Is Rahul Yadav, the sacked founder of Housing.com, still cruising for a bruising?

The startup sector is rife with fresh-out-of-college oddball founders, itching for dust-ups with investors, peers and the ecosystem, who won't think twice before rocking the boat. In a sector known for little patience, they either grow up or fall by the wayside.

But it seems boy genius Rahul Yadav, the Housing.com founder CEO who was sacked after high drama in 2015, is still cruising for a bruising. An investor in another startup Yadav founded wants to know how he burnt its cash.

Consumer Internet group InfoEdge has initiated a forensic audit of its portfolio company 4B Networks founded by Yadav for not disclosing details of financial transactions and related-party activities when asked for by the investor. In a stock exchange filing, InfoEdge said it hired Deloitte to conduct a forensic audit of the property-tech startup. Info Edge had written off its equity investment of Rs 276 crore in 4B Networks during the December 2022 quarter citing “excessive cash burn, prevailing liquidity issues and significant uncertainty towards funding options”.

Differences with investors would be a deja vu moment for Yadav.

The beginnings of the boy genius
Yadav, an IIT Bombay dropout, was considered a child prodigy who took little interest in formal education but could teach himself even the most complex subjects. Hailing from a small town in Rajasthan, Yadav had planned his first entrepreneurial venture in a hostel room along with several of his batchmates. While IIT hostel rooms are known to be incubators of sorts for bright ideas that later turn into reality, Yadav had such a strong belief in his idea that in its pursuit he left IIT without completing his degree.

The idea for Housing.com, the website that brought tech to house search, emerged from Yadav's and his friends' difficulty in searching for accommodation in Mumbai. Housing.com was launched in 2012 when Yadav was just 23 years old. Two years later, it shot to fame as one of India's startup success stories after Japan's SoftBank led an investment of $90 million (Rs 550 crore) in December 2014, valuing it at Rs 1,500 crore. According to a study by LinkedIn, an online professional network, Housing.com had become India's sixth most influential brand under his leadership, ahead of such established names like ICICI Bank and Tata Communications. Housing.com competes with MagicBricks, owned by the publisher of The Economic Times.

A few months later, Yadav, who was seen as a startup whizkid whose middle-class, small-town background and maverick ways endeared him to many, hit a rough patch that made him the bad boy of Indian startups.

Yadav's fatal skirmishes
India's startup ecosystem was presented with an unprecedented spectacle after it emerged that Yadav had fired off an angry and threatening email to Shailendra Singh, a managing director of the country's largest venture capital firm Sequoia Capital, and copied hundreds of his firm's employees on it in early 2015. Yadav addressed Singh as “dude” and accused him of “inhuman and unethical things.” The email surfaced on question-and-answer platform Quora, prompting a rare public reply from Singh on Quora, saying he was “deeply hurt”. He said Yadav’s email to him was possibly triggered by Sequoia hiring a Housing.com employee as an analyst.

“I just came to know you personally are completely after Housing’s employees and are brainwashing them to open some stupid incubation. If you don’t stop messing around with me, directly or even indirectly, I will vacate the best of your firm,” Yadav said in his email to Singh, which was copied to Housing’s 1,500 employees. He also warned: “Also, this mark(s) the beginning of the end of Sequoia Cap in India. Try me :)”

Soon after, following rumours that the board was thinking of replacing him, Yadav sent a letter to his company’s board in which he wrote: "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!" But a few days later Yadav apologised for his “unacceptable comments”. The board accepted his apology, allowing him to continue as CEO.

Yadav sprang another surprise by gifting all his shares in the company, which he claimed were worth about Rs 200 crore, to his employees, saying he was "too young to worry about money". He also challenged his critics, including Zomato’s Deepinder Goyal and Ola’s Bhavish Aggarwal, to follow his lead. Yadav owned 4.57% stake in the company. Nexus Ventures owned 19%, SoftBank 32%, and Helion Ventures and Falcon Edge about 10% each.

Yadav was finally sacked after an email he sent to employees was leaked. In it, he wrote that “to have some fun”, he had given contradictory answers to various journalists who had called him to find out whether Housing.com was being taken over. The Housing.com board said his behaviour towards investors and media was not "befitting" of a CEO.

The series of dramatic events put Yadav in a harsh spotlight. There was even the talk of his life set to be chronicled into a web series by Amazon Prime in India.

What's behind Yadav's oddball behaviour?
Yadav's entrepreneurial life seemed to have hit a dead end after his infamous skirmishes. What led such a promising young man into a self-destructing streak of behaviour?

Talking to TOI in July 2015, Harish Shetty, a noted psychiatrist, said not everything was over for the mercurial CEO though he felt Yadav needed to be more consistent, friendly and humble. But, he warned, not all dropouts turned out to be Bill Gates. "You may have a brilliant idea. But you need to take people along with you, and to sustain the idea you need a different mindset. His behaviour shows that he needs a good coach. I am sure he will make a comeback."

Yadav then went on to set up a data analytics startup Intelligent Interfaces, which received angel funding from Flipkart cofounders Sachin Bansal and Binny Bansal as well as Paytm founder Vijay Shekhar Sharma. But in 2016, nearly five months after announcing his comeback, Yadav decided to shut shop, give up on entrepreneurship and was planning to take up a simple job. “Thinking of giving up on entrepreneurship and do a simple job. Will take decision by this weekend,” Yadav wrote on Facebook. He eventually joined real estate stalwart Anuj Puri’s new venture Anarock Property Consultants as chief product and technology officer.

Yadav later realised where he had gone wrong. In an interview to Forbes in 2019, Yadav said he was way too young at that time and it was immature behaviour. He said he was a leader in college and then a co-founder of Housing.com, always used to being the single point of authority. Even if he was wrong, no one was questioning him. In such situations, leaders got delusional a bit and took wrong calls with confidence, he said.

Did Yadav really change his ways?
The change in Yadav's mindset began when someone advised him to get into a relationship. After the housing.com episode, an investor told him that being single he was living in a different world and a relationship would tell him what real life was like, Yadav had told Forbes. He took the advice seriously. He said getting maried and working with senior people at Anarock changed his perspective. Earlier, he would see married people leaving office at 6 pm and think he should not hire such people. When he was married, no longer a well-off bachelor living close to office, he realised peole had to do long commutes and there was life besides work too. He also realised that the wife, unlike the people he worked with, would tell him if he was wrong right in his face which made him more adjusting to others' viewpoints.

"But now, I won’t do such a thing. If I set up a company again, I won’t get into a spat with investors. If there are problems, you have to talk them out. And if things don’t work even then, you part ways amicably. Now, I’ll do a very good transition," Yadav had told Forbes.

But four years later, he seems to be repeating the history. A forensic audit of his startup by his investor, aimed at probing financial transactions and related-party activities, hints at the investor smelling a mischief in the books. There are reports of Yadav splurging money on luxuries while the employees go unpaid. He reportedly maintained a luxurious lifestyle such as owning a Mercedes-Maybach and hired a boardroom at the Taj Land's End for Rs 80,000 per day. His startup burnt over Rs 276 crore in less than 18 months, while over 150 employees have not been paid since November last year.

Though Yadav can't be accused of any wrong-doing at this stage, his future now depends on his promise that he had changed and would not regress into old behavioural patterns, that is, on the boy becoming a man.