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TheRahulYadavStoryYouveNeverHeardBeforeAninsider'saccountofwhatwentwrongwithabrilliant20somethingIITdropoutsentrepreneurialjourney
HareshChawla
Jul03,201511:07a.m. ENTREPRENEURSHIP
[ImagesourceHousing.com]
Everyonelikesagoodstory.AndRahulYadav'sisagreatone.
He'stakentheIndianstartupecosystemonarollercoaster.Aridethathasendedfornow,butthesystemwillcontinuetoshakeandshudderforawhilefromtheaftereffects.
Somearecallinghimamaniacandaloser,andsomeageniusandamaverick.Onethingiscertainthough:hesuffersnosuchdilemmainhisviewhesthelatter.
Beforewecondemnhimandallother"maverick"20oddyearoldsrunningstartupbusinesses,herearemyreflectionsonhowIsawthingsplayoutathousingoverthelastthreeyearsfromthesidelines.
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RahulandI
ItwasthemiddleofawetAugustin2012.IwasonAlexa,whichprovidescommercialwebtrafficdata,checkingoutonacoupleofmyotherstartupswhenIsawanadbannerfromHousing.Iclickedthrough.Thesitewasarefreshingchange.Itwassharpanddifferentiatedincomparisonthecompetingrealestatewebsiteslookedneanderthal.Itwas,ofcourse,overbearing,likeapilotscockpityouknowatechiehasdesignedasitewhenyouseeonelikethat.Butclearlysomeonewasreallypushingthegameforwardandthathadimmensepotential.Itwastheversion2.0ofhowclassifiedsshouldwork.IwantedtofigureoutwhothesefolkswereandsoIaskedafriendDeap(DeapUbhi,cofounderofburrp.comandtheformerCOOofFreecharge)tofindoutandreachouttothem.
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Rahul(andAdvitiyaSharma)metmeatasmallItalianeateryinBandra.Onecouldseetheyfeltabitawkwardinthesettings.ItookafewminutestoputthemateaseaswediscussedlifeatIITBombayandhowthingswereforme20yearsbeforethem.Hostellifeisagreatbridgebetweengenerations.Rahulthenstartedtalkingaboutthebusiness,theopportunityandwhathisteamandhewantedtocreateandIwashooked.Theenergywaspalpabletheteenagerlikeawkwardnesswasgone.Icommitted,thenandthere,thatIwouldbacktheirendeavour.WhenwefinishedIwasthinking"Heck!Lookatthesekidsnowadays.IdidnothaveevenaniotaoftheirconfidencewhenIgraduatedsome20yearsago."Iadmit,Ifelteverybitmyage.
Ittookafewmoremeetingstoclosethetermsofthedeal.Hewasahardasnailsnegotiator,supremelyconfidentoftheteamandhimself.Eventually,IenjoyedthenegotiationsomuchthatIgaveintowhathewasaskingfor.Itwasclearthatthisguywasdifferent.Hewasverysharpintense,almost.Youcouldsitinameetingwithhimforhoursandhewouldn'ttakeasipofwaterorabitetoeatoramomenttopause.Hewasmorefocusedthanmostpeopleonehadmet.Andhedreamtwithhiseyesopenandmadeyouvisualiseanewfuture.
Forthefirstsixmonths,wewouldmeetregularly.Hewouldcomehome,usuallyonSundayafternoons.Hewasveryshyandquietandwouldbarelysaya"Hi"tothekidswhoknowhimasRahuluncle.Wewouldsitontheterraceforhoursandallhewouldacceptisacupoftea,whichwouldoftengocoldaswediscussed.Onecouldneverpersuadehimtohaveamealwiththefamily.
IwouldoftengobytoHousing'sPowaioffice.Therehewouldbeadifferentanimalobsessedwithdoingmoreandbetter.Histhinkingwastenyearsaheadofthemarket.Hewantedtodo10Xbetter.Always.Andasheraisedmorefundingandengagedwithmorepeople,Isawhisconfidencesoar.
