 "Building bridges between neighbours")
An agitation by the residents of a housing society in Bangalore following a ruptured water pipeline in their complex saw three friends, all in their mid-20s, pool their technical expertise and savings on an online platform for apartment owners to address common issues.
In 2007, convinced they had a viable business idea at hand, the trio - Sumit Jain, Lalit Mangal and Vikas Malpani - gave up lucrative jobs at multinational companies to start their own venture. "We just wanted to create a product that would help apartment owners manage their property better and facilitate daily chores," says Jain, co-founder and chief executive of maxHeap Technologies, the company that runs CommonFloor.com. In December 2007, the trio kicked off CommonFloor, three months after it was conceptualised, as a free collaborative apartment management software platform, and test-marketed it across 20 apartment societies in the city.
Cut to April 2013, Bangalore-based maxHeap Technologies runs a Rs 10-crore business, with about 60,000 housing societies on its apartment management platform. Its revenues rose five-fold compared with Rs 2 crore in 2011-12. Through the last two years, CommonFloor.com has morphed into one of the fastest growing property portals in the country, facilitating buying, selling and renting of properties, a segment that accounts for almost all the company's revenue.
What sets it apart is its apartment management platform is offered free to registered property owners. "This is akin to the Google model, in which the platform is free for the end-user (property owners), while the business customer pays for the service," says Jain, who claims to have about 1,000 paid customers.
The company's new office in Domlur has been a bee-hive of activity, with scores of interviewees fleeting in and out; the start-up recruited 100-odd employees through the last six months. This followed a second round of funding by two venture capital funds, Accel Partners and Tiger Global, in October 2012.
CommonFloor provides members regular updates on maintenance, track payment dues and complaints. Members can search for a plumber, carpenter or maid; create subgroups based on shared interests such as gardening, car pool or yoga. They keep themselves updated through email and SMS alerts, while a mobile app keeps neighbours connected on the go. The platform also helps resident welfare associations manage their expenses and accounts online.
This has created a growing community of property owners (five-million strong), a ready market for service providers and a database for buyers, real estate agents and developers to tap into.
Consider the case of Sandeep Gupta, joint secretary of the resident welfare association of The White House, a 165-flat complex in a tiny Gurgaon suburb. Gupta was introduced to the concept by a few residents who had chanced upon the platform in another city. "The society has been using the platform for six-odd months, maintaining accounts, sharing information with members and regularly updating the membership list," he says.
Jain says, according to research by the firm, at any point, typically, 40 per cent of property owners in a society scout for tenants, creating a constant churn of activity and deals. This flux creates a steady stream of visitors to the real estate portal. The visitors include prospective buyers, sellers, tenants, property brokers and developers. For Vinod Advani, vice-president, Maangalya Developers, a prominent Bangalore-based realtor, the platform offers a better conversion rate than most other property portals. "Their biggest strength is they are more end user- and owner-oriented," says Advani.
Hard knocks
Building the apartment management platform was perhaps the easiest part of the venture. Getting societies to use the platform, generating user-oriented content, and building a scalable business model around it was the difficult part. "We knew we had a winner in our hands, as there was nothing like this in the market," says Jain. But success didn't come without some hard knocks.
After giving up their cushy jobs, Jain and Mangal, software engineers from IIT-Roorkee and ex-colleagues at Oracle India, and Malpani, who had a stint at SAP Labs, operated out of their houses for about a year. It was their cumulative savings pool of Rs 5-10 lakh that saw them through the early months. "We were prepared for a long haul," says Jain.
It took the trio six months of intensive word-of-mouth marketing, with help from friends and family, to rope in 700-odd societies. A four-month stint at the business accelerator programme of The Morpheus, a start-up accelerator, in mid-2008, came in handy. Sameer Guglani, co-founder, The Morpheus, and his team helped fine-tune the business model. "At that point, they operated within a closed user group. We looked at ways to make their database of property owners more publicly available and reach out to a larger market set," says Guglani.
Then, venture fund Accel Partners stepped in. It provided them a small office space in the heart of Bangalore and, in early 2009, invested in the company. "Only when we started operating out of an office did we realise the power of working together under one roof," says Jain.
After about a year of existence, the start-up started taking shape. The team strength grew from three to 30 by 2010, 300 in 2012 and 400 by this April. Through the last two years, the leadership team grew from three to one that had 10 members. "Hiring the senior management team was a challenge," says Jain. Today, salaries account for 70 per cent of operational expenses; the rest is spent on rentals and other operations. "We kept our cash burn low by relying largely on word-of-mouth marketing," says Jain. But that might have to change, as the start-up scales up beyond Bangalore and prepares to take on seasoned competitors such as 99acres and MagicBricks. New-age niche consumer-focused property portals such as Housing.co.in, too, are getting their act in place.
Entering enemy territory
In 2009, maxHeap Technologies launched its real estate portal, CommonFloor.com. Initially, this was like any other property portal, listing properties for sale and rental, offering developers online space to market their properties, or agents to list properties. However a growing community of registered users of the company's apartment management platform created a steady flow of traffic to the portal.
