When I first read this Medium blogpost written by Stayzilla co-founder Yogendra Vasupal at 5 am on Wednesday morning, it felt like a Bollywood plot from the 90s. A middle class entrepreneur is picked up by the cops and goes missing for hours while the anxious family waits cluelessly; a villainous character threatens that the protagonist’s wife would end up in a brothel; hints of political influence being misused are thrown around — these were all part of this complex storyline. And of course, the black magic element: a voodoo doll home-delivered along with a photo of a child — one of the most bizarre and scary twists in this entire episode.

“It can’t be true. This is 2017 and India is the startup capital of the world,” I told myself while walking to office. By the time I’d reached, Twitter, Medium and Facebook were on fire with comments expressing solidarity with Yogi, his wife Rupal Yogendra, and the family of the other co-founder Sachit Singhi, whose son’s photo had been attached to the threatening voodoo doll.

It was already 8am, and I booked myself on a 9 am train to Chennai, driven not by activism, but the desire to unravel the mysteries surrounding Stayzilla, its founders and the company’s debtors.

While on the train, I started making calls and realised that Aditya CS, the founder of a Chennai-based media buying agency JigSaw Solution and Advertising, was at the centre of this case. Aditya, a former Times of India advertising executive in Chennai, had filed an FIR (first information report) naming the Stayzilla founders Yogi Vasupal and Sachit as defaulters who had “intimidated” him when asked to settle dues.

“Let’s meet for dinner after 8pm,” Aditya told me on the phone when I asked for a meeting. Later in the day, his phone was switched off. At midnight, I finally gave up trying to meet him.

If I do manage to connect with Aditya, we will update this story.

Meanwhile, I connected with Rupal Yogendra, Yogi’s wife and head of operations at Stayzilla, and started a conversation, asking her side of the story.

By the time I’d reached Chennai, TiE Chennai, the city-based network of entrepreneurs and investors, had called a press-conference at 4pm.

There, R Narayanan, the president of TiE’s Chennai chapter, described Yogi’s arrest as being “similar to police encounters” where an accused is pre-judged and the action is justified much later.

“We are suspicious of the manner in which this arrest was made,” he said at the press conference on Wednesday.

Finding Yogi

By evening, Rupal texted back saying we could talk.

Rupal, who first met Yogi while studying at Madras University during 2000, says despite scaling down Stayzilla, the couple had not given up on entrepreneurship. “We’re already thinking of the next startup, the next steps,” she told me over the phone.

This whole drama started unfolding on Saturday, March 11, when Sachit Singhi, one of the three Stayzilla cofounders, received a package containing a “voodoo doll” and with his son’s picture pinned to it from an unidentified person at his apartment in Bengaluru. Soon after, Yogi asked Sachit and his family to come over to his and Rupal’s house in Bangalore, and left for Chennai, says Rupal: “He wanted to be there and find out ways to deal with it.”

Yogi and Rupal have a seven-year-old daughter and a six-year-old son.

The family knew something was really wrong when Sachit received the voodoo doll and also got a call from Aditya, when he allegedly threatened and abused him. “When the threatening call came, we had Archana (Sachit’s wife) and kids come over our place to stay; we had to be together,” says Rupal.

“The history to this incident is shared on the blog which was written by Yogi over the weekend (it was published on March 15) after we received the voodoo doll, because we knew something was really wrong. And we contacted our lawyer who told us getting anticipatory bail would take at least 3-4 working days,” she says.

In a heartfelt post titled “Help! I Need Everybody…” Yogi detailed the events leading up to the development, also mentioning that his family was “under duress” from the authorities. The blog had this video of Yogi’s Bengaluru landlord threatening to shoot the Stayzilla office manager, and this audio recording of JigSaw’s Aditya threatening one of the founders.

As the weekend went by, the plot thickened. On Tuesday, Yogi suddenly went incommunicado; his phone was switched off and no one had a clue about his whereabouts.

The last message his family received from him that day was: “I am with SP City, Egmore.”

“It seems during the entire day, they (the cops) were forcing him to confess, and finally by around 6.30 pm in the evening (after Yogi did not give in to the pressure), we received the message,” says Rupal.

The problem, according to Yogi and his family, is that the cops registered a criminal case against him. “This wasn’t a criminal case at all. During the allegations too, we told the cops that the case should have been filed in the civil court, that’s where we were ready to fight it. “

Yogi and his supporters believe that the non-payment of dues is a civil offence, because “deficiency of services” was the reason the agency’s bill wasn’t settled. “We had told him (Aditya) that if we are unable to settle the dispute between us, we would bring a third party, or fight it out in the civil court,” Rupal clarifies.

Luckily, all the developments running up to Yogi’s disappearance were mentioned in the Medium post, she feels.

After learning that he was at Egmore police station, Yogi’s sister in law Lavanya, along with other family members tried meeting him, but the cops refused to let them see him. Only the lawyer was allowed to meet him, suggesting he had been booked in a criminal case.

“I don’t mind being transparent, we have always been that way since announcing the news about Stayzilla. I am losing context of what would be right or wrong to share at this point in time. These are all new experiences for me, (I’m trying to) grasp them as fast as possible,” Rupal told me. “I could use help.”

She kept pausing for seconds during the conversation, struggling to put her thoughts together. “When my family went to the Egmore commissioner’s office on Tuesday, he wasn’t allowed to meet anybody,” she says.

