January 2015:
Rahul Yadav (RY) via LinkedIn: Can we meet sometime in Powai?
Me: Am in Spain now. Headed to the Bay Area from here. Can chat by phone then ( Jan 17 onward).
rY: Let me know exact free time tom/day-after and let's talk over phone.
Me: Day after (Monday) morning anytime after 8AM my time would work. Let me know. Here is my email id and phone number.
No response and no call.
March 2015:
Yadav is all over the news for a scathing email to Sequoia India's Managing Director Shailendra Singh warning him: 'This marks the beginning of the end of Sequoia Cap in India. Try me.' He went on to say to Shailendra in a public forum 'go die motherfucker' and did a paid advertising campaign to get more traffic on the controversial post. The public messages from Yadav made it appear as if he had known Shailendra well, had done business directly with him and found him to be unethical in his dealings. This was a disturbing message for me to absorb sitting in the Bay Area. I checked with Shailendra and turned out that the two had not done any business directly. A different Managing Director at Sequoia had led the diligence for Housing many months ago, offered a term sheet and was finally turned down by Yadav in favour of a higher valuation by another VC. Sequoia and Housing had no business relationship, yet Yadav seemed pissed off that Sequoia had crossed a line by hiring someone out of Housing and by investing in another real estate portal. He targeted Shailendra for this and alluded to bad behaviour with Housing and other Indian start-ups.
April 2015:
rY via Facebook Message: Can you help in taking Housing international and bringing some international brands to India by doing JV #InternationalExpansion #StrategicAlliances&Partnerships. Ping whenever you're free. Will meet.
Me: Am back in California now packing up for the big move to Delhi at the end of the month. Will be back up on my feet in May and will visit Mumbai too. Will come meet then. Got the agenda. Meeting Ashish Gupta on Wed. Old friend...and mentor.
rY: I can make the arrangement unexpected kind of. But need ASAP. Can't wait. I found it to be a strange message. Also found it strange he did not comment about Ashish, his investor.
Me: Sounds like you are looking to hire an intl Bd/partnerships guy. Can't think of any off the top of my head, will let you know if I do. I am certainly the wrong guy, since I am not looking! :-)
rY: What can make you jump? Be open.
There is a thin line between confidence and hubris, I thought. The line had just been crossed. Not one with a shallow ego myself, my instinct was to make a sarcastic counter-offer to buy him out or maybe even his company. I took a deep breath.
Me: Nothing. I build companies. Not looking for a job or assignment. rY: It'll not be any conventional assignment.
I decided to wait until after my meeting with Ashish in Palo Alto before replying. As I did throughout my career, I shared my thoughts with Ashish about my next move and got his advice. Given the recent exchange, we talked about Housing.com. He was keeping his chin up but I could sense his disappointment in the way Housing's CEO was operating. He thought that it was one example inside a larger trend of entrepreneurial hubris in India. Cheap money had brought loads of entitlement with it. The confidence that I saw in IIT entrepreneurs in December 2014 had transformed to hubris en masse. The pendulum had swung the other way.
Another Indian entrepreneur had raised a large amount of money from a global fund and his company was tipped to be the next unicorn. He had proposed a partnership deal to a friend of mine running the Indian branch office of the Silicon Valley original that this entrepreneur was trying to emulate. The entrepreneur was impatient with the diligence and said to my friend, 'You know I am going to be the next billionaire. Better learn to work with me.'
My chat with Rahul Yadav continued. I was taken aback by his last message asking me to put a price on me. Given his vicinity to people I knew, and seeing what he was capable of saying in public forums, I wanted to make my position clear to him and not leave it to misinterpretation.
Me: Am only helping with companies where I have an independent board seat or am an angel investor. As for friendly advice, always available and for free :-)
rY: I need you full time. That's the deal I need from you. Tell me what you need in return (it may not work out but I think there is always a deal).
Me: Not in this case
rY: No :-), there is always one :-), Please.
Me: I admire your persistence. :-) Passed that stage in life many years ago.
rY: Still. You're talented man. How can I use your talent. Tell me a way. A deal.
