You must have heard about TinyOwl, haven’t you? The blue-eyed food-tech dream of five IIT-graduates which went belly up in a disgraceful manner last year. The company started on a very positive note, however along the way it made a number of bad decisions (consecutively), and the end result was predictable, shut down!. (TinyOwl shuts down)

At a moment when the startup market is hotter than the summers, new players come every day and often fail. Here are some lessons to be learnt for every entrepreneur from the TinyOwl fiasco:

Hire well – When TinyOwl saw its initial number of orders per day rise, they went on a hiring spree, and hired employees left, right and center assuming their business need would grow. However, the business didn’t grow accordingly. From a peak of about 1,100 employees, the unfortunate startup went to just 200. Startups are volatile, hiring well is the key to success in the long run, as it keeps costs down and efficiency up. Initially, no one in the startup should feel like an employee, they should be partners holding a common passion for the future of the company or idea. Retaining talent is also as important as hiring them.

Fire well – As the business started floundering, the founders took the decision of cutting jobs. However, cutting so many jobs, that too near the festival and holiday season sent shock waves in the industry. The employees found themselves abruptly and unceremoniously fired leading to anguish and anger. We all know about the infamous episode where the founders were held hostage by disgruntled employees. Such a disgraceful situation can be avoided by properly planning the cuts and intimating about the same to the employees in a sympathetic manner. Take responsibility for your mistakes and try to come to a mutual solution if the situation gets out of hand, don’t take cover behind your emails.

Hire great managers early – TinyOwl hired some talent, but left it till too late. The damage had already been done. The managers, though very efficient, could only do their bit of fire-fighting, and couldn’t save the company from going down. Hiring great managers early on is important to build a solid core team.

Do not blow away the money – TinyOwl spent lakhs of rupees in newspaper advertising and other such means for customer acquisition. No matter how much funding you get, it won’t be enough if you don’t learn to use it wisely. Tough competition means you need have to struggle for a while before you stand up on your own feet. During this time, hire great people who can take up more responsibility, find low cost ways of advertising (in house team, social media and word of mouth), and focus on building a solid product. Appropriately handling of cash gives the investors faith in the founders and at times brings more investment if needed. After all, they need to be sure that their money is in the right hands.

Do not panic – This is the most important piece of advice. When TinyOwl started to see its daily orders rise, it went on a hiring spree, and when the business could not substantiate, it went on a firing spree. The founders panicked, and their actions validated their sentiment. This all or nothing attitude only fomented distrust in the employees and clients. The better way is to keep your calm and talk to industry experts/mentors for a way out. Remember, every problem has a solution.

When you are a young startup, it is easy to be swept away by success and panic in unexpected circumstances. However, you can learn a thing or two from the blunders that TinyOwl made, and not repeat them.

Think there were some other major reasons to the TinyOwl disaster? Do share your thoughts with us in the comments below. We’d love to discuss them!

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