In a series of Tweets, Zomato founder Deepinder Goyal has expressed his severe displeasure over the treatment melted out to him by his alma mater: IIT Delhi. Without naming anyone, he criticized the campus placement procedure, and accused IIT Delhi of partiality (to some extent).
However, on closure scrutiny of the incident, we may discover that IIT Delhi was not 100% inaccurate in their assessment, as ESOPs can be a risky decision sometimes.
How It Started?
On Friday, Deepiner Goyal, a passout of IIT Delhi, went to the campus and asked the placement cell to provide him with Day 1 slot for placements. Normally, the biggest and most preferred MNCs such as Google and Microsoft are provided day 1 slot during the placement session; considering that the cream of talent gets selected during that day.
Deepinder’s request was not only rejected, but he was also informed that the package offered by Zomato is too less to even consider them providing day 1 slot.
Zomato had offered Rs 16 lakh annual take home (excluding tax dedications) and Rs 10 lakh as ESOPs or Employee Stock Option Plans.
Deepinder Lashes Out
Soon after, Deepinder tweeted, accusing the whole structure of campus placement in India, and especially IIT: “Campus placements in India are broken. Placement cells optimise only for money. Growth, esops, quality of work is secondary.”
Soon, within 3 minutes, he posted another Tweet, revealing the reason: “A placement cell head told us that she doesn’t value esops. Couldn’t grasp that the esops we gave students last year are now worth >1crore”
Soon, his Tweets received support from his followers, as one of them suggested that this is unfair for students as they are missing out on a ‘huge opportunity’.
In fact, some of his followers on Twitter suggested that placement officers are working like middlemen, and they should be removed from the system so as to cause a revolution. Deepinder agreed, tweeting, “Great idea. Anyone willing to take a serious shot at this?”
IIT Delhi Responds
Placement officer at IIT Delhi, A Madan responded, as she said, “Any company which has to compete for a slot has to match the cash salary offer. Zomato did not match the salary offer,”
Deepinder replied to this, saying that IIT Delhi has still not understood the true value of ESOPs, hence this unfair treatment.
Are ESOPs Enough For IIT Graduates?
ESOPS are an option for employees to have ownership of certain number of a company’s shares, which are normally determined at the current market value. Hence, if a new hire accepts to have ESOPs rather than higher take home salary, then he is actually putting up a bet with the company’s future.
In case the market value shoots up, depending on infusion of venture funds or IPO, then that employee can cash back his ESOPs at a higher rate, and be profitable. On the same hand, if the market value diminishes, then the ESOPs can prove to be a bad asset.
At the other hand, take home salary guarantees a certain amount of money every month, irrespective of the fact that the company is performing good or bad in the market, and how much the valuation fluctuates.
As per Deepinder, several IIT graduates have become millionaires because of their ESOPs, that too within a year. However, it seems that IIT Delhi management wants a secured, safety net for their students, as they don’t want them to suffer financially because of a start-up’s fluctuating state.
It seems institutions such as IIT will take some time to get adjusted to the new age of business and profit sharing tactics among startups; but at the same time, Deepinder should realize that not every IIT graduate has entrepreneurial dreams and thus, not everyone can fall for the ESOP charm.
This marks another incident where founder of a startup accuses the whole system when their demands are not met. In May this year, Snapdeal co- founder Rohit Bansal had shared that India doesn’t have enough quality programmers, which was vehemently opposed by Flipkart’s co-founder Sachin Bansal.
Interestingly, both of them are IIT Delhi passouts.