PropertyGuru’s boot-strapped path to success
- PropertyGuru, South-East Asia’s main property portal, concerned in region’s biggest ever online funding deal
- But it turned into all about boot-strapping past early challenges and competition that regarded out of nowhere
IN June, Deutsche Telekom subsidiary ImmobilienScout24, one of the pinnacle on line assets portals in Europe, invested S$60 million (approximately US$forty seven million at the time) in PropertyGuru, South-East Asia’s No 1 belongings portal.
It turned into perhaps the largest on line deal within the place, and a vindication of all that familiar wisdom of the begin-up scene, truisms that many technopreneurs seem to clearly forget about: Identify the marketplace opportunity, build a business plan, get a solid partner and right team, gird your self for opposition – and be prepared to paintings your butt off for some time.
The tale of PropertyGuru began in 2006 while Steve Melhuish and Jani Rautiainen registered AllProperty Media Pte Ltd in Singapore, though it became best in December the following 12 months that the Singapore portal went stay.
Melhuish (%) had moved to Singapore in 2005, simply in time to peer the belongings market in the island republic go “a touch crazy.”
“I become renting a assets on the time, but there was an en block circulate – a collective sale, in which if you get 80% of the tenants to sell, the alternative 20% are forced to sell as properly. So proper at the peak of the assets increase, I was forced to move looking for property.
“The first component I did as a foreigner was to go online, and there has been nothing,” says Melhuish, who had held govt positions in numerous venture capital firms together with Skype, AOL, Virgin Media, Vodafone, Extreme Media, iPass and Ariadne Capital.
“It were given me wondering – Singapore is so much a stressed out u . S ., and but there has been not anything on property on-line. It honestly surprised me, so I started out to research it and checked out markets like Europe, the United States and Australia,” he provides.
He determined that the big assets portals there have been producing 60% to seventy five% internet income, were very cash-generative and had marketplace capitalizations of US$1 billion to US$2 billion.
“I checked out the markets in Singapore, Malaysia, Indonesia and Thailand, and to a foreigner like me, there appears to be an obsession with belongings. Almost every single person I spoke to had an opinion on it, had invested or desired to spend money on it -- absolutely everyone was talking approximately it,” he says.
“It made experience to try and adapt a number of the business models we saw in different countries for Singapore,” he provides.
Find the right companion(s)
So Melhuish, who had acted as an angel investor for other startups, determined to make the leap and determined his personal enterprise for the first time. He prepared his marketing strategy and pitched it at an investor pal of his.
“He told me he knew a person doing some thing similar too, who had already constructed a internet site, and he added me to my accomplice Jani (Rautiainen),” he says.
Rautiainen (%) changed into from Finland, and Melhuish had reservations after a preceding enjoy with another startup in Helsinki in which he had acted as an angel investor. He describes it as “the most frustrating three or 4 years of my lifestyles.”
“But it have become clear very quickly that we had very complementary strengths,” he says. “Jani is a completely smart man, and he’s also a generation man, a programmer. He had already constructed a website called PropertyValue.com.sg, which basically tracked the value of your private home portfolio.
“So we commenced running together, component time before everything – I turned into walking any other commercial enterprise, a social community web page for comics fanatics, and he was operating in India for five days a week. But he would come lower back to Singapore for two days, after which we'd work together for the ones two days.
“We started out by doing this, however by way of the center of 2007, it have become clean that if we wanted to be severe about this, we'd ought to do it complete time,” he provides.
So the two gave up their day jobs and set about constructing PropertyGuru, which went stay in December, 2007.
“Since then, we have no longer had one serious argument – we would task every different, we do disagree with each different a number of the time, but it’s a partnership that has worked virtually nicely.
“It’s a extreme commitment, building a commercial enterprise – it’s like a marriage, but perhaps even greater extreme, due to the fact you spend even greater time together,” says Melhuish.
Bootstrapped all the manner
It became a massive risk of path, and speakme of marriages, Melhuish recognizes that the best manner to do all that he and his companion needed to do is to have a totally supportive spouse.
“(She) has to have blind faith in you that some thing’s going to come out of all this – though you need to be organized for that voice to grow stronger as it begins asking when you are going to start incomes a few cash,” he laughs.
PropertyGuru.com.sg became launched from a tiny save-house at Sago Street in Singapore. “It was this very tiny space in a shop-house in Chinatown, just about 900 sq.feet. After 18 months, we had approximately 20 people operating in this tiny space.
