Image: Manoj Patil for Forbes India
UPDATE: A few days after he stepped down as the chief executive of realty portal Housing.com, Rahul Yadav has withdrawn his resignation today and apologised for the unceremonious comments he made about the company’s investors and board members in his resignation letter on April 30.
In his resignation letter, Yadav had said, “"I don't think you guys are intellectually capable enough to have any sensible discussion anymore.” His resignation was accepted by the board. On Tuesday evening, the company issued a statement that said the board of Housing met and has been reconstituted to include all main shareholder representatives. “After some good conversations the board has reaffirmed its faith in Rahul Yadav's vision at Housing,” the company said in the statement. "After some frank and healthy discussions with the Board I have agreed to withdraw my resignation and I apologise for my unacceptable comments about the board members,” said Yadav in the statement. “I look forward to staying on at Housing as CEO and building an even greater company, while working in full harmony with the board.”*** Handle them carefully, for words have more power than atom bombs, said Pearl Strachan Hurd, a British politician in the 1930s. Hurd said this nearly 80 years ago, but there is at least one young company in India that is feeling the impact of such a ‘bomb’. Worse, it has been triggered by the company's own co-founder, leading to a chain reaction from others, including investors.
Housing.com, the darling of investors till earlier this year, felt its share of troubles starting March 6, when its co-founder Rahul Yadav sent an email to Shailendra Singh of Sequoia Capital India, saying the investor was “after” Housing’s employees and was “brainwashing them to open some stupid incubation”. “If you don’t stop messing around with me, directly or even indirectly, I will vacate the best of your firm,” Yadav said.
This communication went public and generated a controversy never seen before in the Indian startup ecosystem. Amid talks that Yadav may be asked to step down, he resigned of his own accord on April 30, but did not go quietly. He left with another volley of words, going to the extent of calling his board members and investors “intellectually incapable” of having any sensible discussion anymore. “Hence resigning from the position of Directorship, Chairmanship and the CEO position of the company. I’m available for the next 7 days to help in the transition. Won’t give more time after that. So please be efficient in this duration,” he said in an email to the board.
For a company that was being labelled as the next $1 billion firm, Housing is today in a difficult situation – controversies, a defamation notice served to Yadav and to the company’s board by Bennett Coleman and Co Ltd (BCCL), as well as one of its co-founders Advitiya Sharma getting embroiled in a car accident which resulted in the death of two of the company’s employees. Sharma was driving the ill-fated car and was booked for rash driving and causing death by negligence among others.
Differences between promoters and investors are common, particularly at the venture capital stage, say startup insiders. What has, however, plagued Housing is an absolute lack of maturity on both the investors’ and promoters’ side, they opined, many off the record. “These are young, immature first-time entrepreneurs who got seduced by high valuations,” says Mahesh Murthy, a startup investor. “One mistake that promoters made was that they went for a higher valuation rather than a supportive VC.” Murthy, however, holds the investors equally responsible. “One pertinent question for investors is—what was your judgement on the promoter? Were you just a money bag for them? Your investee company had no respect for you,” he says. This is a case of immaturity leading to public spats and promoter exits.
Too many checks and balances, differences on future plans and strategies are often a reason for rocky investor-promoter relations, say industry watchers. A Mahendran, chairman and managing director, Global Consumer Products Pvt Ltd, says younger generation founders tend to have a liberal approach and investors need to respect that.
“If you would like to encourage investment behind companies led by young people, investors should provide that liberty and flexibility to run the business, otherwise any kind of checks and restrictions on a younger generation would act as a boomerang,” he says.
Praveen Chakravarty, a corporate adviser, angel investor and public affairs commentator, says both Housing promoters and investors are in the wrong. “It takes take two to tango. If the promoter is smart enough to raise $200 million, he can’t be stupid enough to give it all away for a small issue. It is a long-standing, burning issue,” he says.
Experts say there will be more turmoil in Housing as placing in a new CEO may find opposition from other co-founders and employees. The company’s investors have been looking out for a CEO for over a month now. (Housing’s Advitiya Sharma did not take calls from Forbes India, while its investors Nexus and Helion refused to speak on the issue)
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