New Delhi: SoftBank Group-backed Housing.com was embroiled in a series of controversies last year involving its co-founder Rahul Yadav and investors. Yadav was finally asked to leave in July last year after engaging in public spats with investors and the media.
In November, Jason Kothari was promoted from chief business officer to chief executive officer (CEO) of Housing to turn around the online real estate company. Recently, some media reports said e-commerce marketplace Snapdeal may buy Housing.
In an interview, Kothari denied talk of a sale, saying Housing is on a healthy growth trajectory. The company, which has been an online classifieds firm until now, is looking to expand offline by offering on-ground support for real estate transactions, he said. Edited excerpts:
Have you achieved the targets that you had set for yourself when you became CEO?
We are rapidly transforming the business… the steps that we have taken normally occur in a company over a five-year period and we are trying to do it in just one year. There is a new focus on the business model, strategy and plan to create a market leader in the space. We are focusing 100% on the buying and selling segment of the business, which is the largest opportunity in real estate. We have restructured our business to strengthen our core capabilities… we are significantly more efficient with our resources. We raised about Rs.100 crore from SoftBank in December.
We had a million visitors per month six months ago and we now have 3.5 million visitors per month. Revenue is growing exponentially at a rate of about 200% month on month. We have over 100,000 developers, brokers and landlords working with us to sell their homes.
What kind of revenue do you currently report?
We do a few hundred thousand dollars a month. We do not share exact numbers.
Where is this growth in revenues coming from?
We have about 400 developers (who came in) as paid customers in the last three months alone, and we just started broker monetization and that segment is scaling very fast for us. Our visitors have grown 350% in last six months. These visits are directly correlated to our monetization… one of the key revenue streams is performance marketing. It is directly correlated to number of visits and leads we have per month.
Profitability was very high on your agenda when you took over Housing. Where are you on that front?
We expect to be cash-flow positive in 18 months from now. This is on track with the business plan that we presented to the board.
Have there been any headwinds because of the overall market conditions and the way real estate market has been behaving?
Markets are very cyclical and the technology start-up ecosystem in India is no different. The ecosystem has seen the extreme boom period and now we are at the extreme down period… but we expect improvement in the next 12-18 months. We are executing successfully and not getting dissuaded by these temporary cycles.
We hear Housing is low on gas and would soon need another round of fresh funds? Do you have enough money in the bank?
We will try and raise capital later this year. The growth trajectory of the business has resulted in Housing being approached by a number of financial and strategic investors and we are currently exploring these opportunities in conjunction with our existing investors like SoftBank.
What kind of investors have approached you? Strategic or financial?
We are fortunate enough to have both options on the table and we are evaluating them internally right now.
Housing has been in the news for being a potential acquisition target by Snapdeal and PropTiger. Have these rumours impacted your fund-raising process in any way?
Almost all competitors in our space have approached us and has expressed interest in working together. But we are not looking to sell the company. We are looking at potentially acquiring companies or partnering with companies to drive inorganically.
Is there a deal in the pipeline with Snapdeal?
We are not in any talks with Snapdeal for a sale. This is completely untrue, and it appears one of our competitors may be feeding these false rumors. The real estate space is so large, fragmented and disorganized, that this (creating the largest online real estate company) is a realistic long-term goal for Housing. Therefore, it is too early to discuss a sale of the company.
What kind of companies are you looking to acquire?
The space is ripe for consolidation… we are looking at all the options. I cannot divulge further details.
Acquisitions would require capital. Do you have enough money to go shopping at this time?
We have a commitment from existing investors as well as new investors but we haven’t decided which way to go. We have enough capital.
What are the long-term and short-term targets you have set for Housing?
In the short term, we are scaling up monetization from our brokers, builders and we are also testing new products that will add to the monetization.
In the long term, our target is to move from a classifieds player to a full-service transactional player. We aim to be a full stack online-to-offline transactions company. We have extensively studied the real estate space, especially in the US and China, and have gained from those markets. We want to build an online-to-offline firm in a human-light and technology-centric way.
A full-service company would essentially mean facilitating transactions. We will do it by forming a team of our own agents and partner agents… this is a model that works really well in China.
What kind of companies have you looked at for inspiration?
Some of the examples are Sofun, Lian Jia, also known as HomeLink, Fang Didi. We have spent time with a lot of these companies and studied their businesses in a lot of detail and based on those learning(s), we have a lot of conviction on these models.
This is similar to what PropTiger does currently...
It is similar to PropTiger but we would like to do it in a technology- and human-light way. We think that buying-selling at a large scale has not happened in an online-only way, it requires an offline component as well, specially in India. For the offline piece, we will rather partner with companies and share broker fees etc.
How soon can we expect you to roll out this new business?
In the next 12-24 months. We are still exploring whether to buy a firm, partner with one or build this capability in-house.
There have been multiple departures at the founder level. Has that impacted day-to-day business at Housing?
Not at all. Co-founders played an integral part in building the business at early stage, we are much more mature now and we are a professionally run company with experienced management… in fact, the co-founders have expressed confidence in the new management.
Do the investors continue to be as active in decision making as they were a year before?
The operative committee that was formed last year has been dissolved ever since the new management took over. The investors and Housing board touch base monthly or quarterly, like in any other start-up.