Asthebusinessgotfundedandgrewlarger,ourmeetingsbecameinfrequentandwerereplacedbyphonecalls.Alwayslateatnightat11.30pm,justasIwouldbeabouttoturnintobed,thephonewouldringandIknewitwasRahul.Hewouldusuallyhaveanewideaormostlyhewouldbebotheredaboutsomethinglike,howhedidnothaveenoughtimetodedicatetothebusiness.Ordidn'thavetimeorpeopletohandleeverything.Hewouldsay,"Wearegrowingtoofast.Idonthaveanyonewhocanmanagethegrowth."Orhisstruggleswithsomeofhiscofounders.Andsometimesforjustplainhelphowhewasrunningthefirmhandtomouthbecausefundingwasdelayed.
Hewouldsay,"Wearegrowingtoofast.Idonthaveanyonewhocan
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managethegrowth."
Myengagementslowlytaperedoffinthelastoneandahalfyears,astheinvestorsstartedplayingalargerrole.Sporadically,hewouldrequestmetocomeoverandspendafewhoursattheofficeandmeettheteamordropbyonceinawhiletodiscusssomenewinitiativetheyplanned.
RidingtheTiger
Let'sberealtheventurecapitalists(VCs)whofundedhimwithmillionsofdollarsaregoodjudgesoftalent.Theymaketheirmoneyjudgingpeopleandteamstheyknowthatbusinessmodelsevolveandchangetheirbusinessistobackpeople.Theydon'tinvesthundredsofmillionsofdollarsonawhim.Areyousayingallofthemmadeanerrorofjudgementordidsomethingelsegowronghere?
VCsdon'tinvesthundredsofmillionsofdollarsonawhim.Areyousayingallofthemmadeanerrorofjudgement?
InJune2013,IwroteapieceinBusinessStandardthatwhileHousinghadabunchoftalentedfolks,therealtestofthebusinesswouldbethetransitionitwouldhavetomakefroman"outfit"toanorganisation.Isaidthattheyoungteamwouldneedtoinductexperiencedprofessionaltalentwhowouldbecomethebuildingblocksofascalablecompany.
Therealtestofthebusinesswouldbethetransitionitwouldhavetomakefromanoutfittoanorganisation.
Thatwassupposedtobetheplaybookweneededexperiencedmanagerswhohadrunbusinessessurroundingthisbunchofpassionateandtalentedfounders.
IrecalladaywhenwehaddiscussedthatthecompanywouldtakeitsfirstbabystepsandpilotPunecity,butsuddenlytwoweekslater,Iheardthattheywerelaunchingacross10cities.Withnoteam,nosystems,noexperiencetheinvestorshadaskedthemtogoforbroke.
FirstcametheVCfundingandthentheseyoungsterswereaskedtorideatigertheteamgrewfrom100oddtoovera1,000inamatterofafewmonths.Therewasnosupportsystemnofinancialcontrols,noinfrastructureandprocesses.Nothingthatwouldnormallyformthechassisofacompany.Justablindracetogrowtocreatenewcategoriesbeforetheolderoneshadstabilised.Acarwithanacceleratorbutno
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steeringwheelfuelledbytheadrenalinofhundredsofyoungstersandmillionsofdollarsofVCmoney.
Therewasnosupportsystemnofinancialcontrols,noinfrastructureandprocesses.
Nooneaskedthemtopause,toreview,toreflect.Nooneaskedthemtomeasure,tomonitor,toplan.Onewonderswhatthehurrywasabout.Itsnotasifthemarketwasrunningaway.Therealestatemarketwasbeginningtoevolveonlineplayerswerebarely2%orlessoftheentireecosystemandHousinghadabrilliantsolution.Theyhadbuilttechnologythatcouldrivalthebestintheworld.Theywerelearningtheropes.Andeventhoughwhattheyweredoingwasapparenttoallcompetitorsthreeyearsago,theystillcontinuetoplaycatchupwithHousing.
Nooneaskedthemtopause,toreview,toreflect.Nooneaskedthemtomeasure,tomonitor,toplan.
ImaginethesituationRahulYadavfoundhimselfin.Hewasjugglinginvestors,runningafterfundingsincethemoneyinthecompanyisalwaysrunningoutinsixmonths.Hehadnopeopletomanageasprawlingorganisation,buthadtokeephisfeetontheaccelerator.Andhedidabrilliantjoborsotheinvestorsfelt.Andtheywerecharmedbyhimandhisvision.Thecompanyburnwasgoingupandhewasonafundingtreadmillconstantlylookingforawaytosurvive.
