The Death Of A Startup: This Is What Stayzilla’s Last Days Were Like

On 23rd February, Stayzilla CEO Yogendra Vasupal published his first ever post on the company’s new blog – and it wasn’t good news. Stayzilla will be rebooting its operations, the post somberly declared. The company had had enough of the discount wars, and was choosing to bow out.  

The announcement was met with shock by the startup community – Stayzilla had raised over Rs. 200 crore, and was thought by many to be a successful, fledgling company. But more shocks were to follow – three weeks later, CEO Yogendra Vasupal was arrested by the police.

Vasupal, it was alleged, had not paid dues to Stayzilla’s vendors. Jigsaw Solutions, an advertising agency from Chennai, claimed that the company owed it Rs. 1.69 crore for marketing activities. Crucially, these billings were between the period of January 2016 and March 2016. Stayzilla disputes this bill, saying that there was deficiency in service. But Times Internet owned CouponDunia has also said that it hadn’t been paid, with founder Sameer Parwami asking Vasupal to “do the honourable thing” and pay its vendors. 

We tried to piece together what the last few months at Stayzilla had been like – had Stayzilla shown signs of strife during its last few days?

August 2016

Six months before Stayzilla shut down, there were no outward signs that the company was in trouble. In fact, Yogendra Vasupal had appeared in a TV interview and said that Stayzilla was competing hard with Oyo, and was on track to be profitable over the next two years. He’d also dropped a useful nugget of information – he said that Stayzilla was looking to cut its burn rate by more than half to $500,000 – implying that at that point, the company was spending over $1 million (Rs. 6.8 crore) per month.

The company had also celebrated Independence day, decking up its new office in the colours of the Indian tricolour.

And Stayzilla was still working on its products – that month, it had launched a chatbot that let users communicate with the company on Whatsapp and Facebook Messenger.

September 2016

In September, Stayzilla was still pushing hard on its product – it debuted a feature in its app that let users connect to it offline. It was also actively hiring.

October 2016

In October, CEO Yogendra Vasupal had attended a tech conference in Bangalore, where he’d bemoaned India’s chalta hai attitude. “India does not lack innovation, what we have is low benchmarks,” he’d said.

The company was aggressively attending trade shows, and putting up stalls showcasing its product.

Stayzilla also celebrated Diwali, doing up its office for the occasion.

And Stayzilla was still having parties at its office – Stayzilla had TGIF celebrations on Fridays, with karaoke, music and beer. “Work hard. party harder,” tweeted its VP of product G Chandramouli.

November 2016

By November, Stayzilla had signed MOUs with several state governments to develop home stays, including Gujarat, Chattisgarh, Orissa and Uttrakhand. The company had been focussing on homestays for a while, and was looking to enter into government partnerhips to get a leg-up over the competition.


December 2016

In December, less than 45 days before the company shut down, it was still having full-scale parties in office. Stayzilla turned off the lights, got some disco lights going, and turned its office into a mini club. On 2nd December, its employees sang and danced as, ironically, “Abhi to party shuru hui hai” played in the background. Beer flowed, as did snacks.


January – Feb 2017

The company was going to shut down in less than a month at this point, but to the outside world, Stayzilla gave no indications of its troubles. Its social media handles were still churning out regular content and contests. On February 15th, Stayzilla had posted a quiz on its Twitter, it then went silent for a week. On 23rd February, it shared the news of its shutdown.

It’s perhaps the suddenness of the shutdown that has the vendors irate. It was business as usual at Stayzilla until it shut down; vendors who weren’t paid could wonder why their dues weren’t being cleared when Stayzilla was clearly spending money on other activities. The sudden shutdown could’ve been caused by investors pulling out at the last minute, or not honouring a previous commitment of funds. With CEO Yogendra Vasupal still in prison, it could well be some time until it’s known what really happened.