“It become simply disgusting, there have been cables everywhere and the strength could experience every two or three hours. You’d then must run down 3 flights of stairs to flip the power switch back on, then run all of the manner back up again,” Melhuish says. “It changed into real boot-strap stuff.”
Digital News Asia (DNA) requested Melhuish what became in his thoughts while he went into this enterprise, and what he thought being an entrepreneur was going to be like.
One key element turned into the capacity to lease humans and construct a group with little or no money, which known as for a few creativity.
“Every week, each month, I learned some thing, basically. I wager I blindly went into it, with just the view that there has been an possibility here.
“Me and my co-founder, we poured ourselves 24/7 into the business for five to six years. It changed into a number of hard work – blood, sweat and tears.
“It’s a chunk contrived, however it’s been a curler-coaster – you get the best highs and lowest lows inside the same week, from time to time at the equal day. There were plenty and masses of demanding situations in terms of trying to build a enterprise with no cash. So we didn’t take a earnings for 18 months,” he adds.
The sacrifices began to pay off. In 2008, it obtained early-degree venture capital funding of S$1.eight million (US$1.four million) and also clinched the CNBC Award for Best Property Portal in Singapore, the primary of many accolades and awards to come back.
Building a marketplace, fending off opposition
There had been different demanding situations too, inclusive of market-readiness. Melhuish and his team were trying to convince the players in a booming enterprise to think outdoor the box.
“At the stage while we launched, ninety-ninety five% of all real estate sellers were just advertising in print or conventional media which includes leaflets and flyers. In my first meeting with a group of dealers, I went in spoke in my British accent to a group of very traditional businessmen whose first language became no longer English,” he says.
“I were given plenty of clean faces, now not only because I was talking in English, however also due to the fact I changed into speakme about the Internet,” he provides.
Many of these agents were running for 20 years doing what they'd constantly been doing, so it turned into a tough sell trying to get them to do their commercial enterprise the use of this ‘newfangled’ component referred to as the Internet.
“So I needed to preserve attempting and seeking to persuade them to give it a move. But what happened turned into that the small quantity who attempted it were given a vast variety of leads, and had been selling their assets within per week or . Then of course they start talking to their colleagues, so within twelve months, the whole thing all at once took off,” he says.
By the quit of the first 12 months, PropertyGuru had approximately 1,000 agents signed on, up to four,000 in its 2nd yr. “Then we had 10,000 sellers – it all at once started out developing very rapid,” he says, adding that the business enterprise now has 24,000 agents in the 4 countries it operates in.
The other early task PropertyGuru had changed into staving off competition in its early days – something that it is able to had been unwell-organized for for the reason that portal become conceived at a time whilst there no such players in the marketplace.
However, in the area of a few months of PropertyGuru launching, a Malaysian property portal launched in Singapore as properly, whilst media agencies – Singapore Press Holdings (SPH) and MediaCorp – commenced list assets on their on-line classifieds sites.
“So we went from zero to three competition within a short time – it become quite challenging, pretty horrifying. But inside 365 days we started out to construct an opening, and within three years, it became a quite extensive gap. And nowadays we have an 80% marketplace share,” Melhuish says.
PropertyGuru began amassing an entire bunch of awards and accolades as properly: In 2009, it became the ninth quickest-growing seek term in step with Google Zeitgeist, and also received more CNBC awards, for Best Property Portal in Singapore, Best Property Portal in Asia-Pacific and World’s Best Property Portal.
PropertyGuru.com.sg is now used by over five.1 million purchasers viewing forty seven.three million pages, producing over 250,000 leads for advertisers each month, the agency says, and is also the second biggest domestic internet site in Singapore.
In 2010, it launched more web sites, the primary being CommercialGuru.com.sg, that's utilized by two hundred,000 commercial enterprise customers browsing 2.4 million pages and generating over 50,000 leads for advertisers each month, and is likewise Singapore’s 2nd biggest assets website, in the back of – what else? -- PropertyGuru.com.sg.
Earlier that year it additionally released LoanGuru.com.sg, an impartial online loan brokerage, supplying real-time get entry to to over 300 mortgage packages from 23 local and worldwide banks.
It became no longer ready to take at the regional marketplace, which brought about what Melhuish describes as the largest mistake PropertyGuru ever made.
Next up: Regional expansion, and the risks of stretching oneself too thinly