In this episode The Propcast talks to Dustin Figge from Homelike about his company providing a home away from home.
Click here to listen to Episode 3
The Propcast by Louisa Dickins, Co-Founder of LMRE the leading Global PropTech recruiter brought to you in partnership with UK PropTech Association, The UK PropTech Association is a membership organisation to drive the digital transformation of the property industry. This show will focus on connecting the Proptechs, real estate funds and VC’s globally…and get everyone talking about innovation of the build to rent environment.
About Our Host
Louisa started her career in property working at a well-known estate agency in London. Realising her people skills, she moved over to Lloyd May to pursue a career in recruitment. She now is a Director at LMRE, who are a specialist recruitment firm driven by PropTech and recruitment professionals, and Louisa oversees their 5 core areas. Louisa co-founded LMRE and provides a constructive recruitment platform to the new disruptors in real estate. Louisa is also on the board of Directors at UK PropTech Association (UKPA).
LMRE believe there is a better way to recruit. LMRE focus on a more comprehensive, client led focus delivering exceptional talent to the right place at the right time. They are passionate about the industry and passionate about people's careers. LMRE spend time with each client to become and an extension of the business, and their transparency and core values help them grow with the sector. LMRE simplify recruitment and innovate with our clients and evolve the people driven, PropTech community.
About Our Guest
Dustin Figge is Founder of Homelike. In 2015 he and Christoph Kasper founded Homelike, the leading marketplace to book furnished business apartments entirely online. Before Homelike, he successfully co-founded the HR-Startup “Talents Connect” and worked as an Executive Assistant to the CEO of Arvato. He also spent 2 years working in the Silicon Valley. Through long-term work experiences in China, Spain and the US, Dustin learned about the pitfalls of the highly offline long-term housing market which eventually led to the founding of Homelike. Dustin holds a Master’s in Business from the University of Cologne.
LMRE website www.lmre.co.uk
UKPA website www.ukpa.com
Homelike website www.homelike.com
Insights From This Episode
- We see this Corona situation as an opportunity for business. So we called it “Never Waste A Crisis” – Dustin Figge
- I think for me personally, it's the best thing in my life to be a founder because you can really challenge the status quo – Dustin Figge
- You’ve got to have passion for your product. But I think the biggest thing, which I personally learned is resilience – Louisa Dickins
- I think Corona has been a great opportunity for furnished apartments, and also mega trends like flexible working and remote working – Dustin Figge
- I believe that we have proven that furnished long term apartments are resilient to a crisis like Corona – Dustin Figge
- One very interesting trend is flexibility when it comes to booking furnished apartments… So that's definitely a trend, I also believe will be a lasting trend – Dustin Figge
Hi everyone. And welcome to the Propcast, my name is Louisa Dickens. Co-founder of LMRE and board director of the UKPA and I shall be your weekly host. Each week for 30 minutes, we will be connecting the VC, PropTech startups and real estate professionals globally, and assist in bridging that famous communication gap we all love talking about. So, sit back, relax and enjoy the show.
Hi, everyone, and welcome back to the Propcast season three. Today we are fortunate to be joined by founder of Homelike, Dustin Figge. So welcome, Dustin.
Thanks, looking forward to the podcast.
Awesome, thank you so much for joining us. You’re joining us in Germany, and for those who are listening here’s a little bit of background to Dustin. So in 2015, Dustin and Christoph Kasper founded Homelike, which is the leading marketplace to book furnished business apartments entirely online. But prior to Homelike he successfully co-founded the HR startup Talents Connect and worked as an executive assistant to the CEO of Arvato. Now Dustin has also spent two years working in Silicon Valley through long term work experiences in China, Spain, and the US does sensitive quickly learn about the pitfalls of the highly offline long term housing market which eventually led to the founder of Homelike.
Now, for those who haven't heard of Homelike, which I'd be very surprised if you haven't, I think it's the largest online marketplace for long term furnished apartment rentals for business travelers. And they provide a best in class booking experience for high quality apartments for up to 30 nights, and more for professional landlords. They help people who are executives, professionals, experts, consultants, training from all around the world to find the most appropriate and best accommodation quickly and conveniently online, which is what we're all looking for and from someone who did a lot of traveling before we locked down, this is something which I could personally definitely use rather than these super expensive, not homely hotel costs I face. But Homelike’s mission is to build the number one marketplace for corporate housing, and help business travelers and travel arrangements from around the world find long term accommodation quickly and conveniently. So after that brief introduction, Dustin let's actually hear a little bit more about how Homelike came about. So over to you.
