Are ‘Startups’ Less Sensitive than ‘Traditional’ Companies?

In the event of ongoing Nepal crisis (2015 Nepal Earthquake), BSNL has offered free calls from India to Nepal; and recent updates tell that even Airtel and Aircel have also followed suit and offer free calls for next some days. Other ‘traditional’ telecoms like Vodafone and Idea have also slashed their calling rates to Nepal substantially. Even Google opened up its people finding service for Nepal and Facebook introduced safety check; which though of limited use due to technology reach, are still noble gestures. All such changes cost companies efforts and money; mostly without immediate commercial gains.

In very contrasting terms with this episode, stands what we witnessed in Australia during Sydney hostage crisis last year (in 2014). Immediately after the terror attack, Uber had dramatically increased its fares for traveling in Sydney. Users cried foul on online forums and the company had to go on defensive. Uber clarified that the fares increased 4 times automatically due to system "logic". Of course the company won't have allowed any such system logic to reduce fares by 4 times than normal and their clarification cut no ice with many customers.

I know I am making a generalization; and to declare I have nothing personal against anyone in this; but what comes to my mind is that the 'startups' tend to be more insensitive and more commercial minded than their so called 'traditional' counterparts. 'Traditional' companies generally have a much larger employee base and more diverse customer base, and hence are more community sensitive and many times show more responsible behavior. But the 'startups' are more commercially driven, largely due to their funding structure and challenges on the business plan front and also because their employee bases are small and they have not spent much time in the world to allow enough community feeling and sensibility to seep into the system.

On the face of it, this assertion may appear radical. After all, we are used to hear more polite and ‘friendly’ voices when we call a startup firm’s Customer Care number. Also, their user interface on the World Wide Web are often more transparent and easier to use; even though their ‘traditional’ counterparts have worked well to manage the gap quickly. But, it appears that even when our startups are thinking to help customers and being polite to them, their single most important motivating factor at the back of their mind is in fact ‘commercial gain’. 

For example, there is also a difference in the way companies react when faced with huge losses, or any serious threat towards business disruption. When faced with such prospects, a ‘traditional’ company is more likely to decide to live with the losses; to fight another day. On the other hand, the ‘startups’ or their promoters are more likely to call it quits. It may appear that this difference in behavior is largely because of the financial challenges and since it is much easier for a startup to wind up and start afresh in some other form than a traditional company. But it is also true that the difference in behavior is also due to the difference in their engagements with their stakeholders, be it partners, employees, or customers. This is the same reason why many organizations have ‘trust deficit’ with regard to startups.

I am nowhere suggesting that our world would be better off without ‘startups’. Such a world would be hopeless. But I am definitely saying that in our business ecosystem, we do need ‘traditional’ firms to remain strong and to keep playing vital roles. And the ‘startups’ along with the much hyped ‘startup culture’ have a lot to learn from their ‘traditional’ counterparts.

- Rahul

Views expressed are personal and do not reflect views of the organization the author is associated with.