Stayzilla, an Indian start-up which offered homestays, like AirBnB, is in the news, for wrong reasons. That Stayzilla decided to down shutters would have made it to the trade press, and further, would have signalled to the start-up community that the age of easy investor money is well and truly over. However, the reason why Stayzilla is making national headlines though is because one of its founders has been arrested by the police, for unpaid bills to one of its vendors, and the big ticket start-up entrepreneurs have requested for intervention from the Central Government as this indicates 'India is no place for start-ups'. In the meantime, evidence emerged that the Stayzilla founders threatened the aggrieved vendors with 'dire consequences' if they pursue them and the Court has refused bail to the accused, creating a bigger furore. (See story here)
There are always many sides of stories such as these, and it is best not to hazard guesses about what really happened. However, there are two things which one can comment on, without regard to the different allegations that are flying around (that Stayzilla founders syphoned money out or the vendor in question is using its political muscle). These two questions relate to the wider significance of the story:
1. Some well-known names in Indian start-up community has argued that the non-payment of bills is a 'civil offence' and not a criminal one. The police should not have got involved in the first place.
2. The Stayzilla episode may indicate India is no place for a start-up.
These are complex questions, but facts about these are rather clear. Stayzilla used an advertising service and ran up a $250,000 bill, which they did not pay. Then, Stayzilla announced that they are closing, but did not go into administration. This is indeed fraud, because, one would suspect that while Stayzilla were using advertising services, the managers and the investors were aware - even if they did not want to accept it - that Stayzilla is not making money. It would have been, one could say, trading insolvently. Now, 'closing the business' means the investors were positioning themselves for tax losses, but without regard to the suppliers' - who in this case is another equally entrepreneurial business, but without the glamour and glitz of VC money - unpaid bills. This could indeed be a criminal offence.
As for the second question, would India be considered a place for start-ups if the big and powerful start-ups - those with financial muscle - can operate with impunity and effectively defraud the entrepreneurial businesses that trade with them? In fact, India is not a place for start-ups precisely for this reason, that big and powerful have all the advantages, and the entrepreneurs have to face all the obstacles. Just imagine what would happen if a small business did not pay Stayzilla: An army of lawyers, police and even perhaps Ministers come knocking at its door. It is shameful that some of the Indian start-up founders are trying to meddle into this case, something that perhaps indicates, as the CEO of the advertising company suing Stayzilla has maintained, that they are afraid that their companies would be next. The Stayzilla case indeed point to growing problems in the space, but these CEOs, through their intervention that made this a headline news, have attracted undue attention to this issue.
The Stayzilla case may be an one-off, or a start of a trend that the private valuation bubble is bursting. However, whatever the consequence, one must not miss the bigger question that this case raises: Can Vc-funded start-ups operate outside the acceptable norms and rules of the society? For example, is it okay not to pay the suppliers, or its employees, as some Indian start-ups have done, when financial trouble hits? Most of these people have no upside - they are basically being arm-twisted in making sacrifices because the 'company is in trouble'. In an earlier age, this would have been the entrepreneur's responsibility. But now, after the shift of focus to 'shareholder value', the other stakeholders don't seem to matter. A company would happily ask everyone else to make sacrifices to keep the company going - which is essentially equivalent to trading insolvently - in order to protect the shareholders (the alternative would have been to issue low-priced shares, equivalent to the interest on delayed payment, to anyone who is being made to sacrifice). Once the Start-ups understand these obligations, and learn to behave responsibly towards others who make them possible, they would earn the right to talk about changing the world for better.
Popular posts from this blog
A friend has recently forwarded me a quote from Lord Macaulay's speech in the British Parliament on 2nd February 1835. I reproduce the quote below: "I have traveled across the length and breadth of India and I have not seen one person who is a beggar, who is a thief. Such wealth I have seen in this country, such high moral values, people of such calibre, that I do not think we would ever conquer this country, unless we break the very backbone of this nation, which is her spiritual and cultural heritage, and, therefore, I propose that we replace her old and ancient education system, her culture, for if the Indians think that all that is foreign and English is good and greater than their own, they will lose their self-esteem, their native self-culture and they will become what we want them, a truly dominated nation." The email requested me to forward me to every indian I know. I was tempted, but there were two oddities about this quote. First, the language, which
Introduction : The Business of Gift Giving Business gift giving has always been common and contentious at the same time. Business gifts are usually seen as an ‘advertising, sales promotion and marketing communication medium’ (Cooper et al , 1991). Arunthanes et al (1994) points out that such gifting is practised usually for three reasons: (a) in appreciation for past client relationships, placing a new order, referrals to other clients, etc.; (b) in the hopes of creating a positive, first impression which might help to establish an initial business relationship; and (c) giving may be perceived as a quid Pro quo (i.e. returning a favour or expecting a favour in return for something). The practitioners of gift-giving generally argue that doing business is often an aggregation of personal interactions and relationships, and gift-giving should be seen as a natural way of maintaining and enhancing these relationships. ‘Business gifts, especially one given in the course of the festive s
Buzzwords have disadvantages. Right now, experiential learning is one, and that means we put the label on everything and it stops to mean anything. Also, this means reasonable conversation about experiential learning becomes difficult - at times such as this, either you preach experiential learning or you are traditional, antiquarian and hopelessly out of touch. But, overlooking the limitations of experiential learning can cause big problems. Experiential Learning does many things - putting practice at the heart of learning is an important paradigm shift - but not everything, and it is important to be aware what it does not do. Usually, we equate the terms Project-based Learning (the method) with Experiential Learning (the idea) and Learning from Experience (the ideal), treating them as one and the same and using the terms interchangeably. Any talk about distinctive meaning of these terms is usually seen as pedantic, but really represent very different ideas about education.
