Founders don't always make the best leaders. That is the painful public lesson that SoftBank is learning at Housing.com. The Japanese group is struggling to rein in the 26-year-old chief executive of the property listings website it invested in last December. Though SoftBank may value a reputation for being founder-friendly, being seen as a weak investor is worse.
Rahul Yadav is engaged in near-open warfare with his financial backers. In April, he wrote an acerbic resignation letter attacking the board as intellectually incapable. After the letter was leaked, he withdrew his resignation and apologised for his "unacceptable comments". SoftBank responded by expanding the board to give investors more control.
Yet in the past week, Yadav has pledged to distribute his entire stake in the company - worth up to $32 million - to employees. Most recently, he posted a clip from the Batman film "The Dark Knight Rises" on his Facebook page. It features a businessman whimpering: "I've paid you a small fortune". The villain towers over him to reply: "And this gives you power over me?" The full scene ends with the bad guy breaking the businessman's neck.
It's not unusual for entrepreneurs to clash with their venture capital backers. The puzzle is why SoftBank hasn't replaced Yadav or moved him to another less prominent position. The Japanese company may fear alienating other tech founders: its plans to invest $10 billion in India over the next decade depends in part on CEOs of start-ups viewing the group run by Masayoshi Son as an attractive backer. Yet keeping Yadav in his role appears to be harming both the company and the reputation of its investors.
Housing.com wouldn't be the first tech group to part company with its founder. Daily deals business Groupon fired Andrew Mason in 2013. Twitter churned through two founder-CEOs before its initial public offering.
Research by investor Atomico suggests the majority of tech firms that achieve a billion-dollar valuation do so by sticking with their founding CEO. But the majority of venture capital investments also turn out to be duds. As it stands, SoftBank is living up to its name for all the wrong reasons.
(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)
The story so far Housing.com was founded in 2012. In December, Housing.com said that it raised $90 million in an investment round led by Japan's SoftBank. SoftBank owns 32 per cent of the company, Nexus Venture Partners owns 19 per cent and Helion Venture Partners owns 10 per cent, according to media reports. On April 30, Yadav wrote a resignation letter addressed to board members and investors in which he said "I don't think you guys are intellectually capable enough to have any sensible discussion anymore". He withdrew his resignation on May 5 after the letter was leaked. Rahul Yadav, co-founder and chief executive of Indian property listings website Housing.com, said on May 13 that he would transfer all his shares in the company to its 2000-plus employees. The shares in the privately-owned company are valued at between Rs 1,50 crore and Rs 200 crore ($23.6 million and $31.5 million), according to a statement by Housing.com. Yadav owns 4.57 per cent of the company, according to various media reports. "I'm just 26 and it's too early in life to get serious about money", Yadav said. The following day Yadav used his Facebook page to challenge the founders of Indian e-commerce rivals Zomato and Ola cabs to give away half of their shares to employees. |