Happy Tuesday (or so I think, in my 3rd week of quarantime seems like I might be losing track of the days) morning y’all. One of my favorite Indian Startup publication, The Morning Context, has announced that they will solely be reporting on how COVID-19 is impacting startups & businesses in India and have also removed their paywall for these stories! Ken are y’all listening? So it’s only fair that I plug one of their stories today, plus Uber suspends services in several Indian cities and this is going to have a huge impact on employment.
So when Deepak Shahdadpuri said “winter is coming”, I don’t think he quite imagined it would be this bad. It seems like economy is collapsing and everyone with high burn businesses are in deep deep trouble.
Ashish Mishra points out that two major things are going to follow as a result: a) Layoffs (which has already been happening to some extent with SoftBank cos); and b) companies conserving cash to extend their runways.
The travel and hospitality industries are going to be impacted very severely, occupancy rates are already down 80% and is likely to drop more as this lockout continues. Meanwhile OYO is still obligated to pay at least some hotels their minimum guarantees which is eating into their capital reserve. On the somewhat bright side, they did just raise a lot of money so probably can weather the storm for a bit. Hotels can also be used as quarantine & hospital facilities and OYO, Treebo have already offered the Delhi Govt. that they are prepared to help out if required. I can def see a lot more hotels countrywide looking into helping out their localities as they essentially have no business currently.
A lot other type of companies will be impacted differently based on how essential their services are to consumers in this time. Companies who (and I feel like I’ve said this for days now) reduce burn, conserve cash and survive will end up doing great but a lot of great businesses who aren’t able to scale down or raise capital will unfortunately die out.
The global ride-sharing company, Uber, has suspended their services in 32 Indian cities including major cities like Delhi, Mumbai, Hyderabad & Pune.
With a majority of the country under lockdown (and with some states suspending public transportation as well), it seems like taxi services & ride-sharing companies have bee deemed non-essential.
And while this is great for social distancing & restricting the spread, this is going to impact the income of Uber drivers significantly. There are several million Uber + Ola drivers in the country so this suspension probably affects over 100,000 people who now have now lost (probably) their primary source of income.
And I really feel for these people because it doesn’t seem like Uber or Ola is really doing anything to help those affected and they probably cannot afford to do much (Uber or Ola probably don’t have the capital to completely cover the incomes of the drivers on their platform).
A couple of people have suggested that Uber should let users donate money into a pool that gets distributed to the drivers on the platform worst affected by this lockdown and I love the thought behind the initiative but I feel like the # of drivers and # of willing donors would likely result in most drivers not getting very much money unfortunately.