Empirical data on startups indicate that a large percentage (between 70 to 90% ) of startups are doomed to fail. Some founders realize that they are captaining a sinking ship and bail out early and gracefully, others decide to do a Titanic by failing dramatically. Many others, however continue on a slow burn.
Knowing when to declare “failure” is an art more than a precise science especially since we love stories of businesses raising out of ashes of failures. Godzilla Of Home And Alternate Stays, Stayzilla announced a shutdown and Founder Admits Failure, Plans A ‘Reboot’
This week, the founder of Stayzilla, Yogendra announced his decision via blog post that Stayzilla was shutting down and would “reboot its operations”
I would like to announce today that we would be bringing to a halt the operations of Stayzilla in its current form, and looking to reboot it with a different business model.
This has been one of the toughest decisions that I have taken so far but it is the right thing to do. The hardest part is saying goodbye to a perfect team that has accomplished a lot by putting Homestays on the map of India. I am the most fortunate to have had such a team on my side at this juncture. Whatever and how much ever I write about them is not going to do justice to their commitment. But try, I must!
Reason for Failure: Despite having a very clear lead, despite a lot of firsts, despite being successful in getting an ecosystem up from scratch pan-India, there are a few reasons why we are at this juncture. The travel marketplace does not have local network effects and, therefore, we can’t really take a focused city-by-city approach in terms of matching supply and demand.
Media reaction to the announcement:
For startup talent stung by right sizing, saviours seem to be emerging from within the ecosystem: Alibaba-backed Paytm is the latest to throw a lifeline to technology and product executives, many of whom are hunting for jobs after the restructuring at Snapdeal and the mothballing of Stayzilla.
Early Friday morning, Paytm founder Vijay Shekhar Sharma tweeted: “Hello, Tech/Product people in Delhi NCR, feeling heat of business restructuring? We welcome you @Paytm and @Paytm-Mall with open arms.” Sharma’s tweet didn’t mention any company, but his offer came amid job losses at the two startups that have significant staff presence in the national capital region (NCR).
Backed by marquee venture capital firms like Nexus Venture Partners and Matrix Partners, Bengaluru-based Indian homestay network Stayzilla suspended its operations yesterday.
Why A Bumpy Ride? Although it had first-mover advantage in the space, its growth amped up only after it was rebranded. Yogendra accepted that this was achieved at quite a high-cost and had a lot of pitfalls. He realised that – what can be easily taken as granted in the western market – in India, required a whole lot of brainstorming. He laid out a couple of reasons which led to the failure.
Not The Only One Bleeding: VCs and angels have been pressing upon consumer Internet as one of the ‘closely watched’ sectors for 2017. Exponential adoption of digital devices, increase in Internet penetration, the shift of consumers from offline-to-online, are a few of the reasons which have helped this segment become an investor favourite.
One of India’s biggest homestay and alternate stay aggregators, Stayzilla, has suspended operations. Coming a day after Snapdeal’s massive restructuring, it is once again an indication of the troubles that India’s consumer internet ventures are going through as funding slows.
Vasupal believes specialization could be the future mantra for Stayzilla. “Focusing all our energies on the supply side will allow us to build on our core strength that we have developed over the last 18 months. Specialized solutions such as the concept of ‘Stayzilla Verified Homestays’ excite me in particular. Originally conceived to increase trust, this could serve as the benchmark for the entire nascent and unstructured industry,” he said.
Check out out our previous Story of a failed startup: Tradingrex.com