"I came to London 4 years ago to do an MBA at London Business School and accelerate my banking career. I had two full time offers to join American Express and Deutsche Bank and despite these excellent prestigious offers, I decided to take an unusual career path for MBAs and start my own company," Nitzan tells me at the start of our interview.
During the interview, he goes on to explain how the idea for Flat-Club came about, the difficulties he faced along the way, how he overcame them, and advices for budding entrepreneurs.
Nitzan Yudan is the founder and CEO of Flat-Club, a platform that helps alumni & students of top universities arrange short-term accommodation within their trusted networks.
Hi Nitzan, Thanks for doing this. How are you doing today?
Hi Joseph, thanks. I’m doing great. New Year started with new energies!
Can you give us some background information about yourself?
Originally from Israel, I have 12 years work experience in Finance, IT and Travel. I love to travel, especially backpacking, and my dream is to make travelling my day-job.
Tell me how you initially got into business?
I came to London 4 years ago to do an MBA at London Business School and accelerate my banking career. I had two full time offers to join American Express and Deutsche Bank and despite these excellent prestigious offers,I decided to take an unusual career path for MBAs and start my own company. The main reasons where: ability to make a large impact on the results, accountability, and passion to solve a real need.
How did the idea for Flat-Club come about?
Flat-Club started from a need. As students we were struggling to find short-term accommodation when moving to a new city, going on internship / exchange programmes and even travelling on a budget. Also, we were looking to make extra income, and realized the under-utiliziation of our empty flats when we are away.
The next step was to think who do we trust to stay there, and that’s how we came up with Flat-Club – an exclusive network for alumni & students of top universities for short-term accommodation. The idea is to help find people we trust – our friends of friends from our trusted networks for short-term accommodation solutions. Flat-Club started with 5 flats in London, and now has over 3000 flats in over 20 major cities around the globe.
Tell me about the early days, what was the hardest part of starting the business?
The hardest part is to make the decision to go for it. As an MBA student I had 2 full time offers in banking to join upon graduation so the decision was not only financial, but also taking a career risk. The reason I decided to take this risk and go for it was the simple fact that this is the best job I ever had. I enjoy it more than anything I did before.
What is Flat-Club? And what are you trying to solve with it?
Flat-Club (http://www.flat-club.com) is helping alumni & students of top universities arrange short-term accommodation within their trusted networks. We are solving the biggest problem in peer-to-peer accommodation – Trust. On Flat-Club you can post your place only to people you trust – top MBA alumni, Cambridge Club, or your friends of friends on Facebook. We look where trust already exists and we bring it online.
Moreover, we verify that users belongs to these networks before we add them to the club. Anyone can use Flat-Club, but once you join a club and verify your identity, you can find more exclusive apartment and get more bookings to your place.
How have you been able to fund it?
For 18 months Flat-Club was funded by the founders’ savings and from revenues. 9 months ago we raised external funding from 3 private investors. 2 of them were my Venture Capital professors at London Business School.
What sorts of advice do you having for entrepreneurs looking to raise money for their startups?
Funding is all about building relationships. Investors don’t invest in an idea, they invest in a team that can execute. Hence it’s important to build these relationships over time. Reaching out for advice is a great way to open doors and establishing a reputation is crucial. It’s always easier to raise funding after you founded and sold 3 companies for 100M each. It wasn’t my case, so I had to build my reputation.
I told investors what I’m going to achieve in 3 months, and then came to them after 2 months and told them – we already achieved more than we planned. Results and traction make the decision much easier. Finally, know the tax benefits. With the new SEIS Tax Scheme investors can get up to 76% of their money back, and many potential investors still don’t know about it.
About the first few months, how excited were you, tell us about how those months felt, what happened?
The first few months were a mixture of joy and worries. Actually, it’s probably still like this. It’s an amazing feeling to see someone I don’t know use a service/product that I built and enjoying it. But then there were quite months when no one came to the site and we had to actually come up with a proper marketing plan.
How did you initially get traction?
I was very lucky to be part of the London Business School (LBS) community which is very supportive for start-ups. When we launched Flat-Club 2 years ago we had 5 flats in London. I sent one email to the LBS community and 2 weeks later we had 70 flats and first bookings. It was an amazing feeling. Since then the LBS community helped me a lot in growing the business, and last year members of LBS made over $500K by renting out their extra bedroom or flat for short stays of 1 night up to 6 months.
What are the most crucial things that you have done to grow your business?
Staying focus. There are so many good ideas so sometime the challenge is actually to say no to good opportunities if they are not part of the strategy and focus of the company. The second thing is to manage cash very tightly. Everything is always more expensive and take longer than planned, hence it’s important to have more cash than we think we need.
What would you say has been the highlight of your entrepreneurial journey so far?
My highlight is to start every morning by reading the reviews that our hosts and guests leave on each other. It gives me energy for the rest of the day and provides me with the right perspective.
What should we be expecting from yourself and the Flat-Club team for 2013?
2013 is the year of growth for us. We are launching now in the US and expanding dramatically. We are also planning to launch a complete new website in a few months which will support the recent growth and our plans to expand to more trusted networks.
Lastly, what three pieces of advice would you offer entrepreneurs starting out today?
I would suggest strongly focusing on the marketing plan, selecting a niche market to start with, and doing trials all the time. It’s impossible to know what customers really want or need. The best approach is to do small pilots, track, and learn from it if it works or not.