Sandeep Aggarwal was really angry

A couple of months before meeting this dealer, as research for this piece, I reached out to a former executive at Droom. He requested not to be named because he didn’t want to get into any trouble with the company. He narrated an incident that happened sometime in December 2017. Droom was in the market looking to raise funds, and just around then, an employee started talking about the multiple lapses at the company. On social media. “I remember that Sandeep Aggarwal was really angry,” he says. “It was a small office, so we could all see things.”

Just a part

Small lapses at dealerships where they were taking the company for a ride was just one part. A far bigger problem was with SPCMP. It expands to the Seller Pushed Coupon Management Platform. Simply understood, it is Droom’s coupon offering, where the company generates a coupon to help a dealer close a sale. A dealer would use this coupon to make a transaction and then claim the incentive.

The problem was that a few dealers were found to be selling the same car over and over again to claim the incentive and make money. “Sandeep was very angry. Like, how did this employee get to know about all these things, and I am going to take him to the police and finish his career,” adds the former executive. “Ultimately, Rishab [Malik] took the fall for this. Some people were also fired. But after that, the company raised money, and everyone moved on.”

Aggarwal says this didn’t happen. “We had an incident where someone ran 19 tweets on Twitter early this year and mentioned a few things about our business and many were personal attacks on me,” he said. “After a Gurgaon [sic.] police investigation, this person was identified as an ex-employee, who was let go in October 2017 during the annual performance due to his performance].

Tough times faced

He had a hard time finding any other job and ended up venting many things on social media. Unfortunately, one existing employee was also helping this person. But this issue has been fully sorted out.”

So, Aggarwal wasn’t reacting to systemic lapses, just errant ex-employees. But then he also goes on to say this: “It is not uncommon for any large and scalable marketplace platform to learn how various stakeholders may be gaming the system.

Arguably, it is almost like a good problem to have i.e. good news is that people are using your platform. The bad news is that they might game it but the worse news is when they do not use or stop using the platform. So we are happy that millions are using our platform.”

“And that is how each month the platform becomes better and more full proof[sic] when we plug holes from these gaming opportunities we learn about. So, on and off we get to learn the game dealers’ play. And next month, our system, processes, and controls will plug the hole for such practices.

Developing a robust platform

And this process is iterative and makes the platform more robust. But your understanding is incorrect: no same car can be sold on Droom platform twice in less than 12 months unless the order was the incomplete first time.

We did have some incidents in April and May of this year when we learned that some dealers were trying to game our system. We have zero-tolerance on such practices and we did take appropriate actions as soon as we came to know about this. Nobody was fired but I made it very clear that Droom will not allow any gaming opportunities by dealers.”

Time for us to chew again. What exactly is Aggarwal trying to say?

These are clearly muddy waters. In our search for clarity, let’s dive right into the innards of the used car business. Now, this might come off as a bit philosophical, but it is true. Money is at the root of this problem. How to spend some and then make some.

Bear with me.