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India’s startup ecosystem is living through a nightmare this week—and it deserves it

AP Photo/Oded Balilty
Looks can be deceiving.
By Devjyot Ghoshal
Published Last updated This article is more than 2 years old.

India’s startup community seems trapped in a particularly sordid horror film over the last few days.

One founder has landed in jail after his startup went kaput. Another is under fire after an endless barrage of sexual harassment allegations. Yet another entrepreneur decided to rage against his co-founder (and estranged wife)—on Faceboook.

Of course, the plot is still unfolding and anything could happen, but here are the principal characters:

Arunabh Kumar: The founder of The Viral Fever (TVF), an online digital entertainment startup, has been accused of sexual harassment by multiple women. The episode began on March 12 after a blog post by “Indian Fowler”—à la Susan Fowler and her blog about Uber—said the Indian Institute of Technology, Kharagpur, alumnus had harassed her more than once. TVF first put out a terse statement threatening ”severe justice for making such false allegations.” Kumar later came out all guns blazing in an interview: “I am a heterosexual, single man and when I find a woman sexy, I tell her she’s sexy. I compliment women. Is that wrong?”

Yogendra Vasupal: The co-founder of Stayzilla, an online home-stay aggregator, was locked up in a Chennai jail on March 14. The company shut shop last month to “reboot its operations” after the founders decided that the business model just wasn’t working despite 12 years of trying. Meanwhile, Jigsaw Advertising, a media agency that claimed Stayzilla owed it money, accused Vasupal and co-founder Sachit Singhi of fraud and filed a criminal case, leading to the arrest.

Sandeep Aggarwal: Three years after stepping down as the CEO of Shopclues, an online marketplace, Agarwal let loose against his company’s co-founder and wife, Radhika. In a series of Facebook posts, Aggarwal accused his wife of altering his voting rights at Shopclues, questioned her professional credentials, and repeatedly alleged that she was having an “illicit love affair.” He then deleted the Facebook posts. Agarwal’s exit from the company’s leadership in 2013 was precipitated by his arrest in the US on insider trading charges, which left the other co-founders in charge of the company. Clearly, Aggarwal is still aggrieved.

Of course, none of these shenanigans are limited to Indian startups. Sexual harassment, unfortunately, has been a fixture of the Indian workplace for years now, cutting across industries and regardless of hierarchy. Remnants of ineffectual business models and failed ventures, too, are scattered all over India’s corporate landscape. Messy family feuds aren’t entirely unusual either, if you consider the split between the founder couple at consulting firm Mu Sigma or the protracted fight that went down at YES Bank between CEO Rana Kapoor and his niece Shagun Gogia.

But these incidents provide a much needed reality check to a community lionised in recent years as a singularly extraordinary space inhabited by singularly extraordinary talent. “We have put money behind a number of startups that merit nothing more than a summary rejection,” said Arvind Singhal, chairman of Technopak, a management consulting firm. The sector has been “over-glamourised,” Singhal insisted, diluting the need for an unique idea backed by management competence.

These events also mirror the fact that India’s startup ecosystem still isn’t mature, said Kartik Hosanagar, a professor of technology and digital business at The Wharton School. “These cases call into question the workplace culture and HR practices (TVF), bankruptcy proceedings (Stayzilla) and governance (Shopclues),” he said. “None of these ever get any attention at startups in India. The focus is always on growth and fundraising.”

It’s not that such issues gather attention in Silicon Valley all the time either—the Uber sexual harassment incident is a case in point. But Hosanagar argued that the general level of governance in the US startup ecosystem is much better.

“They also need better boards which include independent board members who can both mentor them and hold them accountable,” he added. “All this is lacking, leading to board discussions always coming down to growth and fundraising. As startups scale, they need much more than that, as these recent events show.”

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