Yes, it was pretty on point description about what we are doing. So back in 2014 at that time, I was living in San Francisco on my ex-patriot assignment, we actually came up the idea travel managers and large corporate organizations, executive assistants, they're doing a lot for the employees when it comes to short term stays. So booking a hotel booking flights, even airport pickups and then we said, “What are corporate organizations doing for the ex-patriots?” So for people who really need accommodation for a couple of months or even years, expats but also consultants being on a project for three to six months. And then we kind of dig a little bit deeper into the market and we learned that this market at that time, and it still is to a large degree, is very offline driven. So those corporate organisations, there are many expats out there and a lot of people are actually looking for temporary housing, which is defined by minimum of one month stay, it's a $180 billion market. They are using offline agencies, so brokers. So they literally go into a brokerage firm, then they see all the different apartment options, then they do a viewing. So it's a very offline driven process, the entire payment is done offline, the rental agreement signatures are done offline.
Sometimes or in most of the cases the availabilities are not right, so you don't have transparency about the apartment choices. And when it then comes to a pan European or global platform where you also can have access to properties in various regions, you need to have kind of different local brokerage firms, actually a network of brokerage firms in order to find the perfect property. So this was back in 2014 and in the beginning, the idea was actually a little bit different. So the first idea we had was to allow brokers to list on the platform where they can actually put their inventory. So basically, that's for that platform for furnished apartment. But then very shortly, we kind of understood that we were able to get direct access to the property managers and the property owners and then we thought about okay, why should we even have someone as an intermediate in the process? Why are we not owning the entire process and that was back in 2014, we bootstrapped the company then for about a year. So we actually didn't get any fundraising the first 12 months, because we wanted to build the product first and really prove that this model is working. And then back in 2015 we launched in February, and then we got our first investment round and since then, we have been growing the platform to now around 65,000 furnished apartments in 9 countries and 400 cities.
Wow. And as being founder and MD, how has it been this whole transition and growing this business across these countries?
Yes, it's a very exciting thing to do. And I think especially a lot of the founders, maybe also some listening to this podcast, when you have an idea and you say, “Okay, I’m going to build the next unicorn business”, that's where a lot of founders actually starting it when they have an idea. I think the way to becoming a unicorn, it's an uphill and downhill all the time. And the last seven months I think for most industries, and for most companies has been one of these holds where you just each have very different skills right to grow the business, maybe when COVID is then gone. I think for me personally, it's the best thing in my life to be a founder, because you can really challenge the status quo and you can disrupt existing user experiences in that case, and actually take advantage of technology and product.
But also, the flip side of it is that you assign most of your time, most of your daytime and nighttime to build the business. And I think it's very similar also for you building your business, right? I's a lot of dedication, and you need to have a lot of love and passion for what you do. And I think what's great about Homelike is that we are still as excited as we were the first day we came about this idea. Obviously, challenges are quite different today than they were actually five years ago. Five years ago, we didn't even know to build a technology business, and now we have a very sophisticated technical backbone, and now it's more about adding features, doing A/B test, taking a look into data. So it's a very, very different company now, and I'm happy that's a different company, because that's what shows progress. But I think it's really important to understand that founding a business, it's probably not something for everyone. But for me, and also speaking for my co-founder Christoph, it's the best thing to do.
I think you’ve come a long way, and nine countries in the space of five years, it's pretty impressive. Going back to what you said, advice you've just given to new founders, you’ve got to have passion for your product. But I think the biggest thing, which I personally learned and I presume you and your co-founder agree, is resilience. Especially in the past eight to nine months, when did you see the market opportunity? And also how has this changed due to COVID?
It's a great question. So when we started, we knew that the market is really, really big. We didn't know at that time that the market is as big as we know today. Because when we started out the business, when you pitch Homelike to friends who don't know the market and probably have never lived abroad, the first thing they say is, “Oh, that's interesting for consulting”. And then you say, yeah, agree, and then you ask, “Okay, which other target customers do you see?” And then they say, “Oh, maybe expatriates”, but then they stop. And if you really think about what the use cases are for midterm furnished apartments, it's actually going from nurses, pilots, during Corona people wanting to put themselves into self isolation, home remodeling, even models, soccer clubs, entertainment companies, film production firms, I mean a long, long list of different use cases. Trainees for example, new hires, so on and so forth. And then when you add all the cases, you get kind of the real picture of the market size.
