[MUSIC] If you have a whole lot of flats and no renters, the flats probably aren't going to be very happy. But if you have a whole lot of renters and no flats, they won't come back. How did you solve that? >> Well, yeah, the question is how we keep solving. Because that's a continuous challenge, because when we launch a new city, we face a very similar case again, so we need to keep optimizing. I learned a lot about marketplaces in that time. And in the five years I've been doing it, I still haven't learned how to move apartment from Zurich to London, where the demand is shifting. So it's actually, keep managing the marketplace day to day, while managing every day how much supply we have. How much demand we have? How are we matching? What do we need to go next? Do we need a little bit more of that supplies or we need more demand? And we're managing that on a daily base in the business. I think the biggest challenge of a marketplace is the fact that you actually run two businesses at the same time. So it's double the fun. >> And they have to match? >> And they have the match, exactly. >> So at the very early stage, did you have flats first or renters first? >> So at the very early stage I had nothing. >> Yeah. >> We had five apartments, I sent one email within the London Business School community. After two weeks we had 70 apartments posted in three cities just by the community and, as well as our first bookings happened. Which is how we make money. And in that case I was very lucky to be within a very supportive community and a close community, that helps. And I think it even more, it made me understand the importance of focusing on a niche. Being the best answer for a small group of customers and from there trying to grow, rather than trying to be everywhere and for everyone initially. And we've tried to replicate that with every community we went to and every location that we launch. Today we have obviously improved a lot and we know how to get the supply. Usually we start by getting supply and then we get the demand. >> And when you go to a new city, and you want to get supply, do you have to go and say, I'd like you to be on my website, but actually I won't give you any business for a while, until I have enough of you so that I can then advertise for demand? Do you have to manage expectations or is that not a problem? >> Yes, managing expectations is always good. Probably, on a sales pitch to say you're not going to get much sales from me is not a good idea. So we have our ways that we are making sure that new suppliers get immediate option. >> So how do you do that? >> We just focus on them, and we have a special team that is looking on new supply, what's called onboarding supply, and making them successful. Because we did our analysis and did our KPIs and we saw that in order to be successful host on FlatClub, you need to get your first engagement very soon after you decided that you are actually interested. So we're working on reducing the time from when someone show interest to have a live listing and significantly reducing the time from live listing to first interaction. >> To a paid customer. >> Yeah. >> Yeah. Interesting. So along the way you raised a little bit of angel money and then you went and raisef a bit of a bigger round. In hindsight, was it the right time that you raised the bigger round or could have it been later or should it have been earlier? >> I think it's tough to optimize that. Because with more funding comes bigger expectations. And so in terms of what actually are you going to do with this money? And you need to be ready to less explore and more invest in. I think I was very lucky to raise from very experienced investors, who were very supportive as well. And understood that we need to change something and they need to give us time to do that, to change. And we were very lucky, I know not all the investors are going to do that and we were very lucky that they kind of gave us a second chance to- >> To make the pivot. >> To make the change in the business, exactly, to make the pivot. And to actually wait with expectations of results until we are actually able to deliver that. So what is the optimal time to raise money? I don't think there is an answer to that. For sure having more money than less is the best advice I can give as well as take from myself, always. >> And as you look forward now you have a business that ought to be fairly capital efficient. Because you get your customer's money upfront and you can then sit on that float for some number of weeks before you have to pay it out to your flat owner. So will you need to raise lots of capital going forward or will the inherent capital efficiency of the business let you grow at a satisfactory rate? >> Yep, so growing new markets require a bigger investment. So, as long as we want to expand and go into more locations we will have to raise external funding because the payback time is longer. So that's kind of of struggle that we- >> That's the trick >> If we are happy with what we have, then we don't need. But if we want to accelerate growth, then we must take external funding to be able to to invest in that growth in multiple places. >> Right, and today, of course, the market for rentals is awash with competition from Home Away and Airbnb, and so on. How can you compete going forward? >> I think the only way for us to compete is to stay focused. Because we have lots of competitors in short term, in holiday rentals. We have many competitors in long-term rentals. In the medium terms we are still in a good position. And it help us give focus. So every initiative, every new feature, every marketing campaign we are launching, we are first asking ourself, is it relevant for our core customers? Is it what, actually, they need? Or maybe that's something that we will try to compete with,because we can't compete with that really. And that aspect stays super focused on a niche market. Serve that niche better than anyone else. And that's kind of how we stay ahead of competition as well as keep creating value for our customers. >> So what about price points? Do you have a wide range of price points, or is your demographic in a narrow band so that you're looking for certain price points that seem to rent well? >> So we are not actually setting the price. We are setting our fees, but that's a small percentage of the total price. The total price is set by the host provider, by the provider of the accommodations, so by the host. And then if we charge 6% or 8% the difference is very small, right, on the total, on the absolute final number. So, we are actually not playing on price. What we can do is provide a device to our host, what, how they should price, what would be a good price. And one of the things that we spent a lot of research on and then launched was a reverse marketplace. We call it live demand. So, as a host, I can actually go on FlatClub, and see what guests are searching for now. And, I can even see who is this guest. >> What city, what price point, how many people? All of that. >> Exactly. And, even David, that is going to do an exchange in LLC. And, I can then go and make a specific proposal to that person. >> To David? >> Yes, yes, of course it must meet his budget or he's not getting spammed and it needs to be within his requirements. But as a host I can be active, I don't need just to sit and wait like many of the holiday platforms, and wait for a booking. That's, again, the specific of our business. The difference between holiday, which is desire to medium term, which is more of a need. All right, when someone, it's more transactional. Host will come into our platform, can get immediate booking which makes it the whole process much better for them. Rather than if I'm going on a holiday platform I'm not interested in one or two bookings, of two or three nights, I need multiple bookings. And in FlatClub, many times they get the three months booking that they already needed and then. >> Then it's done. >> Exactly. >> Yeah, fantastic. Well, you're building a wonderful business here. It's a fantastic story. I want to thank you so much for coming. And I wish you all the best as you build the business. >> Thank you very much. [MUSIC]
