Airbnb has exploded in popularity over the last few years as more of us shun identikit hotel chains in favour of more distinctive (and often cheaper) private holiday lettings. The company has created a big opportunity for property owners to make some extra cash, but what if you don’t have the time (or simply can’t be bothered) to manage the process yourself?
A number of new Airbnb management companies have sprung up to deal with that exact problem, arranging cleaning and maintenance, meeting your guests to give them the keys and acting as a point of contact should something go awry during their stay. Among the first was London-based Hostmaker, founded by Nakul Sharma, a former exec of both Starwood and Intercontinental Hotels.
‘There is still a problem with Airbnb, which is that they are largely inconsistent in service delivery,’ he tells MT. ‘There is a charm and uniqueness to every home, but people still feel nervous about things like, "Am I going to get a good service there? What is going to go wrong when I'm staying in the home? Who's going to look out for me?" Those were things that I felt still needed solving.’
Less than four years after being founded the company, which charges 12% + VAT for a fully managed service, employs more than 150 people, has mover 1,000 homes on its books and has raised over $10m of VC funding. MT grabbed a few moments with Sharma to find out what makes him tick.
What are the biggest challenges you’ve had with setting up the business?
‘I've never started or run a business before; nobody in my family had ever run a business before. So the first hurdle is mental. To gain the confidence that yes you can do this yourself because you have the skill sets of running a business and getting a business off the ground.
‘Secondly we had to raise capital. My wife and I had just taken out a mortgage, and literally six months after buying our place I thought hey, this is a moment that I feel we should start this business. So that was another pretty big commitment for both of us, saying I'm going to quit my job and start this project. We put almost £50,000 of our own money in, which was a pretty big risk.'
What advice would you give other entrepreneurs seeking VC funding?
‘A lot of times people think hey let's come up with an idea and pitch it. I think that's such a [misconcenption] - the idea is actually not the biggest struggle in raising money. It's actually the credibility that comes with knowing the industry, the insight you're acting upon, the team that you build around you, how you're going to make money, are you starting in the right market, who's your customer segment. There are so many questions to answer.’
Do you worry Airbnb could launch its own management service and become a competitor?
‘No, not at all because I think we're just completely different businesses. Think of Airbnb like Expedia or Booking.com. It's a platform, it's a very good platform at matching home owners and travellers, but it's a completely different business from running a management operation. It's a completely different skillset, it's a completely different set of headaches that we have on a daily basis. Airbnb has a lot to worry about itself.’
What’s the most important thing you’ve learned since starting the business?
‘We've hired over 150 people in the last three years and there's so many occasions where we've gone through an interview and selection process that was fairly rigorous, and literally in the first few months we've learned and realised that perhaps there isn't the right skillset or culture fit. I've learned to take care through the recruitment process and if we didn't get it right to let someone go fairly quickly so that it's not only more painless for the company but also for the employee who's joined.’
You did an MBA at INSEAD – is that something you would recommend to other entrepreneurs?
'I don't think it's an essential. It does give you good skillsets for thinking about how you can manage a business, but I'm not so sure it tells you how to found a business, how to kick it off, how to fundraise.
‘Where it has helped is in giving me a network of people that I can tap into. Whether it's investors or employees. Five of my classmates invested in the very first friends and family round, and one of our later investors was an INSEAD alum from the late 90's.’
How would you describe your management style?
‘I think the phrase I would use is firm but fair. I generally give a lot of space to the team members in making their mistakes and growing in their roles, especially with the pace of growth we are experiencing, it's almost impossible that I would be able to monitor every little aspect of the business.
‘Hiring carefully and making sure that really bright people have room to grow is something that's really important to me. At the same time when there's decisions to be made under pressure, that's something I take responsibility for and I make quick decisions.’
Who are your biggest inspirations in business?
‘Elon Musk as a founder is hugely inspirational in how he goes about setting his ambition and his vision. I'm also hugely inspired by Uber. It's a controversial business but at the same time you can't dispute the ambition, the fact they've gone across international markets with a pretty excellent product. You might dispute their employment practices, you might dispute how they run their business, but as a product it's certainly something to live up to.’
If you were the prime minister for a day, what’s the one thing you’d change to make life easier for entrepreneurs?
‘Immigration rules. As an immigrant myself I can absolutely feel the pain of planning my life and planning how I run the business. I'm still an Indian passport holder and when I quit my job in early 2014 I was on a Tier 1 visa, so luckily I wasn't attached to an employer. I had about three years on my visa and I decided at that time to take a risk, start the business, but I knew if at any point in time the business failed I would have had to find a job - otherwise I wouldn't have been able to extend my visa and stay on London.
‘Three years on we employ over 150 people across London, Paris, Rome and Barcelona, and that would not have happened if I didn't have the chance to start a business. We have such a mix of people in our office, not only a lot of English people but a lot of other EU passport holders, lots of people from Latin America in our Barcelona office, and they all make the company stronger.’
If you could do any other job in the world, what would it be?
‘My dream is to be a teacher. I'd love to give back to kids. I feel that there have been some useful learnings I've had in the last few years of running this business. I think there's such a disconnect between what you learn at school and university and when you get out into the professional world. It almost takes decades to really get to grips with the real world and the working world.’