Blog Details

Author: Associate Runa Jasia

A startup is a new established company or business which any individuals like you and I can start. Of course, the prerequisites such as an idea, a team, funds, a location, and some paperwork is necessary, to begin with.

Stayzilla

Talking about “The Stayzilla Story." Stayzilla company (legally also known as Inasra Technologies Private Limited ) founded in the year 2005. This company was located in Chennai, Tamil Nadu, India and aimed to provide travelers stays across the entire nation including all the options from a low budget to the luxurious ones and to go just beyond the concept of hotels providing opportunities to the customers for include lodging, homestays, etc. The company worked online through its website. Unfortunately, the company had to shut down permanently in February 2017. The founders included Yogendra Vasupal, Rupal Yogendra and Sachiti Singhi.

So let’s talk about what really happened to Stayzilla? It’s not that it closed as soon as it opened. This business lasted for more than ten years, and for a startup to be functional for that long is a success in itself. However, what could have been the reason for this downfall? It’s hard to believe, but it happened.

How it all started?

On 23rd February 2017, Yogendra Vasupal announced “halt to the operations of Stayzilla in its current form and looking to reboot it with a different business model” that was mentioned in the blogs of Stayzilla.com. He also said, “this has been one of the toughest decisions that I have taken so far, but it is the right thing to do.” Apart from this, he also said Thanks to his whole department and teams.

He gave the following reasons for the failure of the company:

• The travel marketplace does not have local network effects.
• They needed to invest in both creating the homestays as well as promoting and attracting guests to live in that homestay.
• India does not have a lot of public goods.
• The costs, both financial and opportunity costs, creep up on you over some time and gets rationalized as the cost of doing business in India.

• Necessitating substantial capital required to sustain growth.

Lastly, he wrote: “A change in what and how I value business also played a large part, I feel. More on that later.”

He also mentioned that the website and the mobile app of the Stayzilla would be suspended soon.

So what he was really talking about? His idea lacked planning?

In March 2017, JigSaw Solutions (advertisement agency) filed against the company, and it’s co-founding members. The main concern behind this complaint was that Stayzilla owes Jigsaw Advertising of 1.5 crore rupees. As a result, Yogendra was taken to judicial custody. Still, that’s a considerable amount to pay for a company who stopped their operations just before the month when the case was filed.

On the other hand, Aditya C.S from Jigsaw Advertising said “ My case is authentic, and they have cheated the public, they have taken bookings from lakhs of people, and the total calculated amount of the booking is around 80 crore rupees. I have proof that these people have siphoned money to the account of their family members. “

According to him, Stayzilla cheated on people and them.

So we need to learn something from this case, as it was not just a one-room shop which closed off permanently. It survived in the market for more than a decade. To sum up, the points what a start-up like Stayzilla lacked:

• Lack of proper planning:

Before implementing any business idea into reality, one must have an appropriate plan, in terms of all the aspects.

• Instability of aim and missions.

Any company starts with a single aim to achieve. If the founder members, themselves cannot define the purpose, missions and the long term-goals then what can they expect their future outcome to be? 

• Improper use of the capitals

There must always be more cash inflow than the outflow. Remember, you are using the money for the benefit of the company and its employees.

• Lack of required right connections.

As according to the Stayzilla story, they were a lack of local network connections. It’s essential to put the right people on the jobs and also to make connections with the right type of people while making a deal.

• Lack of proper management

How to use your resources well and wherein the company matters a lot. Availability of resources is essential, but the vital part is to manage those resources efficiently. 

• Bad quality delivery to the end user

The primary purpose of any business is to make their clients or end users happy. The quality delivered to them should be worth their money with good quality. If they are not satisfied, you are bound to fail.

Thus, the Stayzilla story gives all new and veteran founders a better insight to go down to the roots and ensure the checks and balances are all in place to make sure the startup has a strong foundation to grow on.