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.

RahulandI

ItwasthemiddleofawetAugustin2012.IwasonAlexa,whichprovidescommercialwebtrafficdata,checkingoutonacoupleofmyotherstartupswhenIsawanadbannerfromHousing.Iclickedthrough.Thesitewasarefreshingchange.Itwassharpanddifferentiatedincomparisonthecompetingrealestatewebsiteslookedneanderthal.Itwas,ofcourse,overbearing,likeapilotscockpityouknowatechiehasdesignedasitewhenyouseeonelikethat.Butclearlysomeonewasreallypushingthegameforwardandthathadimmensepotential.Itwastheversion2.0ofhowclassifiedsshouldwork.IwantedtofigureoutwhothesefolkswereandsoIaskedafriendDeap(DeapUbhi,cofounderofburrp.comandtheformerCOOofFreecharge)tofindoutandreachouttothem.

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

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

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."

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

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.

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.