Hotelvp: Swimming with Sharks

In August 2011, Mars Ren and Gene Deng created a technology-based venture, Shanghai Tianhailu Network Information Technology Ltd. Filled with passion; they aspired to make the business the first “factory outlet” in China’s hotel booking industry. To achieve this goal, they developed the Hotelvp app for mobile users. Each day after 6:00 pm, users could book accommodations online in hotels rated three stars or higher for that same night at a significant discount. Hotels also benefited because they could sell their unsold room nights at the last minute and improve their revenue management. Ren and Deng were convinced that this win-win idea would take off. Unfortunately, it failed to fully satisfy either the users or the hotels. In spite of the founders’ passion and energy, the business was still acquired by a much more powerful player in the online sector, JD.com, in early 2014. This case is designed to stimulate in-depth discussion based on the question: What are the key obstacles when launching a startup and how can they be overcome?