Slack-rival Flock gets $25 mn from founder for expansion, but is it a good decision?
While the Indian startup ecosystem is struggling to keep afloat as funds are drying up, here is another story -- of an Indian founder who believes that his company can take on large global rivals, and even become one.
Flock by Bhavin Turakhia is a software application for companies -- big and small -- which competes with the likes of San Francisco-headquartered Slack and Facebook at Work, and aims to make communication inside offices easier and faster. From chatting to sharing documents and powerpoints, to reducing the email clutter, and even holding virtual conferences, Flock wants to create a new normal in office communication.
Serial entrepreneur Turakhia, said on Wednesday that he will invest $25 million into the company to build the product for the next level and expand its operations globally. This investment is in addition to $20 million that has already been invested by Turakhia earlier.
The statement from the company said that Flock is closing-in on rival Slack in India, and the fresh tranche of money will go into building international operations. The company has entered the US, UK, Brazil, Russia and Spain markets.
While more money is good news, Indian companies have struggled to manage growth once the funding tap closes. Most of them have burnt out due to free services and discounted pricing. The recent incident of Stayzilla co-founder Yogendra Vasupal getting arrested for not paying dues raises a question on business models of Indian companies.
The company claims that it has already started making money (without disclosing how much), as planned. The app continues to be free for consumers, but also offers premium and enterprise plans.
Like most Indian startups, Flock is a rip-off idea of what Slack wants to do. Flipkart, Snapdeal, Paytm, OYO and many others are also replicas of successful international startups. The company claims that Flock as a concept came into existence before Slack.
According to the company’s profile, however, Flock was incorporated in 2014, but Slack was first launched in August 2013.
The company also dismisses that it is an Indian startup. There is a small difference -- Flock is headquartered in San Francisco, but has its largest user base in India, is run by an Indian, and has its development centre in India. Though the company claims to be a global company, it announced its global expansion only on Wednesday.
Market watchers also feel that Flock, though is based on good concepts, has a long way to go. “The winner in the game will depend on how Flock can be integrated with other enterprise products, offered by Microsoft, SAP or Oracle... It is not yet a success stories,” said Sanchit Vir Gogia, founder and chief analyst at Greyhound Research.
Flock will also need large system integrators like Cap Gemini, Infosys and Cognizant for implementation. System integrators have already built a practice around Microsoft and Slack, which are already large global products. “Flock does not have that advantage,” Gogia added.
In an earlier interaction with HT, Turakhia had said that the company will eventually start charging its clients.
Growth on the basis of freebies is a no-brainer. Mukesh Ambani-led Reliance Jio is a classic example -- it acquired more than 72 million subscribers in less than five months, making it one of the fastest growing companies, before it starts charging customers from April.
The story at Flock is not different. “Since Flock entered the market, we’ve experienced significant global traction and 200% growth. Accelerated demand for the need to increase efficiency across teams has provided us with every reason to continue to expand globally and for me to prepare to invest additional capital,” said Turakhia in a statement.
For Turakhia to stand out and survive, he will have to manage growth and sustain business once the funding turns from a gush to a trickle.
(Note: An earlier version of the story said that Flock offered all its services free, which was changed. We regret the error.)