[Samurai]

Originally Posted by Vishal.R

I am also one of the hater of this startup. There is so much wrong about Its concept and business model.

Did you read the Ken article today about how they hound people online?

https://the-ken.com/story/byjus-sile...online-dissent

[Cessna182]

https://inc42.com/buzz/whitehat-jrs-...radeep-poonia/

The CEO of this scam app has filed a defamation suit against Pradeep Poonia, a guy who showed everyone that there was no Wolf Gupta as mentioned in the advertisements. Pradeep is not an occupational corporate basher or crusader. He is a top engineering graduate who worked in some of the leading corporates as a software engineer and took upon WhiteHat Jr because it was scamming parents.

Except this article, not one of the paid media outlets wrote about this. He is very active on reddit and shares how the reporters shy away from writing about this scam because of the advertisements they put in those media houses. Looks like Byjus learnt well from their Chinese investors about media suppression.

For all the talk about education reforms, I fail to understand why the government is silent on these scams like Byjus and WhiteHat jr which can put millions of parents into debt. I also fail to get how parents spend lakhs without bothering to check the reviews or testimonials. Also, what are the VCs doing? Not much I'd guess because most of them are straight out of a fancy Business school and have nothing other than an expensive degree or 1-2 years at a consulting company making presentations to show for their caliber. Very few VCs in India have any entrepreneurial experience unlike in other countries where ex-entrepreneurs become VCs. And that's why scams like this one keep getting valued in billions.

[Samurai]

Their ADs are quite misleading...

https://www.thenewsminute.com/articl...classes-127516

[Red Liner]

Originally Posted by Samurai

Their ADs are quite misleading...

https://www.thenewsminute.com/articl...classes-127516

They are also extremely aggressive on sales. A friend was harassed and emotionally blackmailed to enroll his 8 year old. He finally asked them to shut it. The sales guys get a pretty hefty commission for every kid enrolled.

If traditional schools are brought under checks and balances, why aren’t these guys? Do they fall under tutorials or something?

Indian parents are pretty stupid. Every single one of these tech CEOs have banned their kids from even possessing a smart phone. Steve jobs is pretty famous for that and started that parenting trend.

[green_ninja]

My close relative is a partner at a VC firm. I have had several discussions with him on the sustainability of the VC business model as almost 99.9% of the current lot of startups don't really innovate or have a path to profit. He flat out said this, VC's don't really care if the business is viable or it can be built into a company. All they want to do is show a product, show some revenue, massage the financials a little and exit after offloading their stake in some series of funding or get some large company to acquire 100% stake in the startup. They get their bonuses and that's all!!!

[Samurai]

Originally Posted by green_ninja

He flat out said this, VC's don't really care if the business is viable or it can be built into a company. All they want to do is show a product, show some revenue, massage the financials a little and exit after offloading their stake in some series of funding or get some large company to acquire 100% stake in the startup. They get their bonuses and that's all!!!

This is no secret. VCs only care about multiplying their funds over 3-5 years and get out. Therefore, the founders have to be fully aware of what they want from the VCs. If founders want to keep running the company, they should not ever give the VC controlling stake.

[Miyata]

Logged in to my Linkedin after very long and found a good article in my notifications:

"Can MyGate Be Your Friendly Neighborhood Unicorn?"

MyGate is priced at Rs. 20 per month per apartment (28 cents) but claims to be profitable even at that price point.

For an average society of 300-500 flats, this amounts to INR 6,000- 10,000 per society each month.

MyGate generated INR 13L ($20K) in revenue in FY17, less than a year after its inception, and closed FY18 with ~INR 2Cr ($300K) . While revenue jumped 20x, operational losses in the same period grew by a little more than 3 times, going from INR 1.1Cr ($200K) to INR 3.7Cr ($500K).

[Samurai]

Today's Ken article is about Yourstory.com which posts editorials for a price, mostly by startups. And Yourstory itself is a successful startup with very little competition.

YourStory is, in essence, not just a digital media firm. It is a media firm, a PR firm and a content marketing firm rolled into one. This means that the firm is disincentivised to actually have a cleaner separation between Church (editorial) and State (advertising) because any such step will directly hit its advertorial business model.
...
...
For YourStory, choosing this path has brought sales and scale, but it has already come with a cost. It might come as a surprise to many that YourStory features on the spam blacklist as a citation source on Wikipedia. External URLs from YourStory are automatically blocked when added to any Wikipedia page. This is what Wikipedia says: “YourStory seems to be a PR publishing platform (thinly) masquerading as a legitimate news site”.