What happened during COVID which was quite interesting, I remember in Europe, it was the 13th of March, where things actually fell off the cliff and a sense of overnight was kind of a new environment and new world you need to deal with. And you mentioned a very interesting aspect, which is resilience, right? And at this point was the question, how resilient is our market against COVID? Also compared to any other industry, right? What was pretty clear in the beginning that some industry will probably benefit from the situation but what's also very clear to investors that everything related to travel will probably not benefit and therefore kind of everyone put us into the basket “Okay, Homelike will be highly effective” and obviously was in the first couple of weeks. So at the peak time of Corona, we still were able to manage 50% of our pre COVID revenues. And when you compare that to the short stay industry, we were actually able to maintain a very, very high share, there were companies in the shorts industry, who lost 95% or even more percent of their business basically overnight.
What happened after that, so after March every single month, we were able to grow at least 25%, month over month until today. And we have now reached 2019 numbers. So we kind of almost rebounded and recovered completely. And there are a lot of things which actually affected that, some were created ourselves in terms of product innovations, we did for example we added flexible cancellation policies, we added enhance hygiene standards, we work more about kind of transparent communication about the corona situation and all the different destinations, we worked a lot on customer care, we even added people on the customer care side in order to have to deal with all the upcoming tickets and customer requests. We worked a lot with suppliers, because they were reaching out and saying, “Hey, I lost a lot of my business, what can I do?” and we have a great data team and a lot of access to data. So we could actually help them what are the prices you can set now in order to get the traction with the demand, which is still in the market, and so on and so forth. So there was a lot of personal staff involved in order to help our two groups as we are marketplace, which is the corporate client and the business traveler.
But on the other side, all the different suppliers. And this was very interesting to see. And we have obviously also talked with a lot of our investors, we have a very, very great board, also one investor from the US and the rest from Europe. So we were able to see kind of the bigger global picture. And obviously all investor said focuses on cash, cash, cash, but also helping your customers to really survive through this crisis And we put this entire COVID situation and I remember our first leadership meeting, which was on the 14th of March, we put everyone into one virtual conference room. And we said we see this Corona situation as an opportunity for business. So we called it Never Waste A Crisis. And this is still something we do today. So we try to take her Corona as an opportunity. And I think the last six, seven months, I've actually shown that Corona can also be a great opportunity for furnished apartments and also mega trends like flexible working, remote working, so on and so forth, I think all of that is supporting what we're doing.
Well, it sounds you've been very proactive and extremely reactive with all the changes you've made in your product and great to see your growth still. I mean, not many other businesses in your space have managed to come out of this and also come out almost better. So congratulations are in the order there is. Say looking at post COVID, not that we are completely post COVID but touch wood through the probably worse or maybe the most shocking or unknown phase, is there any trends you're seeing from your customers so far? Obviously, they are looking for more support, which you're giving to them, is there any other trends you've seen maybe?
Yes, absolutely. As I was saying earlier, I think one very interesting trend is flexibility when it comes to booking furnished apartments. Before that, we obviously had cancellation policy and so on, but due to the very high degree of uncertainty now we see our customers really enjoying the fact that a lot of our properties have flexible cancellation policies, actually 35% of our supply has complete flexible cancellation policies where you're even allowed to cancel your booking 24 hours before you move in. So that's definitely a trend, I also believe will be a lasting trend. So it will not disappear because people are just becoming more aware of the fact that Corona can or new COVID risk enforcement can also change how you're allowed to travel or not. So that's one thing.
The second thing, which is interesting, we started middle of last year was instant booking. So as I said in the beginning, this market used to be very, very offline driven with a lot of hand holding and manual touch points. And we are believing in technology being the enabler for an instant booking experience also when it comes to longer term stays. So we started in 2019 and been training a team we had about 15% of our transactions being instant, and this kind of accelerated a lot throughout Corona. I can't give you the exact numbers here but it's a large portion of our transactions are now done entirely instantly. And we do believe that one of the reasons why this is happening is first of all, due to the lockdowns people were not able to go into the brokerage firms in order to do viewings whatsoever, and we have the technology already in place and we were able to double down on that one. So that's kind of a second trend we have seen. The third one is, and I think it’s very obvious, is hygiene standards. So really making sure that when you travel, and when you book a furnished apartment, that you have all the hygiene standards in place, which are necessary in order to prevent you getting an infection off COVID. That's probably a third thing.
And the fourth thing, I think on the mega trend of flexible working, it now see’s a re-innovation of what it means for a furnished apartment. Furnished apartments and long term apartments has always been not under the radar, therefore the market is too large but everyone has always been talking about short term stays and leisure, and now you have furnished apartments which are more resilient and short stays. That's also the reason why a lot of suppliers are now kind of getting into the long stay apartment market. But even business travelers thinking about “When I'm not required to be in the office any longer, why do I not stay for three months in Hamburg, and for five months in London, and for seven months in Barcelona where I can do my work?” So these are all trends we do believe will also change the way how people will be working going forward. I don't know what your experience with the companies you have talked about in your podcast, but the flexible working thing will change how we see furnished apartments and probably add a lot of acceleration and digitisation into the space.
