 "Housing.com: How the business model slipped")
When it started, Housing's business model was simple: help people find houses for rent or to buy and charge the broker/builder.
The slick website and an algorithm developed in-house meant Housing.com had hits. But, it needed to further monetise this association. It switched tracks in December 2014 and started being a one-stop technology shop for builders. A few months later, Housing started running ad campaigns for builders. These three rapid changes in focus were ideas were all born out of BEST.
BEST was a team that made strategy on how products needed to be sold and what the pricing was supposed to be. "BEST had little patience for sales. Anyone who queries a decision was asked to stop asking stupid questions," said a former employee who was at the heart of the company's northern sales team. According to this ex-staffer, who has 10 years of institutional experience, lack of communication triggered "mis-selling''. Fearing backlash, the sales team would promise builders that Housing had a partnership with Google, which meant their project would show up as the first three results, an ex-staffer said. "It was not possible. Builders were promised leads, which couldn't be guaranteed either."
Most of the pressure to sell came after the high-voltage ad campaign in March 2015, which, reports said, cost Housing Rs 120 crore. Sources said the branding campaign was internally criticised after it generated interest, but not too many leads, which meant the cost of customer acquisition was as much as several lakhs.
However, it had built brand recognition and builders started to sign on.
Until December, the SoftBank-backed start-up has reportedly generated revenue worth Rs 25 crore and got around 165 builders on board. But, sources said, several builders have pulled out and demand for refunds is significant, too.
Sweet dreams
Slice View is a 3-D mapping technology that lets users see what the builder has planned, for every apartment. However, the technology couldn't keep up with the intricacies that the builders demanded and promised. For instance, Mumbai-based Avant Builders, run by Sudeep Saha, an Indian Institute of Management-Ahmedabad graduate, felt let down during the festive period sales. The problem was primarily linked to 'inaccurate display of ads', and Housing explained it as a 'technical glitch'. Saha has asked for a refund.
Business Standard spoke to some of the biggest developers, but none wanted to come on record because of Housing's association with the Confederation of Real Estate Developers' Associations of India (Credai).
According to Housing, it is "the only online real estate platform to partner with Credai, the most prominent and the only recognised body of real estate developers in India'', and that it "always makes the best efforts to reconcile with our partners in case of any exceptions". However, some in the sales department of Housing said the company would sometimes choose to focus on the next new shiny thing, rather than resolve the problem at hand.
All the glitters
In this case, the next new shiny thing was media buying. While its current plethora of products was driving traffic, they were not churning enough revenue. So, Housing branched out in August 2015. Housing wanted to take up the campaign needs of builders. Usually, media buying companies purchase in bulk and get a reduced rate on advertising. Housing couldn't promise media houses a fixed flow of ads as it was placing ads on the per-project basis.
"Say, an ad in a daily costs Rs 100 on card rate. Along with service tax the ad would then cost Rs 112. Housing would attach another 12 per cent on account of the services it rendered, making it Rs 125. They then wanted to put another Rs 10 as their margin. The final cost to the builder would be Rs 135. The builder could have advertised by himself and paid Rs 112. Who would pay Rs 135 for something that costs Rs 112?" asked a top executive who later resigned.
This meant Housing had to either burn its own cash to give competitive rates or see builders walk away. A bit of both happened. By then, the burn had singed the investors and the much-reported lay-offs happened.
"The future of buying houses, if the Reserve Bank allows, will be online. Rahul Yadav was a genius. He had a vision but no plan, he wanted to put this new wave of startups on the fast track. But, given the way Housing is being currently run, they are taking the start-up ecosystem backward," said a former employee.
HITS & MISSES
2012
Housing.com founded
2014 December
Launched Slice View, a 3-D mapping platform
2015 March
Launches Rs 120-cr marketing campaign
2015 June
Founder Rahul Yadav fired
October 2015
Lay-offs begin
2015 November
Interim CEO Rishabh Gupta fired, Jason Kothari becomes CEO
2015 November
All tertiary business verticals shut. Focus goes back to buy-sell
The slick website and an algorithm developed in-house meant Housing.com had hits. But, it needed to further monetise this association. It switched tracks in December 2014 and started being a one-stop technology shop for builders. A few months later, Housing started running ad campaigns for builders. These three rapid changes in focus were ideas were all born out of BEST.