Today, Helen Goddard, 26, a highly popular music teacher of a City School for Girls, has been sentenced to 15 months in prison. Her crime was to carry out a year long lesbian affair with one of her pupils, who appeared in the court and admitted that the affair was consensual and it was she who pressured Helen into the affair. For Helen, a bright musician and a devout Chistian, this is an extraordinary lapse of judgement. Also, she was teaching in the £13,000 private girls only school in London. She was surely aware what the consequences of her action will be. The fact that she still could not stop herself tells us that lovers do not always act rationally, something we always knew. There is more in this affair than personal tragedies. For a start, this has all the dramatic elements: a bright, beautiful teacher more in Julia Roberts mould [as in Mona Lisa Smile], a stiff upper lip school [not unlike Wellesley] and a story like Notes On A Scandal with an added twist. Indeed, Helen
In most societies today, making profits are accepted as moral, if not especially praiseworthy. This was not as obvious as it appears today – people used to be embarrassed about making a profit not so long ago. Crazy as it seems today, it is worth thinking why it was so. Profits, as economists will put it, is the reward for risk-taking, for putting a business enterprise together in the pursuit of an objective. In this definition, remember, profits are not what it is commonly understood to be – the gross middle-line towards the bottom – but a figure net of entrepreneur’s earning [wages for his labour], dividends and interests on borrowed capital, and provisions for building and other physical assets [a sort of rent, offsetting what these assets could have earned if leased out]. This pure profit – surplus – accrues to a business as a reward to its organisation, for the act of entrepreneurship itself. Economists were divided on how this surplus comes about. The conventional wisdom was,
There is no other city like Kolkata for me: It is Home. The only city where I don't have to find a reason to go to, or to love. It is one city hardwired into my identity, and despite being away for a decade, that refuses to go away. People stay away from their homeland for a variety of reasons. But, as I have come to feel, no one can be completely happy to be away. One may find fame or fortune, love and learning, in another land, but they always live an incomplete life. They bring home broken bits of their homeland into their awkward daily existence, a cushion somewhere, a broken conversation in mother tongue some other time, always rediscovering the land they left behind for that brief moment of wanting to be themselves. The cruelest punishment, therefore, for a man who lives abroad is when his love for his land is denied. It is indeed often denied, because the pursuit of work, knowledge or love seemed to have gotten priority over the attraction of the land. This is particularly
Introduction: Hastings in the history of Indian Education Whether or not one includes Warren Hastings in the history of Education in India is a matter of perspective. If writing the history of education means writing the history of schools, the impact of Hastings' administration would be quite limited. If anything, the rapid implosion of local rulers in Eastern, Southern and Northern India during Hastings' tenure had meant a bleak period for the indigenous education system, as patronage and funds would have dwindled away for many of them. The Company administration really concerned itself with the schooling of the natives only after 1813, as Nurullah and Naik rightly pointed out ( see my earlier post ) and one can legitimately start the story at this point. However, if history of Education in India is to encompass the transformation of Indian Scholarship, on which foundation the new, colonial, system of Education would be built, the story must start with Warren Hast
Introduction Erna Petri née Kürbs, a farmer’s daughter from Herressen in Thuringia, arrived in Ukraine with her three year old son to join her husband Horst in June 1942. Horst, an SS leader inspired by Nazi ideologue Dr Richard Walter Darré, settled in the plantation of Grzenda, just outside today’s Lviv, to become a German Gentleman-Farmer. Erna saw Horst beating and abusing the workers in the plantation within two days of arriving there, which was, as Horst explained, necessary for establishing authority. Erna joined in enthusiastically, settling into a combination of roles of ‘plantation mistress, prairie Madonna in apron-covered dress lording over slave labourers, infant-carrying, gun-wielding Hausfrau.’  However, there were clear rules in the plantation, and Erna was very much expected to play the woman’s role of being a Cake-and-Coffee hostess. When four Jews were caught in the estate while trying to escape from a transport to a death camp, Horst told Erna and her female
I wrote a note on Kolkata, the city I come from and would always belong to, in July 2010. Since then, the post attracted many visitors and comments, mostly critical, as most people, including those from Kolkata, couldn't see any future for the city. My current effort, some 18 months down the line, is also prompted by a recent article in The Economist, The City That Got Left Behind , which echo the pessimism somewhat. I, at least emotionally, disagree to all the pessimism: After all Kolkata is home and I live in the hope of an eventual return. Indeed, some change has happened since I wrote my earlier post: The geriatric Leftist government that ruled the state for more than 30 years was summarily dispatched, and was replaced by a lumpen-capitalist populist government. Kolkata looked without a future with the clueless leftists at the helm; it now looks without hope. However, apart from bad governance, there is no reason why Kolkata had to be poor and hopeless. It sits right
The ‘Why’ Question? Adolf Hitler was appointed the German Chancellor by President Von Hindenburg on 30th January 1933. This was an extraordinary turn of events. Previously, President Von Hindenburg consistently refused to appoint Hitler the Chancellor, despite the impressive electoral performance of NSDAP in July 1932, Hitler’s uncompromising demand of the Chancellor’s post and a repeat election in November 1932 which failed to break the deadlock. Explaining his refusal, Hindenburg wrote in a letter on 24th November, “a presidential cabinet led by you would develop necessarily into a party dictatorship with all its consequences for an extraordinary accentuation of the conflicts in the German people.” The question ‘why’ Hitler was appointed Chancellor, despite the President being acutely aware of what might follow, is therefore a significant one. The NSDAP had election successes throughout 1932, and was already the biggest single party in the Reichstag and various Landtags acros
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.