Who’s the Wolf of Dalal Street? Behind the explosion at Housing is a shifting power equation [Updated]

“It’s not personal, Sonny. It’s strictly business,” Michael Corleone told his brother before going and plugging a drug dealer and a police captain in The Godfather.

Housing CEO and co-founder Rahul Yadav may not go to that extreme, but there was more to his waspish resignation than a rant against investors. We asked the question earlier in our Talk section if this was personal or the fallout of a deeper tussle between founders and investors.

(Update: Yadav apologized and withdrew his resignation later in the day. The Housing board was reconstituted with Yadav staying on as CEO. But the episode continues to be discussed because it drew attention to the relationship between investors and entrepreneurs in a booming market.)

Most commenters on Talk were put off by the language of the resignation letter, but some were sympathetic. “Investors put their hard-earned money into a business. But entrepreneurs put their money, time, and health into their business,” pointed out Libin Joseph, for instance.

On Twitter too, questions have been raised on what triggered this. Did it have anything to do with the dwindling share-holding of Rahul Yadav, who was among the 12 bright sparks from IIT Bombay who founded Housing? Yadav now owns less than 5 percent of the company.

#Housing.com a case of one entrepreneur of #StartUp overtaken and left out by #shareholding ,nay, #shareweilding #VC s!

— santhanam (@sanvai) May 5, 2015

Clearly, there are deeper issues here than the intemperate wording of Rahul Yadav’s missive. One of these is the evolving power equation between VCs and entrepreneurs in India’s young startup ecosystem.

Sharad Sharma, former R&D head of Yahoo India and co-founder of startup think-tank iSPIRT, has watched the tech space in India go through many phases since the mid-eighties. He sees the current fracas at Housing as a resetting of the relationship between entrepreneur and VC. As Sharma explains to Tech in Asia:

Rahul [Yadav] has been articulating – correctly, in my opinion – that the entrepreneur is in charge, that the entrepreneur is more important than the VC. Although young and brash, he has asserted the primacy of the entrepreneur to the VC. And this is happening with all the new generation entrepreneurs, from Naveen Tiwari [founder of InMobi] to Vijay Shekhar Sharma [founder of Paytm] to Kunal Bahl [co-founder of Snapdeal]. They are less reverential to VCs than was the case with the older generation entrepreneur.