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I hope you have heard of the open letter-type spat that occurred last month between two top-level fellows of India’s startup community. I quite liked the spiky exchanges between the two. But who does not like a good public spat then? For the unaware, the spat was between Mahesh Murthy of Seedfund and Pinstorm, and John Kuruvilla, founder of Taggle. The first shot was fired when Murthy wrote an open letter to the latter over Taggle after its announcement that it was closing shop rather than be unsustainable in the long run. It was vintage Murthy on the whole group buying business and all that is wrong with it. And how he had predicted it all along, and that Taggle was the start and more will follow. Kuruvilla retorted with unusual vigor, and took the spat to another level with a bit of class, before Murthy came back claiming it was not personal or scathing.
There is little to judge in the spat. Both men come from positions that are in the grey and are right in their spheres. If I had to find a fault here, I would agree with a reader who said that Murthy has this skill of taking the obvious, twisting it a bit more, making it personal, and then claiming you heard it from him first. But that is not the point of this article. The topic here is Taggle, and specifically the way its story unfolded. From the notice on the website: “We started Taggle in June 2010 with US$1M in funding to build a sustainable and profitable business…[but] we realized that service deals were not giving the best value to users, we quickly shifted focus to only products…we grew our revenues 10 times within 3 months of the shift. However…many e-commerce players [are] selling products at below cost price to lure users…only way to sustain…is to get into a price war and burn a lot of investor money…in a Last Man Standing game…against our philosophy…we’ve decided to go back to the drawing board.”
Taggle got the message about Groupon early and moved quickly to be a pure e-commerce business, but it was not enough. The reason is there in the note. The e-commerce space is actually heading for this shootout of the ok-corral type where everyone is trying to outgun the other on price. That is worrying. The sector needs to realize that to win only one thing will matter: service. In time, the company at the top will be the one which solves logistics issues, delivering swiftly and cost-effectively. And that means they will have to take control of logistics and supply chain themselves. Flipkart, which is yet to turn profitable but is chomping down investments, has realized this even as it also continues to play the price war. It has started taking control of its supply chain. Only when it takes full control will its pricing strategy be sustainable for it as a business.
This lesson holds true for all. The much-vaunted Market Operating Price will blindside you. Be warned. Stay focused on being a provider of excellent service levels first.

AUGUST SHARK is a once-failed, second-time successful bootstrapper who resides in Mumbai. He can be contacted at august@stumpspeak.com.

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August Shark, stump speak