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The soft bank

19 May 2015 By Una Galani

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 apologized 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.


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