Me: Like I said, board seat and equity only. No full time. It's been 8 years since I did full time. Acquirers getting what they paid for is different.
rY: What is the best way to have your maximum time? Please tell me the arrangement.
Me: Time hi to nahi hai guru, baaki sab kuchh hai (Time is the only thing I don't have, have everything else). You are an entrepreneur, you would understand this.
rY: I'll try to make it work for you. Become an advisor then.
Me: Ek baar mil lein? (Shall we meet once?)
rY: Sure.
Me: Would like to better understand what you are trying to accomplish. My one way flight to India is on Friday. :-)
rY: Cool. Let me know when is comfortable time. Me: Will do.
Me (10 days later): In Powai next Tue (May 5). You available to meet?
rY: Board meeting on 5th. Should be free in the eve. Let me know if eve timings work.
Me: Yes evening would work.
May 2015:
rY: Do you want to play a $100s of Bns profit (not revenue, not valuation but profit) game?
This message was sent at one in the morning on 1 May, and I woke up to it. A couple of days ago, SoftBank's Nikesh Arora - who had invested in Housing.com - had stepped down from the board. I parsed some math in my head and concluded that even the largest company on earth at the time (Apple) did not make $100 billion in profit. I was getting ready to watch the much-awaited announcement from Elon Musk, the entrepreneur behind SpaceX, Tesla Motors and Solar City, often considered Iron Man Tony Stark in real life. Shortly after that message, Elon Musk unveiled the Tesla Powerwall, a Lithium-ion battery designed to store solar energy. I had lost my patience with Yadav now and saw no other way to make him back off except giving him a piece of my mind.
Me: Trillions of profit, for a company I run. I plan to colonize Mars. Want to join me? Seriously, stop trying to do media arbitrage on an age old fucking business to make a little bit of money. Do something that will change the world. Hope you watched Elon Musk 10 min ago.
rY: It's private but I had to resign from the board, chairman and the CEO to the board on last Thu :-)
I connected the dots that the resignation was written a few hours before his delusional message to me about '$100s of Bns profit.' This made the message even more bizarre. However, my emotion was that of sympathy now. I knew a thing or two about being booted out of a company I had given some of the best years of my life to.
Me: Hmm sorry to hear that Rahul. You should be proud of what you have achieved. Good luck. You have inspired many entrepreneurs and operated with guts, not many know how to do that. Am sure you will dust yourself off and do more great things. Just don't burn your bridges. Aggression without burning bridges is possible...
He did not respond. Instead, the next morning, the press released a scathing resignation letter he had written to the board and investors of Housing.com. Among other things, it said, 'I don't think you guys are intellectually capable enough to have any sensible discussion anymore. This is something which I not just believe but can prove on your faces also!' On 5 May, the day we were scheduled to meet, SoftBank took control over the board and the company rejected Yadav's resignation and ordered him back on probation.
A year ago, Nikesh Arora had left Google as Chief Business Officer to join SoftBank. Later that year, he had made three investments in quick succession with offers that were hard to refuse. And now, Nikesh had left the boards of all three companies and moved to bigger and better things. SoftBank's Masayoshi Son had declared him as his potential successor at SoftBank. Nikesh's colleague from Google and now his new colleague at SoftBank had now been appointed as the board member at Housing. Between the announcement of Nikesh stepping down from the Housing board on 29 April to the board meeting on 5 May, Nikesh's colleague had less than a week to get up to speed and lead the board meeting. After the meeting, Financial Times reported 'SoftBank averts implosion at Indian start-up' while the Indian media seemed obsessed with their maverick hero Rahul Yadav having the last laugh by being back at the helm. The board had now taken over control of the company, reconstituted the board with representatives from Helion and Nexus, approved a buyback of shares resulting in tens of millions of dollars being returned to investors and enlarging the ESOP pool to make room for future hires, began a search for a new management team, put the CEO on probation with a warning and a list of goals, and took over control of all the spending in the company. The Indian media ignored all this and focused on Rahul Yadav instead.
