TLabs Showcase on travel startups featuring UK-based Flat-Club, an online marketplace for short term lettings between friends and members of organisations and clubs.
Who and what are you (including personnel and backgrounds)?
Flat-Club is a London based startup focused on creating trust between hosts and guests to arrange short term rentals, by leveraging existing social networks.
We launched the website in November 2010. Co founders background:
- Nitzan Yudan – 32, 12 years’ experience in tourism, IT, and finance. Nitzan has a BSc in industrial engineering and management (magna cum laude), and an MBA from London Business School.
- Tomer Kalish - 32, 10 years experience in Real Estate in London, US, and Israel. Tomer has a BSc in civil engineering (magna cum laude), and an MBA from London Business School.
- Aviv Shapira - 30, serial entrepreneur with 11 years’ experience in technology and project management. Aviv has a honours BSc in Aerospace from the Technion (Israel Institution of Technology).
What financial support did you have to launch the business?We had seed funding, and just completed a successful first round to support further growth. We are cash flow positive, which further support our financial needs.
What problem are you trying to solve?
We are solving two problems:
- We increase the supply for affordable good value accommodation for short stays
- We solve the lack of trust in short term renting
As people travel more, there is increase in demand for affordable, spacious and well equipped accommodation.
What we do in Flat-Club is we help meet this demand by creating a new market and provide more supply.
80% of our flats are new to the market – people who never posted their flat on the internet because of lack of trust. Our hosts are private individuals who would like to make some extra income and would also like to have more networking opportunities.
By creating trust between guests and hosts, we help them arrange short stays in their flats when they are away, and we increase the market of short term rentals.
More people are posting their flats, and more people are interested in renting – as they know it's with someone trusted within their social network.
Describe the business, core products and services?
Flat-Club provides a safe and secure online platform for individuals to arrange short term accommodation with people they trust – friends, or friends-of-friends.
We help guests find accommodation up to 80% cheaper than a hotel, while the hosts generate extra income.
To create trust, we developed an innovative product based on social networks and common values. We help our hosts find the same people they’d invite home for coffee – people like them.
For instance, universities alumni, employees of certain companies, or friends-of-friends from Facebook. We were the first company to launch a unique service to post a flat only to friends-of-friends in Facebook.
Who are your key customers and users at launch?
When we launched the website we focused on business schools’ alumni and students for a few reasons:
- Trust – these are communities with reputation and common values, however these communities cannot easily interact with each other;
- Travel – students and alumni travel on average 8-12 weeks every year, and their friends and family come often to visit them – hence need for accommodation;
- Smart customers – looking for better value accommodation and generating extra income;
With the excellent feedback we got from hosts and guests, we’ve decided to increase our offering to everyone.
We developed an innovative feature to let a host post his flat only to friends-of-friends on Facebook. This tool was developed after a thorough research and interviews with 500 hosts.
Did you have customers validate your idea before investors?
Yes. We had an excellent proof of concept at Christmas 2010, when we had 10 times more flats posted and more booked nights then we expected.
Ever since, we are growing fast month by month.
What is the business AND revenue model, strategy for profitability?
Our revenue model is simple – we charge a commission on top of the host price of 6%-15% - depending on length of stay.
We also generate revenues from cross selling – restaurants booking, airport shuttles, entertainment tickets, insurance, car rental, but at this stage, this revenue stream is not our core focus.
SWOT analysis – strengths, weaknesses, opportunities and threats?
Strengths:
- Our key strengths is the focus on trust and marketing within social networks.
- By focusing on trust, we get more private people to post their flats, people who never posted anywhere else before. 80% of our flats were posted with us for the first time over the internet!
- This clear focus on our target market help us reach more customers in a cost effective way, while creating an exclusive community.
- Finally, our excellent, hard working team is helping us to achieve targets we didn’t dream we would achieve so quickly.
Weaknesses:
- Our main weakness, like many businesses in the travel industry, is seasonality. We are now developing new marketing strategies to provide excellent accommodation solutions year around.
Opportunities:
- The growth in online payments, international tourism, and social networks provide an excellent opportunity for us to expand.
Threats:
- The main threat can come from one of the large social network entering our industry, such as Facebook. We believe that our unique focus on the target market, and our understanding and network within this market, will help us maintain our strong presence.
Who advised you your idea isn’t going to be successful and why didn’t you listen to them?Some people from our close circle of family and friends advised us against launching Flat-Club. However, after the successful proof of concept, and with very high monthly growth, even they became satisfied customers.
The more we talk and listen to our customers and their feedback, the more we become certain that this idea is really changing the way we travel. It’s exciting times!
What is your success metric 12 months from now?
We are very strong in the London market with about 1,000 flats for rent, and we would like to become at least as big in 10 more cities within the next 12 months.
The financing round we just completed is focused on recruiting the best talent in order to achieve this goal.
NB: TLabs Showcase is part of the wider TLabs project from Tnooz.