The advertising-driven revenue model gained traction, as the size of the community doubled from about 30,000 to about 60,000. Jain, Mangal and Malpani have set a revenue target of about Rs 125 crore through the next two years. Jain says the venture is already profitable. He, however, declines to share details of investment and profitability, citing non-disclosure agreements with investors.
But classified advertising is a space where rivals such as 99acres and MagicBricks have a head start. The advertising market for real estate portals is estimated to attract Rs 300-400 crore a year. A few existing CommonFloor customers such as Advani of Maangalya concede the portal could do with some improvement in marketing properties to prospective buyers.
"Having access to property owners will provide advantage to CommonFloor in the rental market. For purchase of property, access to builders and agents would have to be built, just as other property classified players are doing," says Alok Mittal, managing director, Canaan Partner, a venture fund that has invested in Indiaproperty.com, a competing portal.
Bangalore is the only market in which CommonFloor claims to have a lead. "Bangalore is our bread-and-butter market," concedes Malpani, head of marketing and communities. It ranks third or fourth in other markets, primarily due to low brand awareness. Malpani says through the last six months, the company has set up marketing offices in eight cities across the country. Also, about a third of the headcount is now directed at marketing and sales-related activities.
As the business scales up, the challenge would be to retain its end-user focus. "CommonFloor's USP has been its B-to-C focus, with its community approach. They should not fall prey to competitive pressures while serving the needs of the paying customers," cautions Guglani of The Morpheus.
With several niche property portals targeting specific market segments such as bachelor pads, paying-guest accommodation for women, etc, it remains to be seen whether CommonFloor would be able to retain its focus on societal concerns, as they grapple with commercial pressures.
FACT BOX
Area of Business: Apartment management software & realty portal
Revenue: Rs 10 crore (FY12-13)
Target: Rs 125 crore by 2014-15
HOW COMMONFLOOR'S APARTMENT MANAGEMENT PLATFORM HELPS...
..Residents...
In 2007, convinced they had a viable business idea at hand, the trio - Sumit Jain, Lalit Mangal and Vikas Malpani - gave up lucrative jobs at multinational companies to start their own venture. "We just wanted to create a product that would help apartment owners manage their property better and facilitate daily chores," says Jain, co-founder and chief executive of maxHeap Technologies, the company that runs CommonFloor.com. In December 2007, the trio kicked off CommonFloor, three months after it was conceptualised, as a free collaborative apartment management software platform, and test-marketed it across 20 apartment societies in the city.
Cut to April 2013, Bangalore-based maxHeap Technologies runs a Rs 10-crore business, with about 60,000 housing societies on its apartment management platform. Its revenues rose five-fold compared with Rs 2 crore in 2011-12. Through the last two years, CommonFloor.com has morphed into one of the fastest growing property portals in the country, facilitating buying, selling and renting of properties, a segment that accounts for almost all the company's revenue.
What sets it apart is its apartment management platform is offered free to registered property owners. "This is akin to the Google model, in which the platform is free for the end-user (property owners), while the business customer pays for the service," says Jain, who claims to have about 1,000 paid customers.
The company's new office in Domlur has been a bee-hive of activity, with scores of interviewees fleeting in and out; the start-up recruited 100-odd employees through the last six months. This followed a second round of funding by two venture capital funds, Accel Partners and Tiger Global, in October 2012.
CommonFloor provides members regular updates on maintenance, track payment dues and complaints. Members can search for a plumber, carpenter or maid; create subgroups based on shared interests such as gardening, car pool or yoga. They keep themselves updated through email and SMS alerts, while a mobile app keeps neighbours connected on the go. The platform also helps resident welfare associations manage their expenses and accounts online.
This has created a growing community of property owners (five-million strong), a ready market for service providers and a database for buyers, real estate agents and developers to tap into.
Consider the case of Sandeep Gupta, joint secretary of the resident welfare association of The White House, a 165-flat complex in a tiny Gurgaon suburb. Gupta was introduced to the concept by a few residents who had chanced upon the platform in another city. "The society has been using the platform for six-odd months, maintaining accounts, sharing information with members and regularly updating the membership list," he says.
Jain says, according to research by the firm, at any point, typically, 40 per cent of property owners in a society scout for tenants, creating a constant churn of activity and deals. This flux creates a steady stream of visitors to the real estate portal. The visitors include prospective buyers, sellers, tenants, property brokers and developers. For Vinod Advani, vice-president, Maangalya Developers, a prominent Bangalore-based realtor, the platform offers a better conversion rate than most other property portals. "Their biggest strength is they are more end user- and owner-oriented," says Advani.
Hard knocks
Building the apartment management platform was perhaps the easiest part of the venture. Getting societies to use the platform, generating user-oriented content, and building a scalable business model around it was the difficult part. "We knew we had a winner in our hands, as there was nothing like this in the market," says Jain. But success didn't come without some hard knocks.