ALSO READ: How Housing.com tripped
BEST was a team that made strategy on how products needed to be sold and what the pricing was supposed to be. "BEST had little patience for sales. Anyone who queries a decision was asked to stop asking stupid questions," said a former employee who was at the heart of the company's northern sales team. According to this ex-staffer, who has 10 years of institutional experience, lack of communication triggered "mis-selling''. Fearing backlash, the sales team would promise builders that Housing had a partnership with Google, which meant their project would show up as the first three results, an ex-staffer said. "It was not possible. Builders were promised leads, which couldn't be guaranteed either."
Most of the pressure to sell came after the high-voltage ad campaign in March 2015, which, reports said, cost Housing Rs 120 crore. Sources said the branding campaign was internally criticised after it generated interest, but not too many leads, which meant the cost of customer acquisition was as much as several lakhs.
However, it had built brand recognition and builders started to sign on.
Until December, the SoftBank-backed start-up has reportedly generated revenue worth Rs 25 crore and got around 165 builders on board. But, sources said, several builders have pulled out and demand for refunds is significant, too.
Sweet dreams
Slice View is a 3-D mapping technology that lets users see what the builder has planned, for every apartment. However, the technology couldn't keep up with the intricacies that the builders demanded and promised. For instance, Mumbai-based Avant Builders, run by Sudeep Saha, an Indian Institute of Management-Ahmedabad graduate, felt let down during the festive period sales. The problem was primarily linked to 'inaccurate display of ads', and Housing explained it as a 'technical glitch'. Saha has asked for a refund.
Business Standard spoke to some of the biggest developers, but none wanted to come on record because of Housing's association with the Confederation of Real Estate Developers' Associations of India (Credai).
According to Housing, it is "the only online real estate platform to partner with Credai, the most prominent and the only recognised body of real estate developers in India'', and that it "always makes the best efforts to reconcile with our partners in case of any exceptions". However, some in the sales department of Housing said the company would sometimes choose to focus on the next new shiny thing, rather than resolve the problem at hand.
All the glitters
In this case, the next new shiny thing was media buying. While its current plethora of products was driving traffic, they were not churning enough revenue. So, Housing branched out in August 2015. Housing wanted to take up the campaign needs of builders. Usually, media buying companies purchase in bulk and get a reduced rate on advertising. Housing couldn't promise media houses a fixed flow of ads as it was placing ads on the per-project basis.
"Say, an ad in a daily costs Rs 100 on card rate. Along with service tax the ad would then cost Rs 112. Housing would attach another 12 per cent on account of the services it rendered, making it Rs 125. They then wanted to put another Rs 10 as their margin. The final cost to the builder would be Rs 135. The builder could have advertised by himself and paid Rs 112. Who would pay Rs 135 for something that costs Rs 112?" asked a top executive who later resigned.
This meant Housing had to either burn its own cash to give competitive rates or see builders walk away. A bit of both happened. By then, the burn had singed the investors and the much-reported lay-offs happened.
"The future of buying houses, if the Reserve Bank allows, will be online. Rahul Yadav was a genius. He had a vision but no plan, he wanted to put this new wave of startups on the fast track. But, given the way Housing is being currently run, they are taking the start-up ecosystem backward," said a former employee.
HITS & MISSES
2012
Housing.com founded
2014 December
Launched Slice View, a 3-D mapping platform
2015 March
Launches Rs 120-cr marketing campaign
2015 June
Founder Rahul Yadav fired
October 2015
Lay-offs begin
2015 November
Interim CEO Rishabh Gupta fired, Jason Kothari becomes CEO
2015 November
All tertiary business verticals shut. Focus goes back to buy-sell