Companies & Sectors
Quitting Housing.com was a well-calculated tactical move: Rahul Yadav
Excerpts from a freewheeling conversation at Reddit, where Rahul Yadav, CEO, Housing.com, as usual, called various people names
 
Rahul Yadav, the 26-year old chief executive of Housing.com stirred up some fresh controversy Tuesday during an interaction on Reddit. Yadav answered all kinds of question on his lifestyle, the future of housing.com, about other start-ups, venture capitalists and innovation. Among his gems was trashing Zomato.com, a restaurant listing site, and calling Sequioa a "culturally a very cutthroat VC”. 
 
Here is the select list of questions and Rahul Yadav’s replies:
 
Q: Why do you claim to have beaten Common Floor and Magicbricks based on site visits and app downloads? Aren't they bullshit metrics? 
 
RY: Yes, I believe these are really bullshit metrics. But the market (brokers, builders, investors, media) somehow cares about all these things. And perception matters. So unfortunately, we have to play by THIS (India) market's rules.
 
Q: Along with verified photos, can we also have the legal status of an apartment? Cases like Campa Cola where occupancy certificate was not provided by government will not happen if the buyer is aware of it.
 
RY: On it! We just acquired a legal and due-diligence company; they are working on cross checking all new projects that are on Housing's platform.
 
Q: What was the deal with Sequoia Capital? Can you tell us what 'other bad things' were you referring to in your email to the VC?
 
RY: We decided a slided deal between 10-15% (depending on performance) for $1mn. After 2 months of due diligence, when they realised we were running out money, they said they want to do a flat equity deal. I said ‘Okay. Let’s do it at 12.5%. They said 14.75%. When I requested more, they said, “Let’s not waste each others’ time.” We were left with no option. I came to know they have done it with lots of other ventures (TFS, Ola, Dexetra, LetsBuy...) So to cut it short, I think they’re culturally a very cut throat VC and sometimes I think that’s why they’re more successful than others. But I still condemn their practices, because I feel they’re inhuman and for me, people are the ‘why’ for everything I do. 
 
Q: What made you ask Bhavish of Ola and Deepinder of Zomato to allot half of their shares to employees?
 
R: Success of a venture is a team work. Although all start-ups give ESOPs to their employees but the problem is it’s not PROPORTIONAL to the value creation. Value is being created at x rate and is being given to the employees at y rate. x not being equal/proportional to y is the real issue. So these two names came up in my mind and I just nominated them.
 
Q: What is your opinion about Deepinder Goyal and Zomato?
 
R: A company scanning menus from last 7 years and doing no innovation. And the CEO says 'Aww. So cute.'
 
Q: Is the Zomato CEO really a d-bag?
 
R: I really do not know him much but his sense of humour sucks.
 
Q: There was a discussion on this sub-Reddit few days back, "Yay or Nay? India's [r]eal estate boom is a bubble ready to burst." what are your thoughts on this.
 
R: I do see a price correction but in long term I'm very bullish about the market given that Indian economy is soon going to be one of the world's largest and we have a huge population base with a large number of people require Housing.
 
Q: Do you think your actions are distracting for your employees?
 
R: Yes, it is distracting. But it's actually fun if it's there only for a few weeks. Beyond that, it is really distracting and does not help.
 
Q: Indian start-ups/companies are always stereotyped as having bad security practices. I have read about Ola and Freecharge on this subject. So what do you say about this? 
 
R: Indian companies are built in hurry to capture the market. So some critical pieces are often missed out.
 
Q: Don't you feel that your efforts should be more concrete in building an image that is fitting of a CEO of a growing organization instead of indulging in unnecessary shenanigans? 
 
R: I think whatever issues I have raised are very important for the Indian start-up ecosystem. The way boundaries between emails and chats are fading, I see professional diplomacy and frank conversations merging together. That's the future of conversation: quick and efficient.
 
Q: Do you think start-ups in India are currently overvalued? Do you think it is indicative of a bubble? How long do you see these valuations lasting? 
 
R: Indian market is an elephant. It is going to run/grow slowly. People/companies with patience over a period of 5-10 years will be able to leverage the opportunity. Companies, which will survive in this period, for them the current valuations, are nothing, given the opportunity size. 
 
Q: Just wanted to know your opinion on Myntra going app only and shutting down their website. Do you think it’s a wise decision and why? Would you recommend new start-ups to focus more on their site or app?
 
R: Key people's focus in the company is very important, so it’s great that they have decided to go app only. Thumbs up for their bold decision!
 
Q: What are the 3 most important things that contribute towards a start-ups’ success in the Indian start up ecosystem?
 
R: I think currently it is 1.Validated and copied idea from another market 2.Capital and 3.Marketing
What I think it should actually be: 1.Solving Indian people's problem 2. Great product and innovation. 3.Great teams and culture.
 
