BENGALURU: Rahul Yadav has resigned as the CEO of Housing.com, capping several weeks of drama at one of India's most watched startups and leaving investors with the challenge of restoring normalcy at the online real estate services company.

Yadav, 26, wrote a scornful resignation letter on April 30 to board members and investors denigrating their "intellectual capability" and giving them a one-week deadline to "help in the transition." The investors responded a day later through the law firm Morrison & Foerster LLP acknowledging the resignation. ET has seen both letters.

ET had reported on March 12 that investors were considering a plan to remove Yadav, who studied at IIT-Bombay along with the other Housing co-founders, due to concerns over strategy and his conduct.

The board of Housing will meet on Tuesday to discuss the resignation and chart a new plan for the company.

Housing shot to fame as one of India's startup success stories after Japan's SoftBank led an investment of $90 million (Rs 550 crore) in December, valuing it at Rs 1,500 crore. Since then, Yadav has been in the spotlight for the wrong reasons — he became embroiled in a social media dust-up with Sequoia Capital managing director Shailendra Singh and later the Times Group, which publishes this newspaper.

Late last month, SoftBank's vice-chairman Nikesh Arora resigned from the board. SoftBank executive Jonathan Bullock will take his place.

"I don't think you guys are intellectually capable enough to have any sensible discussion anymore. This is something which I not just believe but can prove on your faces also!" Yadav wrote in the opening paragraph of his letter resigning as CEO, chairman and a member of the board.

Documents accessed by ET show that Yadav owns 4.57% stake in the company. Nexus Ventures owns 19%, SoftBank 32%, and Helion Ventures and Falcon Edge about 10% each.

Yadav, Housing co-founder and board member Advitiya Sharma and investors including SoftBank's Arora, Helion's Ashish Gupta and Nexus' Suvir Sujan did not reply to separate emails.

The Housing board consisted of three directors — Yadav, Sharma and Arora. On Tuesday, sources told ET that the first item on the board's agenda will be the appointment of two new directors — Ritesh Banglani of Helion and Sujan of Nexus — and formalising the appointment of Bullock in place of Arora.

SoftBank has asked all shareholders including Nexus Venture Partners, Helion Venture Partners, Qualcomm Ventures, Nirvana Ventures, Falcon Edge Capital to be present for the meeting which will be held at the office of the law firm AZB & Partners in Mumbai on Tuesday.

Crowded board agenda

People familiar with the investors' thinking said the majority shareholders would like to have Yadav remain in the company and involve himself with technology development. The view is that there is no perceived threat of a boardroom fight because Yadav's shareholding is minuscule, but how he reacts is still a matter of concern.

According to the sources, the board will discuss reporting structure, recent marketing expenditure and acquisitions, the resignation of Arora as well the events involving the Times Group and Sequoia.

Housing has spent nearly Rs 120 crore on its "Look Up" promotional campaign while the original budget was much lower, people aware of the details said. The company has also made some acquisition bids without the consent of investors, the sources said.

Housing competes with CommonFloor, 99Acres and MagicBricks, owned by the publisher of this paper.

Sharad Sharma, a co-founder of software products think tank iSpirt, said developments at Housing will be watched closely for their impact on the startup industry.

"Everyone is waiting for a valuation correction to happen. Housing was a poster child for a dramatic run-up to sky-high valuations, so this may be the trigger that ends the valuation bubble, especially in internet commerce," said Sharma.

(With inputs from Madhav Chanchani in Mumbai)

The Rahul Yadav saga: A tale in two letters

Text of the letter written by Rahul Yadav

Dear board members and investors, I don't think you guys are intellectually capable enough to have any sensible discussion anymore. This is something which I not just believe but can prove on your faces also!

I had calculated long back (by taking avg life expectancy minus avg sleeping hrs) that I only have ~3L (hours) in my life. ~3L hrs are certainly not much to waste with you guys!

Hence resigning from the position of directorship, chairmanship and the CEO position of the company. I'm available for the next 7 days to help in the transition. Won't give more time after that. So please be efficient in this duration.

Cheers, Rahul

Text of the letter acknowledging his resignation

Dear Rahul,

In a discussion among the Investor group, I was requested to send you an express acknowledgement, on their behalf and without any other effect on the terms of our agreements, of your April 30 resignation from your positions (1) on the board of directors (including as chairman and managing director) and (2) as CEO.

Thank you.

With best regards Noah Carr Morrison & Foerster LLP