6 Jun 2019
Everyone knows there is plenty of money to be made in the world of real estate – so much so that investing in bricks and mortar has gone from being a sensible financial decision to something of a cliché. Still, just because the potential exists for property to yield high returns doesn’t mean that making money in the real estate sector is easy – it’s a competitive field, and everyone wants their slice of the pie.
Anyone looking to turn a profit by selling their property should be prepared to share the proceeds with estate agents, surveyors, removal firms, the taxman and a multitude of others. It is no surprise, therefore, that many property owners choose to rent out their premises instead. But even this approach comes with its fair share of administrative hassle – or it did, until recently.
Spotahome, the brainchild of CEO and co-founder Alejandro Artacho, aims to reinvent real estate by making the rental process easier for both landlords and tenants. Launched in Madrid in 2014, the start-up has grown rapidly by championing innovation, reliability and, most of all, simplicity. Consisting of a 100 percent online booking platform for non-vacation rentals, Spotahome offers a broad selection of apartments, studios, student digs and other residences that give individuals the freedom to learn, love and live wherever they choose.
Artacho himself has been instrumental in getting the company to where it is today. Drawing on his own personal experiences of renting property abroad, the Spanish entrepreneur has bootstrapped, borrowed and canvassed investment from around the world. His efforts have transformed Spotahome from a promising idea into a multimillion-euro business that hosts properties across 10 European cities. Despite his success so far, Artacho is not slowing down – not until he has achieved his goal of making renting as fast and simple as getting a coffee.
The onward march of globalisation in recent years has meant that working in a foreign country is easier than ever. Digital nomads can write, code, sell, teach and offer a host of other services from any location they choose. Living abroad, however, still comes with a number of challenges, as Artacho himself discovered while living in China between 2009 and 2013.
The Spotahome CEO’s time in Asia revealed just how complicated the rental process can be for individuals who are unfamiliar with the process and struggle to overcome a serious language barrier. Upon his return to Europe, Artacho, who was working in the real estate sector in both Lisbon and London, discovered that such inefficiencies could be found everywhere. That’s when the idea for Spotahome began to take hold.
“When I realised that the rental experience was challenging all over the world, I began to understand that everyone – landlords, property managers, estate agents – was wasting a lot of time in the market by getting leads through phone calls, emails or word of mouth,” Artacho told European CEO. “Then, property viewings have to be arranged, rentals have to be guaranteed – basically, there was a lot of wasted time across the market. So, I thought, ‘Why not digitalise the entire process?’ The complete rental experience could all take place instantly using a smartphone.”
With Spotahome, Artacho is well on the way to achieving his dream of making home rentals as straightforward as possible. The platform can be accessed via either a web browser or the mobile app, and allows tenants to quickly and conveniently search for their perfect property. There are virtual tours, detailed home descriptions and neighbourhood reviews to help make the decision a little easier. The property is then reserved until the landlord accepts the booking, at which point it’s time to move in.
Alejandro Artacho’s time in Asia revealed just how complicated the rental process can be for individuals who are unfamiliar with it and struggle to overcome a serious language barrier
Properties must be rented for a minimum of 30 days (depending on city regulations), but tenants often end up staying for much longer. Members of staff at Spotahome speak eight European languages and have a wealth of experience dealing with landlords. In addition, a live chat service allows individuals to ask any questions they may have about a property that are not answered by the detailed listings available online. It’s this emphasis on creating a stress-free, flexible rental process that has ensured the platform has found a receptive audience wherever it has launched.
“While it is true that every place is different, there are a lot of commonalities,” Artacho said. “The rental experience is very similar everywhere in the world, but there are local regulations to consider. This is something we’ve had to examine as we’ve grown. In some places, regulations are more tenant-friendly; in others, they are more protective of landlords and elsewhere they are more neutral. Marketplace dynamics are also a factor, with some cities having more housing demand and others more supply.”
Since the very beginning, Artacho has focused on making Spotahome a truly international company. The platform is now available in 10 different cities across Europe and there are plans for further expansion. Already, individuals looking for mid-to-long-term home rentals in Madrid, Barcelona, Valencia, London, Milan, Rome, Brussels, Dublin, Berlin and Lisbon are enjoying the simplicity and flexibility offered by Spotahome.
Although Artacho has put his company on an impressive trajectory, the Spanish entrepreneur knows that he has also had plenty of help along the way. In particular, Spotahome could not have achieved its success without its team of HomeCheckers visiting each property and taking the videos and pictures that potential tenants rely upon. They conduct a virtual visit so there’s no need for prospective renters to see the property in person.
“One of our core values is that we trust in trust,” Artacho explained. “And the reason for this is that we are trying to change behaviours in the rental market – in order to do so, we need to provide as much information as possible. With our HomeCheckers, we are trying to replicate something that is already happening in the market. If someone is moving to London, say, from abroad, but has friends already there, they might ask them to check out a potential property and then take pictures and videos to help them make a decision on whether to rent or not. Our HomeCheckers do the same thing.”