Q: You have mentioned that there are very few Indian start-ups that have your respect. Which are a few of these? In another comment, you mentioned that you detest how most start-ups are validated and copied ideas. Isn't Flipkart one too?
 
R: Flipkart, for maintaining relative quality (in product, service and culture). They have earned respect in terms of implementation and execution and not because of the idea.
 
Q: How do you justify your statement, "it's too early in life to get serious about money etc." when you own a Porsche Cayenne?
 
R: I 'want' to buy and media made it 'bought'. I use a rented car.
 
Q: Do you think it is required to be mean to make a start-up successful? If yes please share an instance you got mean for your start-up.
 
R: There are no rules! I play by the situation.
 
Q: If you are here to solve problem then why you wanted to quit before solving it. 
 
R: It was just a well calculated tactical move.
 

User

COMMENTS

Vishal Modi

2 years ago

Thank you Moneylife for sharing this. Best wishes,

Mongolia luckier than Maharashtra, says Shiv Sena
The Shiv Sena on Wednesday said that Mongolia was "luckier than Maharashtra" after Prime Minister Narendra Modi announced an aid of $1 billion while in that country.
 
"In an extremely generous gesture, Modi has extended the amount to Mongolia for financing basic infrastructure there," the Shiv Sena said in an editorial in its mouthpiece Saamana.
 
However, $1 billion is not a small amount and when converted to Indian rupees, the figure would shake the very souls of the Maharashtra farmers who have committed suicide, it said.
 
"The farmers in Maharashtra (who) continue to be crushed under debts from banks and private moneylenders and reel under nature's onslaught await aid from the government," the Sena said.
 
As the farmers gasp for help, the union agriculture minister made it clear that the government had no plans to provide aid to the dying farmers in the state.
 
"Compared to Maharashtra, the people of Mongolia can be termed as more fortunate... The PM has announced an aid of $1 billion and revealed a glimpse of India's financial might," it noted.
 
Pointing out that in the past, Modi had helped even other smaller, developing neighbours, the Sena said there was nothing wrong in doling out "pocket money" occasionally to poor neighbours.
 
"But where was the need to give money to Mongolia? The dollar is strengthening vis-a-vis Indian rupee and we are under World Bank debts..."
 
It said Mongolia was a distant third neighbour (with China in between), enjoys 60 years of good relations with India though it became a democracy only 25 years ago.
 
But it is imperative that the prime minister exhibits the same generosity for the Maharashtra's farmers and those affected by the upcoming Jaitapur Nuclear Power Project in Ratnagiri, the edit said.
 
"We request the central and state governments to resolve the long-pending issue of farmland suicides and other matters at the earliest," the Saamana urged.

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COMMENTS

MOHAN SIROYA

2 years ago

this is true. The moment I heard about P M Modi's announcement of $1 billion to Mangolia, I had twitted that "Common Man, be ready to contribute by way of direct or indirect taxes"
This will be necessary to balance the National exchequer.

Economy & Nation Exclusive
Tax Tentacles – 6: Expanding the Tax Net
Every time the I-T department talks of widening the tax base, they end up only squeezing those already in the tax net. Can we think about new, fresh ideas to widen the tax net?
 
To put first things first, we have to keep in mind that our economy is predominantly a cash economy. There is so much talk of black money that we tend to forget that most people have only cash and no bank account and it cannot be said that all money is black. Even if it were, Gunnar Myrdal said that it works as a lubricant in soft economies. Every time the department talks of widening the tax base, they end up only squeezing the people already in the tax net. 
 
In the 1997 budget speech, the Finance Minister stated: “It is inexplicable that in a country of over 900 million people, only 12 million people are assessed to income-tax and, what is worse, only about 12,000 assessees are in the tax bracket of income above Rs10 lakh.” In 2012, a temporary 10% surcharge was applied to people with annual income of at least Rs1 crore and it covered only about 43,000 people. Citizens meeting two out of six economic criteria such as ownership of car or house had to file returns. Similarly, a new Estimated Income Scheme was introduced for retail traders. We have no information about the effectiveness of these methods to gather data. 
 
The Tax Administrative Reforms Commission reported on 30 May 2014, “the complete absence of economic, statistical, behavioural, or operations research-based analysis of policy or of taxpayers prior to making major or minor legislative or subordinate legislation-based (rule-based) decisions: Administrative decisions and tax policy making are both based on nil analysis by international standards. No ‘impact assessment’ is carried out before introducing major legislative changes. Even changes in rules that Boards announce have no reference to what background analysis has preceded the decision. Pre-budget discussions are usually back-of-the-envelope calculations of revenue impact. The impact on a taxpayer is considered in a cursory manner, if at all. Retrospective amendments clustered during 2009-12 may reflect this lackadaisical approach. In turn, this reflects complete lack of accountability at any level except on grounds of lagging behind in revenue collection.” It recommended giving prefilled returns, which the taxpayer can accept or modify to simplify the process. 
 
