No more resignations! Housing.com says enough is enough, fires CEO Rahul Yadav

NEW DELHI: Rahul Yadav has been fired from the company he cofounded, an inglorious denouement to the 26-year-old’s stint atop Housing.com, one of India’s best-known startups.
While the development was expected, the board — consisting mainly of investors — made its displeasure with Yadav obvious by severing all ties with him and blaming the IITBombay dropout for poor management of the company and bad behaviour with various stakeholders.

"The board believed that his behaviour is not befitting of a CEO and is detrimental to the company," Housing said in a statement after a board meeting in Mumbai on Wednesday.

"The Housing board unanimously agreed to bring Yadav’s tenure to a close, with reference to his behaviour towards investors, ecosystem and the media," Housing said in statement.

The real estate listings portal will continue to be run by the existing management while investors led by SoftBank search for an "interim CEO". The Japanese conglomerate invested $70 million (Rs 420 crore) in November 2014 for a 32 per cent stake, valuing Housing at Rs 1,500 crore. Yadav, who started Housing in 2012 with 11 college-mates, did not reply to phone calls and text messages seeking comment.

The departure of Yadav may smoothen the path for investors, who are looking to sell the Mumbai-based company that competes with Tiger Globalbacked CommonFloor, Info Edge’s 99Acres, and MagicBricks, which is owned by the publisher of this newspaper. On Tuesday, ET reported that classifieds portal Quikr could buy Housing in a cashand-stock deal for up to $175 million.

LESSONS FOR ENTREPRENEURS & INVESTORS

Startup industry observers said the developments at the company hold salutary lessons for entrepreneurs and investors alike. Mohandas Pai, a former Infosys director and one of India’s most active venture capitalists, said that while investors must show flexibility, entrepreneurs must learn how corporations work and behave respectfully. "There must be a spirit of give and take," he said.



The first signs of trouble among the cofounders appeared nearly a year ago over the worth of Housing when Helion Ventures and Nexus Venture Partners led a round of funding at an estimated valuation of around Rs 350 crore. The entry of SoftBank in November catapulted Housing into the ranks of India’s most celebrated startups, but since then Yadav has lurched from one controversy to another.

He initiated a social media spat with Sequoia Capital’s India Managing Director Shailendra Singh; questioned the intellectual capability of Housing’s investors and resigned from the company; and returned his shares and dared his peers to do likewise. When he quit in April, the board asked him to stay back after extracting an apology. Yadav’s 4.57 per cent shareholding has been transferred to the employee stock option pool.

"I think it’s a bit too late, but better late than never," said Samir Kumar, managing director of Inventus Capital Partners, a venture capital firm whose investments include car rentals company Savaari and online bus ticketing portal redBus.

‘RAHUL WAS ON PROBATION’

Earlier this week, ET reported that Yadav had agreed to step down after the board took the initiative to ease him out of the company. "Rahul was on probation from the last time he resigned, and when he didn’t meet targets set by the investors, he was asked to leave," said an investor in the company. SoftBank has formed a committee that controls the finances and operations of the company. The committee is led by Jonathan Bullock, the SoftBank executive who has replaced the investment firm’s President Nikesh Arora on the board. ET reported on Tuesday that any deal to sell Housing would hinge on the board’s decision regarding Yadav.

The prospect of a sale did not figure at the board meeting on Wednesday and it is likely that investors may give the portal one last chance to function as an independent entity. Kartik Hosanagar, who teaches Internet commerce at Wharton School of Business, said the board should have been decisive earlier and that the "drama" of the past few months could hurt employee morale.

"The board can move on now but (they) have to be very careful during this period of CEO transition. A wrong hire can result in mass exodus of talent," he said.

(With inputs from Krithika Krishnamurthy and Evelyn Fok in Bengaluru)