our stakeholders and our dealings with them have been fair and as per good business practices. We reiterate that the statements made in your email seem to have been made by someone with an agenda to malign our image. Our records are clear on these points.”

The spokesperson, however, did not respond to a detailed questionnaire sent by this writer. Moneycontrol has reviewed a trail of documents that underscore the ire of customers and vendors.

Focus on up-front payment

Part of the problem at Livspace, according to current and former employees, is its commission-driven incentive structure. Since Livspace collects the full amount from clients before the work is complete, it does not matter whether the manager and designer stick around once that payment is transferred, and therefore, most customers are left in the lurch as soon as they pay the full amount up front.

“They (Livspace) move on to the next client once they secure the full amount from a project. Sometimes these old projects are completed and sometimes they aren’t,” said a current Livspace employee, on condition of anonymity.

Nikhil, whose home was supposed to be ready by January, said the manager and designer did not visit the site after he paid the remaining 50 percent in December. Since then, he has been personally handling the labourers and paying extra to the contractor to get it all done. His home is still under renovation.

Vendors and employees also allege that Livspace managers tend to forge bills and accept under-the-table payments to show their superiors the maximum profit. Managers, they say, often pick the cheapest contractors and pocket the difference.

Madhu Sinha (name changed for anonymity), a software engineer from Bengaluru, accidentally got his hands on a vendor invoice and found out that the sum he was quoted was twice the vendor’s bill amount. When he confronted his project’s manager, he was offered a discount and asked to remove his tweets about it.

What’s more, despite advertising a “100% in-house team,” Livspace critically depends on third-party partners for projects and tends to put all the blame as well as the responsibility on them. If there’s a delay or damage, vendors and freelancers have to endure pay cuts, not Livspace.

With negative comments mounting, Livspace has taken to social media with reviews on sites such as Mouthshut and Google. Livspace’s listings on these platforms are inundated with so-called “reviews” by new profiles. The striking thing about these reviews is that they often match each other word for word.

This has led one customer to create a website called livspace-reviews.com to highlight genuine Livspace experiences.

Employees left in the lurch

Further, Livspace is also facing criticism for its alleged refusal to release funds to the 450 employees it laid off in March citing a business plunge in the wake of COVID-19.

Umair Baig, a former senior project manager who was part of these layoffs, said he had wrapped up projects totalling Rs 15 crore in value but Livspace has not paid him the commission of approximately 1 percent (amounting to Rs 13 lakh) he accumulated on various projects over the course of four years.

At the time the layoffs were announced, Livspace co-founder and CEO Anuj Srivastava stated that the company would offer severance pay and an “assistance package”. Baig said he will only receive a pittance compared to what he was earning, and his incentives.

Similarly, Nidhi Gupta (name changed for fear of a legal pushback) said she was only offered 15 days’ pay (without Rs 1.5 lakh in incentives) and no notice — leaving her without a safety net in the middle of the pandemic.

Baig, meanwhile, continues to field angry calls from customers who have been unable to get in touch with Livspace after paying the company in advance.

(Shubham Agarwal is a freelance journalist.)
Shubham Agarwal
first published: Nov 30, 2020 01:17 pm

stay updated

Get Daily News on your Browser
Sections