Stayzilla failure

Stayzilla

Indian homestay network

Description

Stayzilla was a successful homestay network in India and it raised $33.5 million in funding. Yogendra Vasupal, the founder, launched the company, under the name Inasra Technologies, in 2005. He then changed the name to Stayzilla in 2010, because the owner wanted to expand his services in all the cities and Zillas (Districts) in India. The company was an early Airbnb business type that provided an online platform in which homestays, ‘alternative stays’, as well as hotels could be listed. Stayzilla had over 15000 stays in about 1100 cities across the country and in 2013 it reached the 500 bookings in a day milestone.

Stats

Category
Travel
Country
India
Started
In 2005
Closed
By 2017
Number of Founders
Four
Name of Founders
Rupal Yogendra, Sachit Singhi, Sachit Singhi, Yogendra Vasupal
Number of Employees
Between 251 And 500
Number of Funding Rounds
4
Total Funding Amount
$34M
Number of Investors
4
Precise Cause of Failure
Lack of Focus
Business Outcome
Shut Down

Cause of Failure

Throughout its 12 years of operation, Stayzilla had to deal with a varied number of challenges.

The potential for a business like Stayzilla was huge, especially because they were among the first companies in India to venture into the sector and make use of technology. However, being the first mover meant also that people were not very familiar with the concept, nor how to take advantage of the service and basically many didn’t even know how to use the internet. So Stayzilla’s first efforts and resources had to be directed towards both educating the market as well as essentially creating homestays.

As more competitors joined the market, various companies tried to differentiate themselves by offering frequent discounts. But Stayzilla’s operations costs were already too high and they were losing money every year. The CEO also mentioned that they had also lost focus on the essential mission they had envisioned for the company.

The company has not been declared officially closed, though, as the CEO considers this a pause to regain clarity and plans to return on the scene with an improved service and a ‘clean slate’ soon.

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