India teetered perilously close to its first dotcom blowup yesterday, after the founder and chief exec of buy-sell-rent portal Housing.com resigned, saying the board and investors weren’t ‘intellectually capable’. They somehow all kissed and made up, but it’s a big flashing warning sign for anyone involved in the country’s increasingly frothy tech scene.
Housing.com was founded by 26-year-old Rahul Yadav and four of his university friends in 2012. It’s already raised almost $140m (£91.9m), the most recent a $90m round led by Japan telecoms giant SoftBank, which is also Alibaba’s largest investor, that valued it at 1,500 crore rupees (£153m).
All that money seems to have encouraged rather than tempered the outspoken Yadav. After his petulant letter (see the full version below, obtained by the Economic Times), he was persuaded to stay and reverted to more staid management speak.
‘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,’ his statement read. ‘I look forward to staying on at Housing as CEO… while working in full harmony with the board.’
Said board, meanwhile, ‘reaffirmed its faith in Rahul Yadav’s vision at Housing’. But it wasn’t the entrepreneur’s first rude missive. In March he fired off an email to the Indian managing director of Sillicon Valley venture capital firm Sequoia Capital, addressing him as ‘dude’ while accusing him of ‘inhuman and unethical’ poaching of Housing’s staff.
And he practically recanted his apology in a phone call with Quartz, saying, ‘I don’t care what the perception and all is… This is our style.’
Yadav’s ‘style’ obviously doesn’t mean all Indian founders are unpredictable hotheads. But it raises questions about how much risk investors in the country’s burgeoning startup scene are willing to take on.
Private equity ploughed a record $2.7bn into Indian tech in the last quarter of 2014, according to PwC. And no wonder – Morgan Stanley thinks its ecommerce market is set to explode from $3bn last year to $102bn by 2020. But that’s probably leading to some pretty irrational exuberance.
As Bangalore-based angel investor Sharad Sharma told the FT, ‘Soon enough the valuations of one of these ecommerce companies is going to implode, and the risk is that this will set off an avalanche of implosions at other start-ups with unreasonable growth expectations.’
Here’s Yadav’s full resignation letter:
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 [300,000] (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.