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Housing.com – A Bubble waiting to Burst ?

Rahul Yadav is to the world of E-commerce as Arvind Kejriwal is to the world of politics – both believe in sensationalism rather than professionalism in work. What must we learn from the ongoing drama in Housing.com – one of the most happening startups in the world of E-Commerce? Focus on business, not on being in the news all the time for wrong reasons.

If there is an equivalent of Arvind Kejriwal in the world of startups today, it has to be Rahul Yadav, the sensational CEO of Housing.com who got sacked  for the second time since he founded the company with many co-promoters. The comparison with Arvind Kejriwal is apt because right from the beginning, Rahul Yadav never concentrated on the main thing – to build volumes,  ramp up systems, strengthen business model and bring confidence to the external investors. Instead, he allowed Housing.com to make headlines for wrong reasons. It started with news about differences between the promoters. Then came the differences between the MD of Sequoa Capital and Rahul Yadav where both  traded charges against each other – the former accused Sequoa Chief of poaching his employees and called him names. Valuation touched Rs.1000 crore, then Rahul Yadav said he is giving all his equity away as ESOPs to his employees. That was worth Rs.200 crores. It garnered enough limelight. But the traction was not enough – the external investors became impatient with the company  – in the constant bickering between the nine co-promoters. The valuation somehow touched Rs.1500 crores in recent months but gaps in the company’s business model became glaring.

In an industry which sees a huge turnover in real estate sales, Housing.com came with a USP that caught attention – its portal enables search for homes based on technology that syncs with google maps. But is that enough to merit a billion dollar valuation? What about the portals like 99acres.com or magicbricks.com which built much bigger scale and wide-spread usage over the years? How long does it take for established players to map the same technology used by Housing.com and sweep the market? What is the user base of Housing.com vis-a-vis say, a leading portal like 99acres.com (which has listings from 20,000 builders and 5,000 brokers and lakhs of users). In the end, the best startups that survive the online gravity do not get distracted from the main business of increasing customers (call them users or subscribers), they hit the trajectory of growth and keep celebrating the milestones of the next 1000th customer or the new mark of GMV (Gross Monetary Value) of Rs.50 crore and so on. Most of the startups which made it big in India  so far – from flipkart to snapdeal to Ola Cabs to Taxi for Sure (which got acquired by Ola) have done it first by bootstrapping, then by granular and later exponential jump in revenues and customer base.

Getting in the news is good but if it is for reasons  other than business like what Housing.com and  its promoters have got into the habit of attention-seeking, the curtains are not far from coming down. Focus on addressable market, increase of user base, enlistment of massive inventory for home-buyers, and steady steps to comfort the stakeholders like SoftBank, Sequoa, etc. who invested in the company  – these should have been the areas of focus for Housing.com. Instead, Rahul Yadav and his team have set a  bad example of distraction-led attention seeking and spunky advertising to get the mindshare of the public. These won’t sustain the company unless you improve on a daily basis. It is flattering to think of Rahul Yadav as another Steve Jobs who was sacked by the company, it is gratifying to think of the co-founders of Housing.com as pedigreed as Infosys founders but there is more to success than getting drunk on early success. It is also ominous to think that most of the crashes that happened in the history of market cycles start with a late entrant who enters a growth industry with much flamboyance and promise of challenging the status quo – and then fizzles out in a while. Housing.com entered with the same fanfare – to shake up the industry and democratise home-buying with a technology that is touted to be a game-changer. Less than two years into its existence, the chinks are showing so badly that it threatens to spoil the party for others – lest the wise men ignore the message. Make headlines with positive news about your growth, don’t make headlines with news of infighting and Kejriwal-like exhbitionism.

(S.Sridhar )

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