There has extensive debate on the whole Stayzilla fiasco. There is a group of people who stand by Aditya CS of Jig Saw Solutions and believe that he was wronged by Stayzilla, while there is another group that says Stayzilla CEO Yogendra Vasupal is being treated unfairly. But the issue of startups defaulting on payments to vendors doesn’t seem to be a one-off case. Here’s another account of how a startup refused to pay NFN Labs quoting deficiency of services days after having told them they will initiate the payment.

Thoughts on “Deficiency of Service” (Read the original blog by Gokul V here)

We NFN Labs worked with an organization, found by a gentleman we knew for six-seven years, funded ($ 500k) by a group of great people.

We agreed to a project scope, timelines, execution and payment method. On emails because the Indian legal system considers emails as contract. (Euphemism for “we were too comfortable with the gentleman and lazy”.)

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Everything was smooth for first three months. UX was signed off, UI was signed off, monthly payments were reaching us (albeit minor delays). We tend to ramp up only when development hits; naturally, because it is the ‘execution’ phase.

First invoice for development was delivered; 7 digits in INR. The gentleman asks “Are you sure that you didn’t add an extra zero?” We didn’t find it to be in good taste, but trusted. Collected the invoice partially and continued to build.

Second invoice. He now says he has no money to build. This software is at the core of his service, and he has got funding just for that. What did he mean by ‘no money to build’? He wouldn’t even exist after. So, we walked to him and gave an offer. Pay 40% now, and 60% after six months, when you have money. Sweet, right? All because of trust and long relationship, and hey, we liked the product itself. And I guess I was stupid.

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Payment date approaches. He approves the invoice.

The gentleman says “instruction sent to bank”, and doesn’t respond for a week.

After quantifiable effort we reach the gentleman next week, he responds with “service deficiency”.

Lots of arguments, phone calls, emails, blah blah blah. At the end, “I will not pay” was his stand. Because because because “the team you deployed wrote bad code, and none of it passed our Quality Control” or whatever he claimed. Okay, qualitative claim. Disputable. Should. Go. To. Court.

And, he ceased to be approachable. Can’t call, wouldn’t respond, and wouldn’t come for even one meeting. He is the CEO, right? Can’t even escalate.

There is one nifty tool on top of Google Mail, on Google Chrome, called Clearbit Connect. Found email ids of all the members of the fund and sent one email explaining what had happened, and if they can find the gentleman and ask him to connect with us. Should be twenty-five of them :)

Oh, and I attached one presentation with all screenshots, dates and stuff. Pretty self explanatory. Shaming? Hell yeah. We had made up my mind that the gentleman wasn’t going to pay.

The twenty four of them promptly forwarded that email to the CEO of the fund in one night. And the gentleman had to come next day to meet us. He held the stand ‘deficiency of serivce’ and refused to pay.

We were (still are) a small company with less than twenty people at that time. Though we managed to send a legal notice, we didn’t have the resources to follow up. Unlike movies, the good guys do not always win. Godspeed Jigsaw.

Ok, the story doesn’t end here. Here is the kicker.

That gentleman poached from our organisation, and hired the EXACT same team that delivered so called “deficient service” and continued to build the tool.

Of course, that is the laterally hired team I wrote about, when I said that we didn’t find much luck with such people. Am just sad that those folks didn’t have nice parents who taught values.

We released those folks the same/next week, didn’t create any trouble. What will we do with people who can’t hold themselves to high standards.

Oh, and we released the UI kit we built as a freebie; it is in our list

The post was first published in Medium. All facts and figures are to be attributed to author of the post, Gokul Visweswaran. The News Minute has not independently verified any of the facts.