This post has been corrected.
Arguably, Housing CEO Rahul Yadav has become the most brazen entrepreneur India has seen in recent times. In the last couple of months, his name has split opinion across the startup ecosystem—and he seems to have equal number of admirers and haters. So, it is not surprising that his “ask me anything” session on Reddit on Tuesday (May 19) received so much media attention.
It began in March this year, when Yadav’s email to Shailendra Singh, Sequoia Capital’s India chief, was leaked on Quora. In the email, Yadav referred to Singh as “dude” and accused him of “inhuman and unethical things” such as poaching his staff. All this was unprecedented in the Indian startup ecosystem where entrepreneurs are generally submissive around investors.
But the controversy did not end there. In May, in his typical dramatic style, Yadav resigned as the CEO of Housing. In his fiery resignation letter, he told investors and board members that they lacked any “intellectual capability.” Later, he took back the resignation and continues as the CEO of the real estate startup.
But despite this flip-flop, one thing is clear: Here is an entrepreneur who has a massive appetite for risk and does not shy away from bold decisions. After all, this 26-year-old had the guts to leave one of Indian’s most prestigious engineering schools—Indian Institute of Technology, Bombay—in his final year and test the startup world.
His AMA on Reddit provided his fans and detractors a great opportunity to learn more about the man.
As someone who has just launched my own company, it is always interesting to know more about famous founders, and here is what I thought of the Reddit session.
Most of the time in the AMA, Rahul came across as an honest, insightful person with a brilliant sense of humour.
Obviously, he was quizzed about his spat with Sequoia. Here is the question and Rahul’s response:
Question: What was the deal with Sequoia Capital? Can you tell us what were the “other bad things” you referred to in your email to the VC?
Yadav: We decided a slided deal between 10-15 performance for US$ 1 million. After two months of due diligence, when they realized we were running out of money, they said they want to do a flat equity deal. I said, “Okay. Let’s do it at 12.5 percent.” They said 14.75 percent. When I requested again, they said, “Let’s not waste each others’ time.” We were left with no option.
I came to know they have done it with lots of other ventures (TaxiForSure, Ola, Dexetra, LetsBuy…)
So to cut it short, I think they’re culturally a very cut throat VC and sometimes I think that’s why they’re more successful than others. But I still condemn their practises because I feel they’re inhuman and for me, people are the ‘why’ for everything I do.
This is a very technical answer, but one that will strike a chord with many startup founders. Yadav has tried to explain the anxiety what every new entrepreneur goes through during the funding process, and how it can be detrimental to the business.
In India, an investor’s verbal promise means nothing unless and until you sign the dotted line. I have often heard stories where investors have committed to something and later withdrawn from the deal. This creates a rather toxic environment for startups. Investors must be more honest and less slippery if we want to turn India into a great startup destination. Hopefully, Yadav’s public spat with Sequoia will lead to a more transparent system.
I also agree with Yadav’s personal philosophy as an entrepreneur. He said in order to succeed; we need to “be obsessed about solving the problem” and we have to look for ways to disrupt the entire ecosystem instead of aiming for incremental gains. With a disruptive startup, you can create a new market and generate more employment. It is a big risk, but promises big gains. For example, Uber has disrupted the taxi industry and as a result has become one of the most valuable startups in the world.
Here is where I strongly disagree with Yadav:
Question: What are the 3 most important things that contribute towards a startups’ success in the Indian startup ecosystem?
Yadav: I think currently it is:
1 Validated and copied idea from another market
What I think it should actually be:
1 Solving Indian people’s problem
2 Great product and innovation.
3 Great teams and culture.
As fellow entrepreneur, I agree with Rahul’s view that we should be solving Indian people’s problems by building great products and teams. But I cannot discount the importance of capital to fund that innovation or marketing in order to take that product to people. I think it is misleading to dismiss the importance of these two in any startup ecosystem.
Also, I don’t think copying ideas that have been validated abroad to solve India’s problems is necessarily a bad thing. Many would debate that Housing itself is a copied idea. The concept already existed with websites such as MagicBricks and CommonFloor, but Housing executed it much better.
This is what Yadav had to say about food discovery website Zomato and its CEO Deepinder Goyal:
I really don’t know him much but his sense of humour sucks.
Zomato is a company scanning menus from last 7 years and doing no innovation. And the CEO says ‘Aww. So cute
I thought this was the most unpleasant part about this AMA. Just a week earlier, after gifting his entire stake in Housing to his employees, Yadav had asked Goyal to do something similar:
“Now I challenge Deepinder Goyal of Zomato and Bhavish Aggarwal of Olacabs to continue this noble act and give away HALF (not full) OF THEIR SHARES to their employees. And I hope both of them spread the nominations further,” he said in a Facebook post.
Now, if you think a person is worthy enough to be publicly nominated for an activity that is so close to your hearts, why do you have to insult him just a few days later on another social media platform.
To me, Yadav’s earlier challenge comes across as a mere publicity stunt.
While Yadav knows how to stay in news, he is also an expert at dodging tricky questions. Here are some excellent questions that were raised in the AMA, and I hope Yadav finds the time to respond someday:
- Given the fact that real estate is one of the murkiest, most opaque businesses in India, often marred by black money and real-estate mafia, can you tell me what you do except Housing to make this business better and transparent?
- For now, Housing is a portal which is streamlining the demand and supply in real estate. I don’t see a lot of independent listings by the landowners, but by the brokers themselves. So essentially, this is nothing but another aggregator. I don’t see how you’re solving a tough technical problem, but again welcoming this service online. What are your views on that?
- Lastly, what do you feel about the culture of start-ups in your alma mater- IIT-B? Scores of people are giving up on academics, stopping to learn hard skills and discovering talents, and starting up to make another ecommerce site for something or another. It’s quite sad to see so many of them needing independent developers to do their technical work, while they themselves proclaim to be the ‘business intelligence’ experts. What do you feel about this culture?
To conclude, what Yadav said in AMA is something which most entrepreneurs already know, and it is good that he also subscribes to it. He came across a straightforward chap with lot of emotional intelligence.
I see a hint of Steve Jobs in him, whether it’s manufactured, forced or real, only time will tell. Hopefully, it is real.
Correction: An earlier version of this post indicated that Sequoia Capital was an investor in Housing.com. Sequoia has, in fact, not invested in Housing.
You can follow Rajesh at @chronicated. We welcome your comments at firstname.lastname@example.org.