When Auditors Flee 🔥

The collapse of ReshaMandi, India's $65M AgriTech startup.                                                                                                                                                                                                                                                                                                                                                                                                                 [Listen Online]( | [Read Online]( When Auditors Flee The collapse of ReshaMandi, India's $65M AgriTech startup. [Nicolás Cerdeira]( [like]( [fb]( [fb]( [fb]( [fb](mailto:?subject=Post%20from%20Failory&body=When%20Auditors%20Flee%3A%20The%20collapse%20of%20ReshaMandi%2C%20India%27s%20%2465M%20AgriTech%20startup.%0A%0Ahttps%3A%2F%2Fnewsletter.failory.com%2Fp%2Fauditors-flee) Hey — It’s Nico. Welcome to another Failory edition. This issue takes 5 minutes to read. If you only have one, check this: - ReshaMandi, an Indian AgriTech startup, abruptly shut down — find out why below. - Lenny Rachitsky shares [10 proven growth tactics]( from top consumer subscription apps. - [Brazil’s X ban sends 2M users]( to decentralized social media platform Bluesky. - [Magic raises $320M]( to create AI models for code automation. - Paul Graham published a new essay: [Founder Mode]( — get all the details below. This issue is brought to you by Intercom’s Startup Program — [get 12 months for free](. Intercom for Startups AD Join Intercomʼs Startup Program and [get 12 months free](. Create a direct line to your customers. Experience the only complete AI-first customer service solution. [Join]( thousands of other fast-growing startups using Intercom such as Coda, Qonto and Pitch. [Apply Now →]( This Week In Startups 🔗 Resources Lenny Rachitsky shares [10 proven growth tactics]( from top consumer subscription apps. Why 37signals [stopped hiring full-time managers](. AI-presentation startup [Tome shares how they’re pivoting](. [How to use design partners]( for your startup. 📰 News [OpenAI reports ChatGPT usage has doubled]( since last year. [Brazil’s X ban sends 2M users]( to decentralized social media platform Bluesky. [Amazon acqui-hires]( the founders of AI robotics startup Covariant [SparkLabs secures a $50M fund]( to back early-stage AI startups globally. [A16z is investing $30M]( in Games x Tech startups via the SPEEDRUN fund. 💸 Fundraising [Magic raises $320M]( to create AI models for code automation. [YC-backed Pylon raises $17M]( to build the next Zendesk. [Hello Wonder raises $2.1M]( to build an AI-powered browser for kids. [Payroll startup Cercli raises $4M]( to become the Rippling for the Middle East and North Africa. Fail(St)ory A Sinking Marketplace A few weeks ago, [ReshaMandi](, an Indian agritech startup, abruptly shut down, leaving many questioning what went wrong. Founded in 2020, ReshaMandi wanted to revolutionize the silk supply chain in India using AI and IoT. The startup quickly gained attention, raising millions and boasting impressive growth, but despite its early successes, ReshaMandi recently let go of all its employees and ceased operations. What Was It: ReshaMandi aimed to streamline and digitize India’s silk industry by providing a platform for farmers, weavers, and retailers. The company introduced IoT devices to silk farms and developed an AI-powered system to help farmers sell their produce directly, ensuring fair prices. They also optimized logistics, reducing market times and enhancing the overall supply chain. Within just 10 months of its launch, ReshaMandi onboarded over 6,000 farmers and had grown its gross merchandise value (GMV) to $30M annually. Investors were impressed, and the startup received over $40M in equity capital from notable backers like Creation Investments and Omnivore. Additionally, they secured $25M in debt funding from lenders and venture capital firms. The Numbers: - 📅 Founded in 2020. - 💰 Raised over $40M in equity capital and $25M in debt funding. - 🧑‍💼 At its peak, the company employed 500 people. - 🔥 Reached a GMV of $30M annually within 10 months. Reasons For Failure: - Financial Struggles: ReshaMandi’s financial situation deteriorated as it struggled to secure additional funding, particularly a Series B investment. This led to the layoff of 80% of its workforce over time and, eventually, the complete closure of operations. - Leadership and Transparency Issues: ReshaMandi’s auditor raised several red flags before their departure from the company last month. They pointed to significant financial mismanagement and a lack of transparency. The sudden exit of the auditor only intensified suspicions of potential misconduct. Founder Saurabh Kumar Agarwal acknowledged the company’s financial challenges, but questions remain about the transparency of its leadership. - Legal Troubles: With operations ceasing, vendors and creditors are now pursuing legal action against the company. Some are even considering filing