Rs 200 cr gift to employees: Is Housing.com CEO Rahul Yadav the monk who sold his Ferrari?

A young IIT dropout CEO exclaims that at 26, it is too early for him to get serious about money. Passionate about solving problems, Housing.com CEO Rahul Yadav has once again created quite a stir by announcing that he will "allot" his personal equity worth around Rs 200 crore in the online real estate start-up to 2,251 employees of the company. While the 'gift' could serve as a temporary motivation factor for Housing.com's employees who might be concerned about their future in this uncertain startup, it should also be noted that in most cases, when a founder decides to leave a company, his share is transferred back to the ESOP pool. Is this 26-year old CEO really willing to lose it all and start afresh or is there more to it than meets the eye?

According to a report in the Economic Times, following a board meeting early in May, investors in Housing.com, too, were considering a proposal to return about 10 lakh shares to the company to swell the pool of employee stock options.

This announcement of employees getting approximately one year of their annual salaries worth of Housing stocks comes just a week after he withdrew his resignation from the company.

So what can be made out of this move? Unpredictable, impulsive or a masterstroke in perception management?

Housing.com's decision to make 'every employee of Housing.com a shareholder' appears as if the board and investors wanted to save face. Yadav is definitely not new to controversy, having indulged in a public spat with Sequoia Capital’s Shailendra Singh as well as a media house.

Rahul Yadav. Image courtesy: Housing.com

Rahul Yadav. Image courtesy: Housing.com

The latest blowout of his resignation and then the subsequent withdrawal of the same, not only portrayed Yadav in a bad light but even the investors, which includes Japanese giant Softbank that led a Rs 575 crore round funding, valuing the startup at Rs 1,500 crore. Moreover, even though they somehow kissed and made-up, it is a big  warning sign for anyone involved in the Indian start-up space.

As brand expert Harish Bijoor told Firstpost "Housing.com needs to correct its imagery. The good thing is that correction can be attempted quick and fast as well. eSpace can damage you fast, it can correct your reputation fast as well."

While Yadav has won some Twitter admiration with his latest stunt, others in the industry are not quite impressed.

Ajay Gahlaut, the executive creative director at Ogilvy and Mather, thinks's Yadav's generosity is not charity but follishness.

Deepak Shenoy, founder of CapitalMinds has termed the 'giving away of stocks' as the start-up equivalent of CEOs accepting $1 salaries

Moreover, companies where promoters/founders have substantial holding have more value because it shows that founders have confidence in the company. If a founder decreases his stake in the company, it would imply a negative for the brand.

Dilip Cherian, CEO of Perfect Relations, cautions: "Childish behavior is tolerated more in the geek world where Bermudas mix well with bemused spectacles. But when a company’s crossed the puberty stage into being funded, the fun needs to be confined to quirky marketing ideas or at best edgy company parties. Any more is dangerous for growth."

In such a scenario, where the founder of Housing.com has not only given up his entire stake but also compared going to office as going to school where one has to still deal with those  'goddamn board' exams, it's not unlikely that Yadav may be shown the door.


Updated Date: May 14, 2015 15:49 PM

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