At least three sources confirmed that ex-Flipster Saran Chatterjee kept the founders out of the loop on major decisions. Co-founders Arjun Kumar and Sunil Goel are no more part of the startup, as result of a board decision
There’s serious trouble brewing up within the house of Bangalore startup Housejoy. Co-founders Arjun Kumar and Sunil Goel have allegedly quit the company, through a board executed decision leaving a professional CEO at the helm.
Founded in 2014 by Kumar and Goel, the company has raised about USD 27 million so far from investors such as Matrix Partners and Amazon India.
The board allegedly forced the founders Kumar and Goel to quit in November 2016 to create a single point of decision making in the hands of professional CEO Saran Chatterjee, at least three people familiar with the development told Moneycontrol.
“The decision was taken by the board and the company keeping the best interest of the company in mind. The founders and the board hired a professional team, which is the CEO and the leadership team to take the company to the next level post series B funding,” a company spokesperson said in response to an e-mail query.
“Over a period of two years, we have let people go based on performance because we are charting our road to profitability. The investors did not want three-headed management,” the spokesperson added over a call.Explainer: Why are Indian Startups Stumbling?
When reached for comments, Matrix Partners declined to elaborate, adding that it was a board decision and founders were part of it.
Over a brief call, Arjun Kumar confirmed he is no more a part of the company, but did not elaborate on the reasons for his exit. Post this call Moneycontrol tried to get in touch with Kumar multiple times through calls and messages, to ascertain his reasons but did not receive a response.
Two ex-employees of Housejoy, who were part of the layoffs undertaken by the startup, alleged that the top management was often at loggerheads regarding some of the plans for the company.
One of these ex-employees, who didn’t want to be named because of the sensitivity of the issue, also said that “Founders were often kept out of the loop on some major decisions.” The founders, according to these employees, were also against the move of rolling back operations.
However, the company spokesperson claimed that to retain Chatterjee as the sole active decision maker for Housejoy was a long-standing plan of the board, founders, and the investors.
Matrix was one of the earliest investors in the company. Amazon, Qualcomm Ventures, Ru-Net and Vertex Ventures are the other investors of Housejoy.
Saran Chatterjee was appointed the CEO of Housejoy in 2015 by the co-founders. Prior to joining Housejoy, Chatterjee was with Flipkart as VP of product management and was a key part of the leadership team for about three years.
The company claims to service over 4,000 orders a day and competes with bigger rival UrbanClap in the home services space. The company offers doorstep services such as plumbing, carpentry, salon, beauty, electrical repairs and so on.
Within a year of operation, the company had expanded its operations to 12 cities.How GST will impact startups?
It recently rolled back services from 7 of these 12 cities to focus on 5 of its biggest markets – Delhi, Mumbai, Chennai, Bangalore, and Hyderabad. The startup also cut at least 50 percent of its workforce, mainly because of the roll back.
“As a company we have not slashed our workforce to half at any given point of time, we have taken corrective measures over the last two years to streamline operations, drive more focus towards growth, better the service delivery and go deeper in our top 5 cities,” Chatterjee explained in an email statement on the issue.
He went on to enumerate the growth points the startup has achieved after the exit of the founders in November.
“From December we have been seeing tremendous traction and consistent growth in the company. We have broken even in the beauty category in Bangalore and have become contribution margin positive as a company," he added.
On-demand beauty services account for about 30 percent of the company's revenues.
Tough road ahead
Not all players in the segment have seen a smooth sailing.
Housejoy is one of the leading startups in the home services space, with UrbanClap as its closest rival. Backed by Ratan Tata, it also counts the beauty and home salon services as its most profitable segment. It has raised over USD 36 million in funding to date, according to Tracxn.
Neil Shah of Counterpoint Research said that hyperlocal services space has been gasping for breath with several new startups vying for the same customers. “The cost of acquisition was as high as Rs 300 for each user. It is practically unsustainable for a bootstrapped startup,” he said.
UrbanClap also faced huge expenses resulting in mounting losses of nearly Rs 60 crore on revenue of Rs 2.8 crore in FY16. High cash burn has also led several startups to shut shop. Doormint, a Mumbai-based laundry services startup, closed down in September. Another startup Taskbob shut its operations in January this year after it failed to raise fresh funds.
With Quikr present in the same segment, the game is getting tougher by the day. Recently, Quikr made its fourth acquisition in 12 months, buying out a home services startup - Zimmber. The company has committed to invest at least Rs 250 crore for its home services business. It earlier acquired hyperlocal services startups Salosa, Zapluk and Stayglad.
Betting big on the segment, social networking giant Facebook has also introduced a local services site in India that helps customers discover the best-rated service providers around them such as plumbers, spas, event planners, or pet email@example.com