As my mentor used to say, it is easier to deal with the organised sector than the unorganised people unless there is some way of getting them organised. That was one of the ideas in progress that we used to discuss in Guwahati. We should also keep in mind that money is actually stored energy and is released only when used.  Just keeping cash in the strong box is of no use until it is spent. Only when it is actually spent and gets into circulation does it release energy by activating to people to do things that are needed to be done. The next level is when the money is kept in a bank because the bank makes it work by granting loans based on those deposits. People have to be educated that keeping their money in the bank is itself a great service to the nation.     
 
What better way to organise people than to encourage them to open bank accounts. In a recent initiative of financial inclusion, the government has a project to see that every individual has a bank account. I am happy to say that this was one of the ideas of Justice S Rangarajan, shared with me 40 years back. If every account is linked with a PAN Card, the department gets a huge databank. However, without incentives, it is not possible to achieve this target. The recent initiative is to give accident insurance for Rs1 lakh as well as life insurance for early birds
 
Exemption from income tax can also be built into this by making all saving bank interest tax free but putting a ceiling of Rs30,000 and compulsorily transferring the excess to FD accounts. The Income Tax (I-T) Act gives an exemption of Rs10,000 on savings bank interest and this can be embedded this way in the account itself and at 4% every account holder will have a minimum tax free income of Rs1,000 per month. This will also create a safety net when life insurance is also embedded in it. There is also the added advantage of KYC, which can be used to eliminate duplication. If we have uniform rate of tax on interest, duplication of accounts will not affect tax collection. 
 
The idea of distribution tax on salaries and interest will remove the mismatch between deduction of tax and tax liability. It will also reduce the cost of compliance, because the compliance will be limited to the liability of the employer or the creditor and the requirement of their giving TDS certificates can be dispensed with. The credit voucher and bank accounts will show how much of the remittance is diverted to the Government as tax and the assessment will be on the remitter. 
 
In the alternative, in case the total income concept cannot be abandoned, the point of deduction of tax can be shifted to the accounts of the recipient, instead of the remitter. The banks can be instructed to freeze 10% of all remittances in the accounts of every individual and at the end of the year, based on the public profile of the individual, the income tax payable can be assessed and deducted from the frozen amount and the balance either released or collected depending on whether the tax is less or more. This process removes many hassles such as mismatch between taxes due and deducted, cost of compliance by third parties in respect of tax liability of the individual, payment of advance tax and payment of interest on tax due or refunded.  If the process of easy collection of taxes is to be outsourced it is better to use the banking system than the assorted group of remitters.   
 
(This is sixth part of a seven-part series on the vexing Indian tax system and the path to genuine reforms, adapted from Justice S Rangarajan Memorial Lecture in Bangalore delivered recently)
 
Tomorrow: Concluding Part: Tax the source and not the person
 
You may also want to read…
 
 
 
 
(Justice TNC Rangarajan is a former judge of Madras and Andhra Pradesh High Courts. Earlier, for more than 20 years, he was a Judicial Member of Income Tax Appellate Tribunal.)

User

COMMENTS

Yash

2 years ago

The main thing is that in this 60 years or more of the tax system. How much have we tried to educate the masses about the income tax? When one thinks to educate masses about the same a common question is raised that what benefit do we get? Moreover the administration part of the department is a fear among the masses. Like the Swatch Bharat Abhiyan we have to start a huge movement. We can also widen the tax net it the different sectors, business and industries are organised one.

Davidson D

2 years ago

Scrap income tax for individuals completely. Just introduce banking transaction tax of say 3% and whatever credit is effected after deducting 3%, balance can be credited to the account. This would have a huge impact on governments' finances. Withdraw all deductions and exemptions. No filing of tax returns. this would be genuine simplification.

Davidson D

2 years ago

Scrap income tax for individuals completely. Just introduce banking transaction tax of say 3% and whatever credit is effected after deducting 3%, balance can be credited to the account. This would have a huge impact on governments' finances. Withdraw all deductions and exemptions. No filing of tax returns. this would be genuine simplification.

Anil Agashe

2 years ago

You are absolutely right we need to bring many more people in tax net and the successive governments have failed in this.
All small businesses including Panwalas must be asked to pay presumptive tax of say Rs 2ooo per month. They can claim refund filing IT return and these refunds must be processed in 2 months at the most.
I am thrilled that you have talked about interest on savings rates and transferring excess amount to FD mandatorily. I have been saying this for yeas now.I also think small investors who have NIL tax liability should actually be paid 6% interest on their SB balances.

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