After giving up their cushy jobs, Jain and Mangal, software engineers from IIT-Roorkee and ex-colleagues at Oracle India, and Malpani, who had a stint at SAP Labs, operated out of their houses for about a year. It was their cumulative savings pool of Rs 5-10 lakh that saw them through the early months. "We were prepared for a long haul," says Jain.
It took the trio six months of intensive word-of-mouth marketing, with help from friends and family, to rope in 700-odd societies. A four-month stint at the business accelerator programme of The Morpheus, a start-up accelerator, in mid-2008, came in handy. Sameer Guglani, co-founder, The Morpheus, and his team helped fine-tune the business model. "At that point, they operated within a closed user group. We looked at ways to make their database of property owners more publicly available and reach out to a larger market set," says Guglani.
Then, venture fund Accel Partners stepped in. It provided them a small office space in the heart of Bangalore and, in early 2009, invested in the company. "Only when we started operating out of an office did we realise the power of working together under one roof," says Jain.
After about a year of existence, the start-up started taking shape. The team strength grew from three to 30 by 2010, 300 in 2012 and 400 by this April. Through the last two years, the leadership team grew from three to one that had 10 members. "Hiring the senior management team was a challenge," says Jain. Today, salaries account for 70 per cent of operational expenses; the rest is spent on rentals and other operations. "We kept our cash burn low by relying largely on word-of-mouth marketing," says Jain. But that might have to change, as the start-up scales up beyond Bangalore and prepares to take on seasoned competitors such as 99acres and MagicBricks. New-age niche consumer-focused property portals such as Housing.co.in, too, are getting their act in place.
Entering enemy territory
In 2009, maxHeap Technologies launched its real estate portal, CommonFloor.com. Initially, this was like any other property portal, listing properties for sale and rental, offering developers online space to market their properties, or agents to list properties. However a growing community of registered users of the company's apartment management platform created a steady flow of traffic to the portal.
The advertising-driven revenue model gained traction, as the size of the community doubled from about 30,000 to about 60,000. Jain, Mangal and Malpani have set a revenue target of about Rs 125 crore through the next two years. Jain says the venture is already profitable. He, however, declines to share details of investment and profitability, citing non-disclosure agreements with investors.
But classified advertising is a space where rivals such as 99acres and MagicBricks have a head start. The advertising market for real estate portals is estimated to attract Rs 300-400 crore a year. A few existing CommonFloor customers such as Advani of Maangalya concede the portal could do with some improvement in marketing properties to prospective buyers.
"Having access to property owners will provide advantage to CommonFloor in the rental market. For purchase of property, access to builders and agents would have to be built, just as other property classified players are doing," says Alok Mittal, managing director, Canaan Partner, a venture fund that has invested in Indiaproperty.com, a competing portal.
Bangalore is the only market in which CommonFloor claims to have a lead. "Bangalore is our bread-and-butter market," concedes Malpani, head of marketing and communities. It ranks third or fourth in other markets, primarily due to low brand awareness. Malpani says through the last six months, the company has set up marketing offices in eight cities across the country. Also, about a third of the headcount is now directed at marketing and sales-related activities.
As the business scales up, the challenge would be to retain its end-user focus. "CommonFloor's USP has been its B-to-C focus, with its community approach. They should not fall prey to competitive pressures while serving the needs of the paying customers," cautions Guglani of The Morpheus.
With several niche property portals targeting specific market segments such as bachelor pads, paying-guest accommodation for women, etc, it remains to be seen whether CommonFloor would be able to retain its focus on societal concerns, as they grapple with commercial pressures.
FACT BOX
Area of Business: Apartment management software & realty portal
Revenue: Rs 10 crore (FY12-13)
Target: Rs 125 crore by 2014-15
HOW COMMONFLOOR'S APARTMENT MANAGEMENT PLATFORM HELPS...
..Residents...
- Get things done from comfort of homes
- Stay updated
- Get issues heard and addressed
- Find service providers like plumber, maid, carpenter
- Ease of management
- Track collection of dues
- Maintain accounts & finances
- Ready database of prospective customers
| EXPERT TAKE Incumbent leaders in the real estate portal space in India are six to eight years old, and they haven't changed much. They are just a listing site for brokers; usually, all you can find on the portal is the number of a broker. The market is very large and, recently, a lot of new players have emerged. These include Housing.co.in and the likes of Quickr. Most players have relied on media spend to pass their names to users. CommonFloor has taken a different route -they have a free give-away software for housing societies. Thus, they get their traffic without media spend. However, merely getting users to your portal free of cost might not be enough. A real estate portal has to try to disrupt the market status quo. Nobody is giving you a social connect to your landlord and tenant, something that would add more trust to the transaction; nobody is saying 'we will eliminate brokers completely'; nobody is giving enough photos and research data online; and nobody has a solid mobile app. Some new players have come up with brave attempts and only those would survive in the long run. Just being a listing site such as Justdial wouldn't be enough in the long run. CommonFloor has to translate its initial advantage through its community software to more value-add for its customers. Anand Lunia, founder-partner, India Quotient, a super angel fund that has invested in two-start ups in the property portal space |