Source

This is a common theme all industry magazines (mostly print) these days. They are primarily posting paid content as feature articles and cover stories. If you see a story on top 10 or top 20 companies in any industry, that means all of them paid to be put in that list.

But Yourstory has the best coverage compared to those magazines, and most people don't know they are paid stories.

[AZT]

Originally Posted by Samurai

This is a common theme all industry magazines (mostly print) these days. They are primarily posting paid content as feature articles and cover stories.

I remember reading somewhere that the pandemic has been hard on advertising so daily newspapers are needing to rely on govt advertising revenue more and more. I think media independence in general is not where it should be but in the case of yourstory it's just too blatant.

[Samurai]

https://www.youtube.com/watch?v=Y6P8qdanszw

I was watching this video today and it really struck me, when Elon says finance has been given too much importance. I would not have appreciated this one year ago when I had started a new company and was desperately looking for investors.

After many sessions when an investor finally agreed to fund the company, they wanted 90% stake. Basically we had to do all the work and they will own most of the company. We were basically hiring a new boss. Once we realised most investors had the same idea, we decided to run on bootstrapping. We started with a shoestring capital and within 6 months we could start paying salary, we are completing first year in profit. And the entire stake stayed with the founding team.

If you can create value, you can generate revenue too. But too much focus on finance has brainwashed the new generation of entrepreneurs that they can't start without funding. It also doesn't allow the idea to be validated as having real value. I know certain ideas need lots of capital before they can show value. But the line has become blurred. I look at some ideas and wonder how that can make money, and the next thing I know they get millions in funding.

[v1p3r]

Originally Posted by Samurai

I was watching this video today and it really struck me, when Elon says finance has been given too much importance.

He's talking about finance separately from venture funding. Musk's first company was quite heavily funded and investor-owned. He owned about 7% of the company after 3 years, when they sold it.

Some products need capital to scale. Some do not. To tar all with the same brush in not advisable.

On the other hand, anyone can sell a dollar for 90 cents. Any investor who wants 90% of a new company is no investor at all.

[Samurai]

Originally Posted by Samurai

I know certain ideas need lots of capital before they can show value.

Originally Posted by v1p3r

Some products need capital to scale. Some do not. To tar all with the same brush in not advisable.

Good to know you agree with me.

When I say lines are getting blur, there are businesses that don't need capital are being funded way early.

Originally Posted by v1p3r

Any investor who wants 90% of a new company is no investor at all.

Preaching to the choir? We told them that and walked away.

[v1p3r]

Originally Posted by Samurai

Good to know you agree with me.

When I say lines are getting blur, there are businesses that don't need capital are being funded way early.

Preaching to the choir? We told them that and walked away.

What can I say, I'm an agreeable fellow.

How does someone say 90% with a straight face? Even the mafia only wanted 50%!

[Samurai]

Originally Posted by v1p3r

He's talking about finance separately from venture funding.

May be, but I am talking about how it struck me, since I am in the startup mode, and this is a startup thread.

Originally Posted by v1p3r

How does someone say 90% with a straight face? Even the mafia only wanted 50%!

Did Mafia invest in non-profit making ideas or unproven ideas? Didn't think so. They wouldn't invest in loss making ventures. Money laundering firms are an exception though.

Investors primarily look at how much multiplication they can achieve on their investment when they exit after 3-5 years. If they feel they can achieve exit, higher the stake, higher the earnings. So they have no qualms in asking for more stake when the founders are most vulnerable, especially if they are young and impressionable.

Investors come in all colors and size. You may be thinking about Tencent, Sequoia Capital or Softbank. But there tons of investors who invest in $200K to $1M range per company, and never more than that. This was the range we were looking at. They hope to exit when bigger fishes get interested in investing $10-50M.

[V.Narayan]

Originally Posted by green_ninja

My close relative is a partner at a VC firm. I have had several discussions with him on the sustainability of the VC business model as almost 99.9% of the current lot of startups don't really innovate or have a path to profit. He flat out said this, VC's don't really care if the business is viable or it can be built into a company. All they want to do is show a product, show some revenue, massage the financials a little and exit after offloading their stake in some series of funding or get some large company to acquire 100% stake in the startup. They get their bonuses and that's all!!!

Very true. On the money. I experienced this myself. Very mercenary.

Originally Posted by Samurai

If founders want to keep running the company, they should not ever give the VC controlling stake.

I actually found getting a like minded industrialist to invest a more sensible approach. They have a longer horizon, understand business and don't nit pik with spread sheets.

Originally Posted by Samurai

We started with a shoestring capital and within 6 months we could start paying salary, we are completing first year in profit. And the entire stake stayed with the founding team.

Congratulations. A great moment.