Yadav declared himself the winner of that bout and spent the next few days designing and launching the best product of Housing.com, himself. A populist nation was looking for a hero to worship. The audience was picking sides in this highly polarized reality show. Some chose to love him, many chose to hate him, but no one in India following the tech space could ignore him. Yadav changed his Facebook profile picture showing a middle finger while laying on a rock under a waterfall without a shirt. He got featured on a leading news channel NDTV with a star-struck lady reporter fawning at his every word. He had cover stories in newspapers and magazines that had perfected the art of hagiography. He conducted a Reddit ask-me-anything where he trolled Ola and Zomato founders.
And then he ended the week with an announcement where he impulsively pledged his shares to the employees during the all hands meeting. The employees went berserk and declared him the Monk who sold his Ferrari. He owned less than 5 per cent of the company and a significant
portion of his stock was unvested. Apparently, he urged his co-founders to follow his lead and pledge their shares too. They snubbed his request. Yadav had never cared for stock ownership considering nearly 90 per cent of the company was owned by investors this early. He cared about raising more and more money, and spending every round faster than he could receive it, so he could go raise some more. That was his fix. While Yadav was telling the world that he was a philanthropist, he was trying to prevent the board from ploughing out funds from the company in lieu of expanding the ESOP pool. It was like killing two birds with one stone. It was a calculated political move.
Tension with the board increased and the antics escalated. Yadav started believing his own press. Zishaan's words from three years ago rang in my head 'He has no fear.' His attempts to raise money abroad were snubbed. Attempts to sell the company to the incumbents were snubbed even more - board members of Info Edge (owners of 99arces.com) and Times Group (owners of magicbricks.com) were no fans of Rahul Yadav and had their own stories to tell about how they had been trolled by the enfant terrible.
It was sometime during this chaos that I met Bhavish in Bangalore. This was the first time we were meeting since my move back to India. Bhavish started the conversation quite concerned: 'I heard you are joining Housing.
com.'
'Of course not!' I contorted my face while trying to decode the source of misinformation.
'Yea, the guy's cuckoo. Is he on drugs?' Bhavish asked.
'Aah, I don't know. I don't want to talk about him. Who told you that I was joining them? Was it him?'
Bhavish shook his head from side to side implying 'No.'
'Then who?'
He thought for a bit, computed the implications of revealing this information and the implications of not revealing the information, weighed the two and said, 'SoftBank.' This explained Yadav's irreverent persistence in hiring me at any cost without even talking to me or giving me a choice in the matter. He had told his largest investor that he had already hired me!
The party ended in July 2015. SoftBank fired Rahul Yadav. He was walked out of the office with the police on standby. All his shares were moved to the ESOP pool. He was left with a polarized public image and Housing was left with a team of 2,500 people he had hired using the same formula that SoftBank used to fund Housing - give them a 3x multiple of the last offer. By September 2015, a dozen business divisions were shut, operations in 25 Indian towns were terminated, hundreds of people had lost their jobs as quickly as they had earned it and the company had yet to announce a new CEO. Meanwhile, Yadav changed his cover photo on Facebook to suggest that he was Iron Man and shared through a status update that he had consumed LSD at Pangong Tso Lake in Ladakh. Based on his pictures, posts and persona on Facebook, his self-image shifted between being the Steve Jobs of India to being the Elon 'Iron Man' Musk of India, and his fans indulged him. For all the creativity that he was credited with, he could not come up with an original identity for himself. My conversation with an angel investor in Housing revealed that the angels in Housing had not had the opportunity to cash out. I wondered if they ever would.
At the start of my career, seasoned entrepreneurs and investors used to tell me that more companies die due to indigestion, fueled by overfunding, than due to starvation. After all these years, I have found this to be true. Excess funding kills accountability, customer-focus, the necessity to innovate, organizational discipline and everything else that is needed to make a profitable long lasting company. Too much too soon creates bad habits. When bad habits get rewarded, they encourage worse habits and perpetuate them like cancer. Eventually, the company dies before bad habits do.
