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Startups

Housing.Com CEO Startup Soap Opera Continues as CEO Quits With Dramatic Letter. Is This The Indian Boo.Com?

Housing.com seems to have yet another drama, with it’s CEO Rahul Yadav quitting abruptly. The company is the India TV of the startup world, going brash and batshit insane on anyone that dare criticize it. (See spat with Shailendra Singh of Sequoia or the CEO calling Alok Kejriwal dumb). Investors apparently find this attitude extremely appealing because holy crow, another site that helps you find properties to buy or rent! And with a brash set of founders, with IIT pedigree! That gave it $120 million in funding, with the latest at $90 million as recently as December.

 

The CEO’s  letter is here (Source: @KyaUkhaadLega and Eco times), dissing investors and walking away:

Dear board members and investors, 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!

I had calculated long back (by taking avg life expectancy minus avg sleeping hrs) that I only have ~3L (hours) in my life. ~3L hrs are certainly not much to waste with you guys!

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.

Cheers,
Rahul

The first thing that comes to me is: What hubris! What immaturity! Where’s the Popcorn?

But obviously there is more to this than the eye is being given to see. It would make more sense that the CEO was going to be superceded or replaced, for him to write such a disparaging letter. The funding has led to “visual” spending of ginormous proportions, with their ads on outdoor locations everywhere.  The technology is good, but the housing market is crap in general, and if you want “exponential growth” in a market that, beyond the rabid craziness of Mumbai, is benign and slowing, arrogance will only take you so far. At some point investors start asking for numbers and justifications and demand that heads roll. That’s the nature of the game.

Look, if you do crazy things like this poster below (they’re all ads of housing.com in the same darn location!) you will be an object of ridicule when you leave the company because you can’t intellectually m..  discuss stuff with your investors or board.

Housing.Com CEO Startup Soap Opera Continues as CEO Quits With Dramatic Letter. Is This The Indian Boo.Com?

Source: Facebook post by Vijay Khubchandani.

From a posterchild of success (raised $120 million, hired 2500 people with just an idea and cojones) to what is looking increasingly like boo.com, which in 1998-99, raised (and spent) about $130 million in 18 months. It went bust in early 2000, running out of cash after a spending spree that supposedly involved three C’s (champagne, caviar and Concorde to fly between London and New york). In fact, says the guardian, the drama continued after the company’s collapse:

The firm’s decadence terrified its chief financial officer. Dean Hawkins, formerly with adidas, resigned after two months in the job. The company eventually launched six months late at the seventh attempt.

As their fame turned to notoriety, boo’s founders developed a rock star mentality. Leander would carry a video camera with her everywhere to chronicle the company’s inevitable rise to global prominence. In true rock star style the pair are now banned from several hotels on the South Coast as a result of their predilection for defenestrating televisions.

But the greatest sign of excess, which hasn’t been disclosed until now, was the extraordinary steps boo took to protect Leander and Malmsten from the threat of kidnapping. With its backers telling it the company was worth £1bn, boo decided it was important to protect its most valuable assets – with no fewer than 40 Gurkhas to escort the founders wherever they went. Fiercely loyal, the Gurkhas prevented accountants KPMG from entering the company’s offices after it went into liquidation.

The founder even wrote a book: Boo Hoo, about the fall of this very interesting company. Boo’s fall eventually coincided with the 2000 dot-com bust, and it was obvious that the company failed because it was designed to be prominent through investor funding and not through “operating cash flow” – with the former running out the door and the latter non-existent.

Will housing be India’s boo.com? This is a market that requires money to be pumped continuously – be it housing or Ola/Uber or even Flipkart. While founders should be confident to the extent of sounding arrogant (who cares what someone else thinks) the real story will hinge on: are these companies able to flip and generate cash flow profits, or will they survive on investors’ panic attacks on not being part of the next “unicorn”? If the storyline is like the 1999-2000s, housing.com is just a first, and it won’t be the last – and as Satyajit Das said of the subprime crisis in May 2008, quoting Winston Churchill:

…this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.

Get that popcorn. This space is about to get a lot more interesting.