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Bankrupt StayZilla Founder Yogi Jailed, Startups Cry Foul

India ranks 130th in World Bank’s Doing Business rankings for 2017-18 and wants to reach 90th by next year and take a big leap to 30th by 2020.

But not when startup founders are hounded and arrested on streets by Chennai police without giving a second chance or a second hearing. On March 14, 2017, Yogendra Vasupal or Yogi, who was the founder of Stayzilla, which provided a via media for homeowners and renters find each other online.

He had to shut the shop down owing to severe competition and mafia-driven real estate domain in February but he had already incurred an advertising bill worth Rs 1.7 crore (about $260,000), which landed him in jail a month later.

With over 200 startup founders and CEOs joining an open petition against Yogi’s arrest and jail, more than ethics, the country is beset with a moral question – How’s Yogi Different from Mallya?

The techie founders in their open letter to top ministers and bureaucrats calling for Vasupal’s release and a fair trial instead of landing him jail straight away. "The question is not how this will affect entrepreneurship today, but how young Indians looking to become entrepreneurs in the future will give up even before starting up," reads the open letter.

Those who have rallied behind Yogi include Vijay Shekhar Sharma of Paytm, Bhavish Aggarwal of Ola, Kunal Bahl, co-founder of e-commerce portal Snapdeal, Shashank ND, founder and CEO of healthcare startup Practo Technologies. The Yogi episode was a message sent out to startups that they cannot venture into unwieldy expenses at the cost of their suppliers and secondly, they cannot just shut their shop and walk out.

What Mallya could do when he was not paying was similar in spirit, if not intention. He had property back up but refused to pay citing company rules. None of his companies were strong enough to get bank loands but he did manage it with connivance from political leaders and even managed to flee the country. No startup founder can dream of getting similar treatment and the rule of law is still strong in India.

Stayzilla founder Yogi is finding support from his comraderie who have sarted a website, help-yogi.com, and opened a Twitter handle #helpyogi on social media platform. The supporters allege that the advertising firm resorted to strong-arm tactics instead of taking a legal recourse. Since the company is well-connected, it had threatened both Yogi, his parents, his co-founder earlier before sending him to jail from the streets of Chennai.

With his bail plea hearing slated today, Wednesday, March 22, 2017, his supporters said the issue is bigger than mere Yogi’s episode. No Indian startup can venture into intense competition propelled by people with bad intentions. Kunal Bahl of Snapdeal, which is facing similar competition, said on Twitter: "Many startup founders, including myself, have seen the ugliness of getting on the wrong side of people with bad intentions."

Yogi’s Stayzilla had raised millions of dollars from investors including Matrix Partners and Nexus Venture Partners but still the business turned out to be unviable in view of intense competition in the real estate sector.

Shashank ND of Practo denied that they are seeking special protection. "Startups need the safety net of basic law and order. We are not asking for anything special," he told the media.

Finally, who will pay the bill? If Yogi is bailed out, tomorrow Mallya would also seek same framework to protect himself. The intention may be different but the solution remains the same.

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