This is an opinion I formed after reading an article about E-restaurants and also about mobile wallet applications in E.T.This opinion is about firms with innovative business ideas, not technology where there is a tangible product or a new software for sale. Rather, it is meant for mostly service related firms where there is no tangible product.

Some time back, I read an article in E.T about how E-restaurants are attracting millions in funding and they are praised as Flipkart’s of the future. After reading this, I am stuck with a question: are we considering a venture to have potential just because it is new? Are businesses being disrupted for disruption’s sake? Especially considering that even Flipkart, which actually succeeded in revolutionizing the way we shop, has not yet turned out profits.

E-restaurants, though a novel idea, have some drawbacks when it comes to earning revenue:

1. For Indians, eating at restaurants is not a regular habit. It is more like an outing for holiday. Norestaurant, let alone an E-restaurant, has succeeded in changing perceptions like Starbucks did for coffee in the U.S.
2. Flipkart has overcome customers’ anxiety of paying in advance by using cash on delivery. How can E-restaurants assuage customers’ anxiety about the hygiene of the food?
3. Can E-restaurants compete with subsidized canteen food provided by many corporate companies to their employees?

I am not saying that E-restaurants are completely a bad idea; however, are they safe enough to be invested with millions of dollars?

Now let us compare this with the Mobile wallet business. Today(the 2^nd of February),  I read an article in E.T saying that RBI is expected to do away with the two-way authentication  required while using a credit card on a mobile device –  suddenly mobile wallet applications are no longer a necessity. The same business is hailed as having immense potential until today. What is to prevent E-restaurants from going the way of the mobile wallet business?

With investors hungry for novel and innovative ideas, are we churning out startups that have weak foundations? Or, is it the way of the modern economy where a periodical cycle of bubble and burst is to be expected?