 "Housing Co-Founder Rahul Yadav")
Rahul Yadav has once again made headlines, upsetting the public who found the entrepreneur spending lavishly after reports of a forensic audit on his company surfaced. InfoEdge initiated a forensic audit on 4B Networks after heavily investing in the startup and not receiving any news from the company nor its founder. It was also revealed that employees of 4B Networks had not received their paychecks since November 2022.
Yadav was the center of controversies that led to his departure from his former startup, Housing.com in 2015. While many believed he had learned from the past, current reports seem to suggest otherwise. Here is everything you need to know about the entrepreneur, his companies, and controversies.
Rahul Yadav became popular as an IIT Bombay dropout who made it big as an entrepreneur. He was considered a child prodigy who took little interest in formal education but could teach himself even the most complex subjects, said an Economic Times (ET) report.
While he had once run a successful startup, things went downhill for the seemingly talented entrepreneur due to behavioural issues.
The Housing.com debacle
The idea for Housing.com emerged from Yadav's and his friends' difficulty in searching for accommodation in Mumbai. The platform was made to bring landlords and renters together on one platform and was launched in 2012 when Yadav was just 23 years old. Yadav became a startup success story after Japan's SoftBank led an investment of $90 million (Rs 550 crore) in December 2014, valuing it at Rs 1,500 crore.
However, Yadav’s attitude became a source of concern, especially after he wrote an angry email to the managing director of one of India’s largest country's largest venture capital firms, Sequoia Capital in 2015. At the time, the media reported that this may have been due to the venture capitalist hiring one of Housing.com’s employees. Yadav copied the mail to 1,500 employees.
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The mail became public on quora and included statements like, “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.”
Despite apologising, Yadav quit as CEO a few weeks after the incident.
However, Yadav once again created controversy when he gifted all his shares to his employees in May 2015, stating, “I'm just 26 and it's too early in life to get serious about money”. He claimed the shares were worth Rs 200 crores and then proceeded to challenge other entrepreneurs to do the same.
A break from entrepreneurship
After his departure from Housing.com, Yadav decided to stop being an entrepreneur and take on a full-time job.
In an interview with Forbes in 2019, Yadav reflected on his journey and acknowledged that he was too young and exhibited immature behavior during his tenure at Housing.com.
He mentioned that he was used to being the single point of authority, where his decisions were unquestioned. However, he learned from his experiences and recognised the importance of working with senior people, as well as the influence of marriage on his perspective on work-life balance and commuting realities.
History repeats itself?
Rahul Yadav started Broker Network (4B Networks Private Ltd) in November 2020, once again beginning his entrepreneurial journey, to help facilitate communication between real estate developers and brokers.
4B Networks received investments amounting to Rs 288 crore, with Rs 276 crore invested in shares and Rs 12 crore provided as debt finance from Info Edge’s wholly-owned subsidiary, Allcheckdeals India Private Ltd (AIPL).
As Business Standard earlier reported, AIPL initiated a forensic audit to investigate the company's affairs and appointed Deloitte Touche Tohmatsu India as the forensic auditor on June 1. This decision was disclosed in a regulatory filing made by AIPL.
The filing stated, “The investments into the shares of 4B Networks and the loan have been fully impaired, in the backdrop of various factors including inter alia excessive cash burn, prevailing liquidity issues and significant uncertainty towards funding options.”
Info Edge has been seeking details about financial transactions, transactions with related parties, and other relevant information from 4B Networks and its current management. However, the startup consistently failed to comply with these requests and did not respond to Info Edge on multiple occasions.
There are also 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.
These reports, along with Yadav’s history, have garnered attention from social media, with users making jokes about Rahul Yadav and questioning Info Edge’s judgment on the same. He has been termed, "enfant terrible of the Indian startup ecosystem", according to Business Today.