Yes, I wouldn't say it’s just with my clients, I think it's even with my friends who are young professionals who are all be revisiting where they are going to be living. And for lots of businesses that are expanding from countries, what better way than to immerse yourself for a month or two, get to know the city, and people now are a lot more open to doing client meetings. If you're there in say New York or Germany, having that base for a month or two where you can do that, limit the risk, I think it's a really healthy alternative which I'm not surprised there’s been uptake in, something which faster expanding across different cities in the US and Europe. We are looking at doing that with all our consultants as well. You are in nine countries, was there a particular market you found difficult entering? And with different government regulations, how did you overcome this?
Yes, I think being compliant with legal regulations by country or even by state is one of the USPs we have. So before we expanded to new markets, we want to understand the legal requirements and we need to understand that, because we work with two kinds of apartment providers, one which are more from the service apartments side which usually don't need a rental agreement which needs to be signed, it’s more terms and condition. So when you book on leisure travel platforms for example, you don't need to sign for your vacation rental agreement, you just accept terms and conditions. But there's another group of suppliers more from the residential real estate side, and when you book with them you are obliged to sign the rental agreement.
And in order to be able to do the online signature procedure through our booking system, we need to issue the rental agreement, even though we are not responsible for the content, we need to understand which regulations are in any given city, state, country. So therefore, we have a lot of knowledge in all the nine markets where we are operating how the legal situation when it comes to midterm stays is actually in those in those territories. So therefore yes, there is a lot of difference across countries and there's lots of probably a reason for that. It would be easier if there would be just one rental agreement which can be applied throughout the world, but that's not the case. But we have actually technology in place where we are able to even give you a rental agreement when you move into a residential property in London in different languages. So this is the technology we have been building over the last 4 to 5 years or so.
Also if everything was that easy, then you wouldn’t have got the satisfaction that I'm sure hopefully you're feeling after all this achievement you've had across Europe. Now, I'm fairly clueless, I'd love to know, what's the difference in cost between say, the average hotel and say renting one of your homes each month? What's the difference, there must be so many benefits to it, but if we're looking at the economics of it, what's the cost difference roughly?
Yes, it depends as you said, on a lot of factors. And one is obviously if you go into a five-star hotel, you can't compare that with kind of a like lower budget furnished apartment, right. But if you just have an average hotel and average furnished apartment, there's a rule of thumb about that you save 30% to 40%. But also the longer you stay, the more you save, because we have a lot of suppliers and when you stay longer than six months, for example, you get an additional discount of 10% to 20%. But I would say for every apartment you book at home, compared to hotels, you save about 30% to 40%.
That's not bad! I'm sure my co-founders who let me do a lot of these work trips would much prefer me to use this. Obviously, everything's digitalised now, you have mentioned how a lot of people are using less brokers, they want to avoid meeting people face to face, with some of our clients like SmartRent and Funnel the US PropTech business, they’re saying they're seeing a massive change in leasing, lots of people want to just avoid having whether it's an estate agent, broker following around the flat, some-one pointing out the obvious “This is where you can do your work, this is the fridge”, have you got a percentage of the amount of people that are looking to avoid that face to face interaction and the need for virtual apartment viewings? Any stats behind that?
Yes and no. I think even before Corona, we tried out different things. We even had until last year, a lot of our properties where we did 360-degree views where you could actually fly through the apartments, then we also A/B tested how that actually works for us. One of the best working things, and I think that's also very obvious is the quality of pictures, the number of pictures, so how good are you able to show how this apartment really looks. And also you need to make sure that you're not only making the conversion, so the transaction, you also want to make sure when the tenant is moving in that the apartment looks what is advertised on the website, right? So I think that these two things are very important. Obviously to think about that, you were relocating to Berlin for eight months’ time, it's a very different emotion you have towards the apartment compared to a two night stay in an apartment in Berlin in the hotel. So understanding that the customer experience is very different compared to a very short stand a very long stay is something we have obviously a lot of experience in, and I can't give you all the secrets to that.
But I think what has worked best for us is really trying to make sure that we have a neutral view on the listing. So what we are not doing is, when the supplier wants to pay us more to be listed higher that's not the thing we do. We have a ranking algorithm, which is taking into consideration a lot of things, which is the quality of the pictures, we even have an image recognition tool where we can understand what are the amenities and the furniture actually on the pictures, that it matches with the description in the text, and so on and so forth. So that's a lot of technology actually involved in order to make sure that the apartment has a high quality. In terms of the personal viewings, I do agree that the longer this the stay is, the more relevant the personal viewing can actually be in order to make a decision. For some very, very small portion we do make exceptions, but it’s mainly applied towards group booking. So when a company is working 50, 60, 70 apartments for a longer-term stay, then we also do have viewings. But for the general process? That's not what we have as part of our customer experience.