Artacho has bolstered his executive team with some impressive hires who are making the corporate world stand up and take notice
The role played by the HomeCheckers cannot be overstated. Without them, the trust that Artacho rightly places at the heart of his business wouldn’t be there – he would effectively be asking tenants to commit to a property in the hope that it will look exactly as it does in the online images. HomeCheckers also play a vital role in quality control: they open drawers, check that appliances are functioning, and note any damages. Put simply, HomeCheckers ensure that all of the properties listed on Spotahome meet the required standards.
In addition to the HomeCheckers, Artacho is assembling a talented team of full-time staff members to assist him. When conducting the recruitment process, he is careful to select candidates who not only have the knowledge to thrive in the real estate industry, but who also match well with Spotahome’s core values. “We like people that are humble and that are hungry,” Artacho said. “And not only hungry for success, but also to change the world for the better. We try to identify people that are ambitious, that think globally – we have more than 30 nationalities working for us. We want people that embrace our mission of reinventing real estate and demonstrate the same passion that we have. We don’t hire people that are looking for a job, we hire people that are looking for a mission to accomplish.”
More recently, Artacho has begun to bolster his executive team with some impressive hires who are making the corporate world stand up and take notice. In October 2018, he convinced HelloFresh’s senior vice president of product, design and analytics, Balaji Nageswaran, to join Spotahome as its chief product officer, and followed this up by naming Cleo Sham, the former head of regional operations for Uber EMEA, as COO in January 2019. A month later, Angel Azcarraga, then the director of software development at Amazon’s search customer experience team, came on board as chief technology officer. With such a high calibre of individuals behind him, there is no telling how far Artacho can take Spotahome.
A new build
While Spotahome is enjoying envious growth today, it wasn’t too long ago that the company was in a more perilous position. The firm was launched on a shoestring budget, with Artacho and his three co-founders cobbling together €3,000 from their collective savings. There was a lot of bootstrapping, hard work and reliance on the kindness of friends and family members.
“We were lucky enough to get our first booking on the same day we launched, which gave us confidence that our business model worked,” Artacho said. “So from the first day we were generating revenue, but it is never easy to raise capital in the initial stages of any business. It was particularly challenging as a Spanish company, as when we were founded in 2014, I do not think Spain was fully recovered from the financial crisis. There was a very risk-averse attitude, especially when it came to early-stage businesses.”
However, thanks to an unwavering belief in the business and no shortage of persistence, Spotahome eventually secured the investment it needed. After receiving backing from HOWZAT Partners, a Luxembourg-based venture capital firm, further investment followed. In fact, last year Spotahome became the first Spanish company to receive direct funding from a Silicon Valley private equity firm when it raised $40m (€35.6m) from Kleiner Perkins in a Series B funding round. With Artacho’s company growing rapidly month-on-month, attracting capital was becoming a little easier, but growth came with its own challenges.
Spotahome’s emphasis on creating a stress-free, flexible rental process has ensured it has found a receptive audience wherever it has launched
“When you are increasing volume every single day, you need more robust infrastructure, so the website and all the platforms that stem from that need to grow as well,” Artacho told European CEO. “Operationally, there is also the challenge of maintaining the quality of property listings as we increase volume. We’ve put in place standardised processes, strengthened the onboarding of our HomeCheckers and set up internal teams for human resources, legal issues, finance and more. In the beginning, we were doing everything ourselves, but as you grow, you need more teams.”
One thing that hasn’t been too difficult is convincing people there is a need for a platform like Spotahome. Although on the surface the company may appear similar to Airbnb, Artacho does not consider the home-sharing firm to be a competitor. First, the customer bases that the two companies are targeting are completely different: while Airbnb focuses on travellers, Spotahome targets individuals looking for more permanent places to stay.
As a result, the services that Spotahome offers to tenants and landlords are quite different from those provided by Airbnb. On the demand side, the company provides a lot of material to ensure tenants feel comfortable making what is likely to be a big decision. And on the supply side, landlords are granted access to bespoke property management software, which allows them to edit listings, communicate with renters and maximise their revenue. Spotahome also provides guarantees in case of default of rental payments, damages or last-minute cancellations.
The real estate sector is certainly competitive, but Spotahome is finding its niche. One of the ways it is doing so is through offering a more thorough and flexible service than those provided by estate agents and property managers. Another is down to Artacho: the entrepreneur believes that his job is not only to help tenants and landlords enjoy a smoother rental process, but also to inspire his workforce and make them believe they can achieve incredible things. The Spanish CEO knows that investing in bricks and mortar is not the only way to be successful – investing in people works just as well.