Itputhiminacornerhehadnomentorinthegroup,noonehecouldreachoutto.OncehisfundingroundwasstuckbecauseheneededalittlemoneytoclearupsomestatutoryduesheranfrompillartopostfordaysandforafewnightsIhadafrustratedRahulonthephone.Noonehelped.EventuallyIsteppedinwithaloanwhichallowedthislockjambetweeninvestorswhohavemillionsofdollarsattheirdisposaltobecleared.Itwaspainfultoseethisyoungboyhandlingsomuch.
Itputhiminacornerhehadnomentorinthegroup,noonehecouldreachoutto.
Towardstheendoflastyear,whentheJapanesefundinghappened,hecalledmeonenightfromJapan,allexcited.Hesaid,"Sir,theinvestorshavetoldmenottobotherwithrevenuesforthenext10years.Theyhavesaidtheywillsupportthebusinessandwecanbuilda$10billioncompany."
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Mystandalwayswas:getyourpeople,slowdownthecompanywasalreadyfar,faraheadofitscompetitorsandtherewasnotearinghurrytodoanything.Nowthatthecompanyhadmoneytolastawhileandhenolongerhadtospendtimefundraising,itwastimetoconsolidate,putsystemsinplace,controltheburnandonlythenmakethenextbigpush.Butthatwasnottobetheywentonaheadandmadeabigsplashwiththeircampaign,addingmorecities.ridingabiggertigerevenharder.
Nowthatthecompanyhadmoneytolastawhileitwastimetoconsolidate,andonlythenmakethenextbigpush.
TheBeginningoftheEnd
Idontcondonewhathehassaidanddone.Noonehasarighttohurtotherpeopleormockthempublicly,orthreatenthem.ButIamnotwritingthispieceforRahulYadav,soIwontgetintothegorydetailsofhisengagementwithSequoia,TimesandtheHousing.comboard.Thisismeanttobeacautionarytaleforstartupfoundersandinvestors.
Mylastconversationwithhimwasadaybeforehewasaskedtogo.Hesaid,"IcantrelatetothesepeopleandIcantunderstandwhytheycantseewhatIsee.Theycantseewhatwecanbuild."Thathedidnotknowwhetherhewantedtostayonanddoitanymore.ItwasthefirsttimeIsawhisenergylowhewaspensiveandseemeddownbeat.
Itoldhimhehadachoicetomake,betweenbeingagreattalentedindividualplayer.Orbeingamanager.Thatchoicehadtodeterminehisbehaviour.
Ifyouarealoneplayerwithgreattalentlikeasportspersonoranartistorpainteryouarethenfreetoworkalone,withoutregardtowhattheworldthinksofyou.Youhavenoresponsibility,excepttohoneyourowntalenttobecomethebestintheworld,andtostriveforexcellence.Itsalonelyjourney,whereyoulearntopracticehardandliveyourownfailures.Afterall,nooneremembersthethirdseedatWimbledon,orthesecondmanonthemoon.
Butifyouvechosentobeamanager,youvethengottobeamongpeople,collaboratewiththem,leadthemorbeledbythem,beabletohandletheirfrustrations,tohandletheircompetenceandtheirincompetence.It'sanegocrushingjourneywhereyouneedtolearntoallowpeopletheirspacetowork.Ithasverylittletodowithintelligenceitismoreaboutdevelopingsensitivityfindingawaytomotivate
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people,topulltheminonedirection.Ajourneyoffrustration,butequallyoneoftriumphwhenyouseetheteamworkingtogetherandwinningajourneyyousharewithyourteam.