What other big partnerships do you have? Or are there any future partnerships you might be looking for?
Yes, partnerships are actually something which is very, very high on our agenda. We do have on the supply side, a lot of partnerships when it comes to property management system, channel managers Siteminder, we work with Rentals United, and a couple of others in the industry which you probably also know being an expert in PropTech. And there are many, many more alternate solutions, for example. So there are a lot of tech platforms out there which actually connect towards the supply side. And we have a collaboration with them because it's benefiting both sides. Homelike has an additional market tenant marketing channel, which is working super well for their suppliers and we are able to offer instant booking to our customers so it's a win-win situation. On the demand side, we also work with a lot of travel management companies, relocation firms, and I think that's the beauty of the market and what we do. It's not that we are actually someone as a business wants to be focused on doing everything, we want to partner with companies in various aspects of the business. And when you just think about the value chain of an expatriate, accommodations just one piece, it's a very important one. But there are also visa processes, there’s moving from A to B, there’s cultural training in the cities on and so forth. So there are lots of partnership opportunities there and this is something we want to explore more going forward. So if anyone is listening on the podcast who is interested in partnering with Homelike, I'm very much looking forward to discussing that.
I think everyone wants a nice, efficient, and simple way when they go away to a new country, so any partnerships we can make a lot more inclusive is what I'm sure a lot of your customers must look for. It’s all about simplifying the process. So let's look a year or two in the future, is there anything which is coming out for your product, any changes you're working on or any top secret information you can share with the audience on for what to wait for?
If it was just between the two of us, I’d be very happy to do that. But I think, and to come back to also you're learning during Corona which is resilience, I think what we also learned is that on the product side, the continuous iteration and improvement of your product is very, very important. There are some moonshots you can actually do, some fundamental changes in your product and technology. But we also learned that the small product changes can also have a big, big impact. And we have done tons of things in the last couple of months. One topic we are currently rolling out is recurring payments, so that every monthly charge is facilitated by our payment gateway, when we talk about simplifying the process, as you just mentioned. So in the end, the vision is that when you book with home that, we take care of everything, which relates to your stay in the apartment, even kind of post booking, prior booking, during booking.
And there are tons of things we want to be focused on, one is recurring payment, the second one could be around deposits, who needs deposits and is there actually a better solution than deposits because it's an extra financial flow. For example, it's a lot of working capital for corporate clients who need to pay deposit for 50, 60 or even 70 bookings at the same time, are there better solutions to just sending over a one month's rent to the supplier or to us in order to cover any damages, what about insurance packages, so on and so forth. So there are a couple of things we want to dig into in the next couple of years, but I also believe that we have proven that furnished long term apartments are resilient to crisis like Corona, but now I think taking it even further is how much is furnished apartment digitisation, online process also benefiting post Corona. So when we are allowed to travel cross border, because cross border is something which has not really returned yet, most of the traffic is coming domestically because people are just not allowed kind of to travel from the UK to Germany without going into quarantine for 14 days, right? And this kind of puts people into a position to maybe not travel to Germany right now. But when this travel restrictions are gone, this will happen again and we want to be prepared for that. So what keeps us busy at the moment is thinking about how is Corona changing our industry for the long run? And what are things we can do today and prepare for today in order to be ahead of the wave when there's a vaccine and kind of Corona is somehow under control and managed.
It's very difficult to predict the future but trying to work out how you can manage the unknown can be difficult, but I'm sure you have a few things up your sleeve. Unfortunately, this is bringing us to the end of the podcast but Dustin thank you so much for joining us and is any little bit of parting information you'd love to share with the audience, and also the best way for them to connect with you.
Yes, I mentioned that on the LinkedIn post back in back in April, I think what Corona was really creating is that the founders are getting more connected, the industry is kind of joint in trying to overcome this crisis, and what I would actually love with any property managers out there, channel managers, property management system providers, founders, people in the PropTech scene, the travel scene , if you want to reach out just to have a chat or even collaborate or partner or additional supply, really looking forward to having a chat about that. The easiest way to reach me is through LinkedIn, so I very frequently check out my LinkedIn. So really looking forward to interacting with as many people from the industry as possible.
Awesome. Dustin, thank you so much for joining us on the Propcast, and I'm looking forward to catching up with you after the show.
Thanks a lot.
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