for bankruptcy, further highlighting the severity of ReshaMandi’s financial situation. - Overexpansion: While the company grew quickly, adding thousands of farmers to its platform and rapidly expanding its workforce, it seems they failed to keep costs in check. Burn rates became unsustainable, and despite the large sums of funding raised, ReshaMandi could not generate enough revenue to offset its growing expenses. Why It Matters: - ReshaMandi’s story highlights the dangers of rapid expansion without securing long-term financial stability. - It also underscores the importance of transparency and leadership during financial struggles. - It serves as a warning for startups that rely heavily on debt and external funding without a sustainable revenue model. Trend Founder Mode This week, Paul Graham published a [new essay](, and it’s the only thing being discussed on Twitter. In the article, Graham breaks down two approaches to running a growing startup: Founder Mode and Manager Mode. He argues that while most founders are told to switch to Manager Mode as their companies grow, this advice is wrong. According to him, founders should always stick with Founder Mode when running their companies. Why It Matters: - Founders face tough decisions as their startups grow—knowing how to lead can make or break a company. - Paul Graham’s take challenges the usual advice, offering a fresh perspective on startup leadership. - Scaling a startup isn’t just about hiring more people—it’s about how deeply involved the founder should stay. - Understanding this new framework could help you navigate the tricky transition from a small team to a larger company. Manager Mode Vs. Founder Mode: Manager Mode is the standard approach recommended to founders once their startups reach a certain size. It’s all about creating a well-oiled machine by hiring skilled managers and trusting them to lead their teams. In this mode, the founder steps back, treating different parts of the company like separate "black boxes." Each manager runs their area, reporting up the chain without much direct input from the founder. According to Graham, this can lead to problems—especially for founders who built their companies by being deeply involved in every detail. Graham introduces a more unconventional idea, Founder Mode, which consists of staying hands-on as a company grows. In Founder Mode, the founder remains closely tied to the operations, breaking traditional management rules by holding skip-level meetings and keeping a direct line with the entire company, not just top-level managers. While Graham admits it’s unclear what Founder Mode will fully look like, he’s confident that many successful founders have already been practicing it without realizing it. The real question is how to maintain this involvement without burning out or stifling growth. Obviously, founders can’t run a company of 1000 employees the same way they did when it was just a team of 10. However, Graham’s theory is that staying more connected can lead to better outcomes, even as the company scales. What People Are Saying: Paul Graham’s essay has sparked a wave of reactions across social media, especially on Twitter. Some agree that staying involved is critical, while others are skeptical of Founder Mode’s potential drawbacks. Anu Atluru, in her [Working Theorys]([newsletter](, offers a different perspective. She points out that most founders already start in Founder Mode—small teams, tight control, and lower stakes—but that doesn’t stop them from failing. For Atluru, the issue isn’t whether founders remain in Founder Mode or transition to Manager Mode; it’s about the timing of that transition. If a founder makes the switch too early or too late, or if the shift is too rigid, it can spell trouble for the startup. Others, like Eric Newcomer, founder of the [Newcomer]( newsletter, have added some humor to the conversation. He joked that one of Graham’s examples of a company in Founder Mode, Airbnb, isn’t exactly thriving in the stock market at the moment. [tw profile: Eric Newcomer] Eric Newcomer @EricNewcomer [tw] founder mode vs manager mode 3:59 PM • Sep 3, 2024 3.38K Likes 169 Retweets 118 Replies This mix of skepticism and recognition of some truth reflects the broader conversation around Founder Mode—there’s potential in Graham’s idea, but it’s still unclear how it will work in practice. So, what do you think? Is Founder Mode the right way to grow a startup? [✅ Of course! That is why everyone is talking about it.]( [❌ Sounds like a fancy term for "micromanaging" to me.]( Help Me Improve Failory How Was Today's Newsletter? If this issue was a startup, how would you rate it? [🚀 Launches to the moon!]( [🤔 Room for a pivot]( [💀 Crashes and burns]( That's all of this edition. Cheers, Nico Update your email preferences or unsubscribe [here]( © 2024 Failory 1309 Coffeen Avenue Ste 1200, Sheridan, Wyoming 82801, United States of America [[beehiiv logo]Powered by beehiiv]( [Terms of Service](