What's the primary goal of a business? It's two major things:
- Adding Value
- Generating money for the owners and shareholders
Now the moment a business doesn't do either of the above, it's not a viable business to run, either you are not solving a problem that your target users have or you're running yourself out of money in the process.
We're in an age of commission-free everything, zero charge delivery, zero-charge investing, zero-extra-charge commute. We hardly stop by and think if they are actually spoiling the habits we have as consumers. Heck, some of the businesses that do it are actually not adding any substantial value to the lives of people as a whole.
Noticing startups that promise to deliver groceries for free to you, making a loss at whatever they are already spending on marketing their service to the masses through the regular Google, YouTube and Facebook/Meta route. But heck, what value is that business adding, is it solving a problem I really have? Getting groceries in 10 minutes to me means there's a grocery shop nearby which I can possibly walk to, what's the problem with that? The only thing I feel this is adding is the problem of laziness. Food Delivery apps don't have this problem because
- Food takes craft to create and isn't something you can just walk up to the nearby grocery store to get.
- Restaurants aren't always nearby, and getting that authentic dish from a faraway restaurant might be worth paying the delivery charge for.
If the business loses 3 rupees on each grocery delivery and does end up delivering a million baskets of groceries (Because obviously, someone will ask them to since we're all lazy anyway), they have already lost 3 million rupees on top of their marketing budgets.
The growing answer to this problem by startup founders is "We want to focus on growth and not profitability right now, once we capture a sizeable market share, we'll jack up the prices." Well, you can do that, and multiple companies have done so, but those companies have things called "moat". I won't switch to Airtel from Jio just because Jio raised their prices, because:
- I'm still getting things for rates similar to what Airtel and other telecom providers have had to adopt.
- The process to switch cellular providers is tedious.
When you're talking about delivery startups or any startup today for that matter, switching to competitors is extremely easy. If one grocery delivery startup changes its prices, I'll just use another one.
Then some startups and companies actually don't solve any problems at all: consulting companies whose sole purpose is to act like they can do things your developers can't, even though they'll rope your developers in and waste hours of their time and delay projects for months to get those fat paychecks and have your developers do all the work in the end, companies that offer debit cards for teenagers (My personal favourite example), startups that offer stock tips promising phenomenal returns based on one-off events (PS: They won't work) and a lot of other startups.
I recently came across a few ads for a few of the startups offering debit cards for teenagers as a service, they focused on not being able to find spare change when your parents are not at home as a problem when the delivery guy comes in.
- First, no parent ever leaves home without leaving some money behind in case their kids need it.
- Second, even if that's the case, we have UPI, just call your parents and ask them to transfer the money to the delivery guy if the whole point of the startup is to enable digital transactions for teenagers.
- Third, if getting an OTP from your parents for a purchase is a problem (which is of course just a ten-second job), then it's likely because your parents don't approve that purchase, not because getting an OTP is difficult to get from their phones. If they are okay with your purchase, then they will just tell you to take the OTP from their phones as most parents do.
- Fourth, and most important, this isn't a new concept, I've had my debit card since I was 13 and it was from a traditional bank, almost all banks have some form of parental control and debit account scheme for teens and kids.
Granted, these startups are actually not looking at teenagers being the primary market, they're most likely looking at educating them financially right now and capturing them when they are spending adults to provide them services like Mutual Funds and other investment options in the ecosystem they are already part of, but, the problem they are catering to just isn't a problem that is worth solving.
The current economy is rewarding anyone for having a dream, and what happens when too many people see dreams of having their own startups? Startups pop up that do not actually provide people with any value, trust me, there are people who today take startups for granted and there are college students who sit back and are proud to say "I'll start my own startup when I graduate." There's no problem about that, that's actually a good thing, as long as you know what problem you want to solve, a business's end goal is to solve a problem, not exist because the starter of the business wants to start something on their own.
The process of finding a problem to solve and building a business around it requires some time and expertise in the field that you're associating the problem with. A person who has never worked in finance shouldn't start a fintech company just because the space is hot.
In the pursuit and glorification of starting your own startup, there are hundreds of chat apps and social media startups that have no base, because let's be honest, the max number of social media apps and services we use is 3, in most cases, it's 1 or 2. The bigger a sector is, the fiercer the competition, and the more it means that someone else has already acquired that segment. Now, what do you do if all viable paths are taken? You create new paths. We have long gone past the point of value addition to existing processes, we are entering a phase of "demand-creation" now, startups and companies popping up to provide consumers with things they didn't know they even needed just a year ago.
Picture this, you have an idea for a startup, but in 5 minutes, it is discarded because it's a terrible idea and will never actually make money plus the startup doesn't actually solve any problem. Cut to a month later, and you're reading about a company doing exactly that has raised a million dollars, and is valued at millions of dollars.
The above is the situation we have been living in for quite a while. And there seems to be no stop for it, at least not until the people throwing money at these companies realize there's no substance.
Now, I'm sure you guys can think of a lot of other companies that you might have seen or heard of, which make you go, "What the hell? Who's throwing money at this?" And I'm not going to run to conclusions here, of course, but this is an unhealthy trait of the economy where things that don't add any true value to anyone's life are allowed to be operational at inflated valuations in the hopes of them turning profitable a long way down the line, or in turn, creating the demand required by brute force advertising and convincing them that they need the product they're selling.
We might be seeing a growth in solutionism, where everyone today is trying to solve even the smallest of problems and turn them into huge ideas. Hope isn't bad, but before that, everyone should ask "Does anyone need this? If yes, would they pay for something like this?"