“Knowing Yogi, I can guarantee that he’s not someone who will give in. He always sets a great example as a leader, and I am saying this as someone who has worked with him for years. He is not somebody who will give in to this arm-twisting, but it’s not going to be easy either and we are all praying for him,” says Rupal.

“I will know only by Thursday how he is doing, after my family meets him.” For now, Yogi continues to be in incarcerated at Puzhal Central Prison in Chennai.

Can a startup die with dignity?

So, is there a way to settle everything amicably without things taking an ugly turn?

While I couldn’t get through to Aditya of JigSaw to get his side of the story, Rupal said the way things turned out with Stayzilla has been deeply distressing, but not enough to crush their spirit.

“We (Yogi and Rupal) were college buddies, I know him since 2000, so the relationship goes back 17 years. Becoming entrepreneurs (in 2005) was the start of a great journey, and shutting down (Stayzilla) was humbling,” says Rupal. “We were very transparent at every stage, we only wanted good things, we wanted to remain in the ecosystem, not escape from it.“

“We are God-fearing people, we play by the rules and we felt even in failure there was something we could leverage.”

“We thought we could start again, we were very confident.”

As Ravi Krishnappa, an early angel investor and board member of Stayzilla, points out, the couple has had a long, slow and painful journey in building the startup. “There is this belief that being an entrepreneur means being in control of everything. This incident and shutting down of Stayzilla tells you that’s not the case,” he says.

Much before Stayzilla raised money from established VCs such as Matrix Partners, Krishnappa and Sharad Sharma of iSpirt backed the three co-founders with angel investment.

As I was writing this story, a #SaveYogiSaveStartupMovement has been gaining momentum. A WhatsApp group with members like Sharma, Freshdesk founder Girish Mathrubootham, and Vijay Rayapati of the Silicon Valley-based Minjar Inc., have been garnering support to get Yogi out of jail. On Twitter, a #releaseYoginow hashtag led by the anonymous handle Unicon Baba, had been gaining momentum too.

For Yogi and Rupal, the future means working on another startup idea and moving on.

“The next steps were decided, the work had begun. Within no time, we were thinking about the next startups, basic strategy and values. Basically, entrepreneurship is not something we will stop doing, despite this incident,” says Rupal. “We have the fraternity giving us all the support, we will stick to this.”

“Not giving up, definitely. Might take a while, especially since I had a surgery a month before the shutdown,” she says, finally breaking down and sobbing.

Unanswered questions

Did Stayzilla have enough money left in the bank to settle the debts?

Did investors manage to get any portion of their investment back?

Remember, Stayzilla has raised $34 million since it was founded in 2005. In May 2016, Stayzilla raised $13.5 million, and $20 million the year before in 2015.

“From what I understand, they (Stayzilla) have not run out of money; there’s enough in the bank for a normal, structured shutdown. And the founders haven’t siphoned any money either,” says Krishnappa.

So, if the company has not run out of money, then why can’t the debts be settled?

“There was an internal note saying you cannot spend on non-employee and non-statutory expenses as part of the winding down process,” said another person directly familiar with the developments.

Entrepreneurs such as Pranay Srinivasan, the founder of SourceEasy, said startups cannot just “shut down” and ask vendors (with dues worth millions) to just “have a nice day” or “go to court.”

“You can pivot/stop/ move off your business model as many times as you like — as long as you pay people who rendered services to your startup on credit terms agreed to,” says Srinivasan. “However, none of this exonerates using a criminal statute to chase a civil liability.”

For his part, Aditya has maintained that Stayzilla and its founders owe his agency nearly Rs. 1.7 crore, an amount too high to be written off. In an email sent to several media outlets, Aditya also accused Stayzilla founders of siphoning money from the startup, a claim refuted by the group of volunteers running a campaign against the arrest.

“The payments listed in the FIR (payment to his father for rent, and credit card payments) are kosher and have been vetted by the company auditor as well as by investors,” a spokesperson of #SaveYogiSaveStartupMovement said in a WhatsApp message. “Stayzilla is a genuine business failure. Yogendra may be a bad businessman but he is NOT a crook and certainly doesn’t deserve to be treated like a criminal.”

Notwithstanding the ability of a startup to settle debts after its shut down, the manner in which Yogi was arrested and the founders’ families were intimidated, point at a deeper nexus between politicians and businessmen in Chennai, according to at least three people familiar with the matter.

“There is political nexus behind this, and there’s a strong desire to make an example of this at the highest level,” said one of the persons involved.

Aditya’s father GC Shekhar, for instance, is an influential journalist in Chennai with connections in political circles, the second person said.

And while the local startup ecosystem is not directly naming those who may be involved, TiE Chennai president Narayanan hinted at foul play.

“The speed at which the FIR was filed, Yogi was arrested, and the case was handled with the family not even getting a copy of the complaint until Wednesday, raises questions,” said Narayanan at the press conference.

From what has happened so far, and the way things have shaped over past week, there are two big learnings for India’s startup ecosystem entering adulthood — ensure a safe, clean work environment for entrepreneurs, and secondly, rethink the existing primitive regulations around shutting down a startup. Mortality rates are over 50% among startups globally, and India is no exception. And while neither investors, entrepreneurs or startup customers work towards failures, some basic ground rules that make the process of failing more transparent and easy are much needed.

Finally, the Stayzilla case underscores evils in India’s business environment, such as misusing political connections and employing them to apply unjustified force on people, which are harming not just startups, but all businesses. It’s time for the government to make an example, and reaffirm its commitment towards building a world-class, meritocratic startup ecosystem.

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