It all started off with an email. No this isn’t the opening scene of a rom-com movie releasing at a theater near you, this is a soap opera with an eclectic CEO in the lead role. Emails were sent, lawsuits were filed, the CEO resigned and withdrew it within 24 hours, and all this time social media was abuzz with conjectures, banter and every once in a while a bit of nastiness.
So, it looks like Housing.com CEO Rahul Yadav thought to himself let’s get more candid, and he participated in an Ask Me Anything session on Reddit. He spoke about a number of issues (including what he thinks about Zomato, but we aren’t going there!) and cleared the air on some of the issues we have been reading about over the past couple of months.
On the Sequoia Capital deal
Yadav said that initially a slided deal between 10-15% (depending on performance) for $1 million funding had been decided. However, after about 2 months of due diligence, Sequoia wanted a sign a flat equity deal, when they realised that Housing was running out of money. Yadav mentioned that at this time he suggested that the deal be finalised for a 12.5%, but Sequoia wanted 14.75%. He also mentioned that Sequoia wasn’t interested in further negotiations and stated “Let’s not waste each others’ time”, which left Housing with no other option.
We decided a slided deal between 10-15% (depending on performance) for $ 1 million. After 2 months of due diligence, when they realised we were running out money, they said they want to do a flat equity deal.
Yadav also claimed that Sequoia Capital has done the same with other companies, like TaxiForSure (before Ola bought them), Ola, Dexetra and LetsBuy. According to Yadav, Sequoia is a “very cutthroat VC”, which he thinks could be one of the reasons why they’re more successful than others.
On the ESOP challenge
Speaking about the recent ALS Ice Bucket like ESOP challenge that Yadav threw at Ola’s Bhavish Aggarwal and Zomato’s Deepinder Goyal, he said that “although all startups give ESOPs to their employees but the problem is it’s not proportional to the value creation.” According to him, “value is being created at x rate and is being given to the employees at y rate. x not being equal/proportional to y is the real issue.” As to why he specifically challenged Goyal and Aggarwal, Yadav said that “these two names came up in my mind and I just nominated them.”
All startups give ESOPs to their employees but the problem is it’s not proportional to the value creation.
It’s worth noting that in March this year, in a similar Reddit AMA session Zomato CEO & founder Deepinder Goyal had said that the company already has 10% of its shares in the ESOP pool, and that they continue to top it up after every round of funding. He had also mentioned that about 25 people at Zomato have been able to sell their shares in the secondary market until now, or in other words, people at Zomato have already made quite a bit of money with their ESOPs.
On developments at Housing
On a more serious note, Yadav also spoke about a few interesting developments on the product side. Firstly, he mentioned that they recently acquired a legal and due diligence company, which will enable Housing to cross check all new projects that are listed on the site, and ensure that the legal status of the apartment/building is verified. He also mentioned that a team at Housing is currently exploring the option of listing commercial real estate projects.
On Data Science Lab
Yadav mentioned that Data Science Lab is a long-term bet for Housing. He added that “a lot of features require a lot of data which we’re still in process of collecting”, and that “without data you can’t solve the housing problems.”
You can read the complete timeline of the Housing saga here.