// STARTUP COMPARISON
Despegar (COVID crisis) vs Debenhams
Despegar (COVID crisis) failed in 2020 due to Bad Timing. Debenhams failed in 2021 due to Competition. Different causes, different sectors, different eras — but the same simulation outcome.
| METRIC | 🔥 Despegar (COVID crisis) | 🔥 Debenhams |
|---|---|---|
| Sector | Ecommerce | Ecommerce |
| Country | Argentina | UK |
| Founded | 1999 | 1778 |
| Died | 2020 | 2021 |
| Raised | Public company (NYSE) | Public company |
| Peak | $1.2B revenue | £2.9B revenue · 166 stores |
| Primary Cause | Bad Timing | Competition |
// WHY EACH FAILED
🔥 Despegar (COVID crisis)
Bad Timing
Despegar, Latin America's leading online travel agency, saw revenues collapse 70% in 2020 when COVID-19 eliminated air travel across the region. As a pure-play OTA with limited diversification, Despegar had no revenue substitute. The company laid off over 1,000 employees, raised emergency capital, and needed three years to recover to 2019 revenue levels.
// LESSON
Single-sector dependency in travel is an existential risk during pandemic events. The OTAs that diversified into accommodation, experiences, and corporate travel recovered faster. Pure-play flight search has no resilience when flights stop.
Single-sector dependency in travel is an existential risk during pandemic events. The OTAs that diversified into accommodation, experiences, and corporate travel recovered faster. Pure-play flight search has no resilience when flights stop.
🔥 Debenhams
Competition
Debenhams entered administration in April 2019, was rescued, entered administration again in December 2020, and closed all 166 stores in May 2021. A combination of online retail competition, £600M in private equity debt loading, and COVID-19 lockdowns destroyed the business over a decade.
// LESSON
Private equity debt loading on a structurally declining business accelerates the inevitable. Debt amplifies both upside and downside. On the way down, it is a death sentence.
Private equity debt loading on a structurally declining business accelerates the inevitable. Debt amplifies both upside and downside. On the way down, it is a death sentence.
// EXPLORE FURTHER