On May 28, Kavin Bharti Mittal, founder and chief executive of Hike Messenger, tacitly admitted in a blog post that the company had taken a “misstep” in moving away from its “core” over the last 12-15 months, and that it would be a ‘Back to Basics’ approach in the coming year.
THE PEOPLE PROBLEM
“No discredit to Kavin, but in India, the difference between founders and professional management hasn’t yet come in,” says Sanchit Vir Gogia, chief analyst and chief executive of Greyhound Research. “This also reflects rather poorly on investors, who should have done a far better job in due diligence and catching problems at their infancy and not when its too late in the day.”
To be fair, when they (Hike Messenger) started out, they had a very decent objective. But, given the fact that revenue has been hard to come by in this segment, that’s the time they tried a whole lot of different things to scout for the same.
When you do struggle for revenue, and you have such big investors in place, what you also get is a lot of insights and inputs from a lot of investors that does tend to confuse you…. I think they got lost doing too many things. And when you do too many things, what you need is a set of professional managers, who have been there, and done that. Take the example of Flipkart, where Kalyan (Krishnamurthy) had to come in, and take over the show and steady the ship.
We can’t just point fingers at Kavin Mittal at the end of the day, the investors, should have done a lot more to ensure that the company had a credible story and a sustainable revenue model in the first place.
When you have so much money at your disposal, in the name of innovation, you end up trying too many things. Going away from the focus areas can be easy…The sector was also changing, especially after the acquisition of WhatsApp by Facebook.
“The metric of registered users is much like GMV. It stands for nothing. Just because someone has downloaded the app once does not make him an active user. Ultimately, it’s not even the number of active users that change the game, it is the depth of their usage. The real users are those who are actively contributing to the platform, and not just passively consuming from it. These are two different things.” Gogia points out.
They (Hike Messenger) have indeed spread themselves too thin. You have to stand for one thing. There’s a reason why Facebook is what it is. You have an Instagram and WhatsApp. While Facebook and Instagram also have messaging, the WhatsApp platform continues to be the most robust platform. It’s not just about feature functionality, it’s also about user tendency, and what the app has to solve right.
Hike had to do that – Solve that one big problem well, which, unfortunately, hasn’t happened, because they lost track. Too much money in their pockets, and too many players in the space.
…NOW WITH A RESET BUTTON
But as Gogia cautions, “The pressure from investors is going to mount tremendously. The next three to four quarters is what I’ll give to a company like Hike, if it wishes to survive. They have to prune to grow.”
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Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, an award-winning global research & advisory firm. To read more about him, click here.