Ifyouvechosentobeamanager,youvegottobeamongpeople,collaboratewiththem,leadthemorbeledbythem
Theyarechalkandcheese,thesetwolives.Eventually,whicheverpathyoupick,youvegottostrivetogiveyourbest.AndItoldhimthatitwon'tbeeasy,butthatchoicewashisthathecouldsalvageeverything.Allitrequiredwasaswitchinmindsetthathewouldnolongerdependonhisindividualintellectforsuccessthatheneededtobeamanager,wheresuccessdidnotdependonhowwellhecouldusehisuniquementaltalents,butwhetherhecouldharnesstheindividualtalentsofotherpeopleinawaythatthecollectivecreatedsomethingadmirableanduseful.Here,successwouldentirelydependonhowhedealtwithothersandhowwellhecouldgetthebestfromothers.Thatethoshadtofindawayintoeverydecision.
Finally,Itoldhimthatifhechosetobetheleader,hewouldneedtoeatcrow,sitandrepairrelationshipsandfindawaytomoveahead.
Ialsotoldhimthatthisadvicewascomingtoolateitwasmyfailurethatweshouldhavehadthisdiscussionlongagoandmaybethisdaywouldnothavecome.Buttherewasstilltimeandhisconductfromthenonwoulddecidehisfate.Butfirstdeepdownhehadtochoose.
Heleftthatevening,sayingyes,heneededtothinkaboutit.ThatsthelastIheardfromhim,tillIreceivedatersemailthenextday.Itsaid:"HadBoardmeetingOutofthecompany)"
Somepeopledogetthebalancerightsomehaveitintheirnature.Allofusmanageourfamilieseverydaywenavigatetherituals,jugglingthevariousrolesandthecousins,theunclesandauntieswenegotiateourwaythroughlifeeveryday.Wejustforgetitisthesameatwork.
Wenegotiateourwaythroughlifeeveryday.Wejustforgetitisthesameatwork.
SowhatcangreenbehindtheearsentrepreneursandventureinvestorslearnfromtheHousingsaga?Hereissomeunsolicitedadviceforhotrodstartupfounders:Workonyourculture,people.Workonyourself.Youarenotheretocreateanapp.
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Youareheretobuildsomethingthatlasts.Thatcanweatheranystormandoutlastthefounders.Onlythenwillyoubetrulysuccessfulinyourendeavour.
Workonyourculture.Workonyourself.Youarenotheretocreateanapp.Youareheretobuildsomethingthatlasts
Andforinvestors:pacethecompany.Getinvolved.Thesecompaniesneedthebedrockofsystemsinfrastructure.Theyneedaculturalfabric.Whatistherealhurryformarketshare?Consumersdontcareaboutmarketsharebuttheycertainlydofeelthequalityofservice.Andmarketshareboughtbymoneywillalwaysbeshortlived.Afterall,therewillinvariablybeanewstartupthatwilldoitcheaper,fasterandbettersoon.
Itscrazytoseeover20startupsgettingfundedtodothesamething.Everybodyyoumeettodayisanangelinvestorpeoplearespreadingtheirbetsbutnooneisprovidingthestartups"adultsupervision",somethingtheysorelyneed.Startupsneedhelptobecomeorganisationswithculture,withrituals,withcodesofconductandwithanoperatingphilosophy.Somethingthatstakensuccessfulcompaniesyearstobuild.Howdoyouexpectastartuptodoitinnotimewithoutanyhelp?Helpthefoundersrecruitgreyhair,andrespectitsvalue.Finallystartupsarealsocompaniesasetofpeoplewhohavetoworktogetherinasystemtocreatevalue.Whowillteachthemhowtoworktogether,howtoorganisework?
Thereistoomuchmoneychasingtoomanystartupswhicharedoingthesamethingandoncethemusicstopsplaying,wewillseeatrailofdeadstartupswithyoungsterswhohaveonlylearnttogrow,grow,grownottobuild.Ithinktheecosystemneedsawakeupcall,foreveryonefromangelstoVCs.Makefewerbets,buthelpbuildcompaniesthatlast.
Epilogue
RahulYadavistheoutsidernow.Maybehelllearnthatcompanieshavetobebuilttolastandcomebackamuchwiserman.Maybehewillmakeamendsandwelllearntoforgive.Hedeservesasecondchance.Wouldntyouwantoneforyourself?
Ibelievehesgotmanymilestogo.Maybewellseeamucholder,wiserandsuccessfulRahulYadavintheyearstocome.Pictureabhibaakihai.