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How to develop a company having neither money nor team. Startup of the day #4 Localie

How to develop a company having neither money nor team. Startup of the day #4 Localie

15 Aug 2019

Nick Nedelchuk and his co-founder Sergei Chebykin started Localie as pure «crazy dreamers»: they had neither money, nor free time. At that time both were working in large corporations. But they really believed in their idea. Today the startup is present in 180 cities: from Australia to Kenya uniting about 500 people. In the interview Nick tells how to create a project on the base of new economy and to develop company, when you don’t have any resources.

Startup Jedi

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What is Localie?

Localie is a service of unique and accessible journeys. Once my friend and I wondered which ones of all our journeys were the coolest? And the conclusion was that those when we visited friends. We didn’t waste time on planning the routes, we weren’t afraid of meeting new cultures. When you have a friend in another country, you just arrive and relax. A friend knows the most interesting places in city and takes you to the ones that are really worth visiting. Besides, such walks help learn much more about the new city, to see it just as locals do.

So some years ago we got the idea to make it walking in the new cities with friends more accessible to everyone, that is how the story of Localie started.

We started with forming a community. At first we invited our friends to join. Then they invited their friends and so on and so forth. Today the startup covers about 180 cities on all continents and unites about 500 people we call «localies».We gathered an excellent team of approved Russian-speaking guys (but there are english-speaking locals as well) living all around the world. They are ready to show their cities to all travelers, as if you came to a friend.

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What does MVP include and what will be included in the future

Now the platform allows to book walks with localies all around the world based on the preferred language and interests of a client. Whatever you want — the museum, bar on the roof or a secret club — all these can easily included in such a walk. In the future we will add more services: it will be possible to buy tickets, to book a room in a hotel, to rent apartment and so on.

Furthermore, here you can get even some creative ideas for your trips. We want to work as a full-fledged travel agency, but we want to kinda reinvent it taking into account the possibilities of a new economy — a digital economy of exchange and experience.

There are many services, which offer services for travelers. So we position ourselves as a social network, which is specialized on communication and journeys. We introduce tourists to sympathetic people who are ready to show their cities. There is a demand for such services. But most people solve these needs in different ways: use Couchsurfing and even Tinder to find a’guide’ in a new city. But we are looking for people who want to show their cities to travelers and who are good at it.

Localie
Click the image to open View Localie’s profile on Rocket DAO

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How the team sees the monetization of the project

One of our main advantages is a single price (set for a company which consists of 4 persons), which doesn’t depend on the country of the journey. Half a day with local costs 69 euros (the whole day — 99 euros), that is much cheaper than guide service.

There are also some additional services. Localies can offer a photo session, excursion out of the city, they can host a guest or develop an interesting rout, for example. Additional services also cost 69 euros.

At the same time we try to support tourism in the countries of the «new East» (Russia, Ukraine, Belarus, Georgia and others CIS countries). Costs there are lower: half a day will cost 29 euros, the whole day — 49 euros.

Actually our platform is a typical marketplace. We take a commission of 29% of all amounts that pass through us. The more often a person conducts a walk, the less commission he pays. If during a calendar month there was only one walk so far, the commission will be 29%, for two days — 24% and so on. The minimal commission is 9%.

In general it is profitably for Localies to cooperate with us. But all depends on the country. For example, I live in the Netherlands, for half a day walk I can get 50 euros and for a whole day — 70 euros. According to standards of Western Europe it is not a lot, equal to the cost of a dinner in a restaurant. In other countries cooperation with our service can become a full-fledged work for some people. For example it is quite possible to earn about 1500 euros in 20 days.

At the same time Localies don’t need to have a guide’s certificate. We position the service exactly as a walk with the locals, but not as an excursion service. And we inform our clients about it.

Localie 2

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Promotion and first investments

Localies have already conducted 1057 walks since March, 2018. Traffic is predominantly organic, we practically didn’t spend any money on promotion (as we didn’t have it). Nonetheless we kept growing stably: on the average by 22,5% per month (monthly revenue grew by more than 11 times in the period from April, 2018 to April, 2019). For the popularization of service we worked with bloggers who had from 10 to 100 thousand followers on barter.

We also experimented with Facebook Ads, but it didn’t bring us any results. The service works well only in the case you invest 50$ in campaigns on a daily basis.

More than month ago we attracted our first investments. It is amusing, but our first investor was our client. He knew about us in the Internet and decided to use the serviceб and used it for several times later. For the fifth time he booked a walk with me, because I am also a Localie both in Amsterdam and the Hague. We met, spent time well and in he end of our walk he said that he was thinking of investing in us. He was just looking for an interesting project in the EU with the potential of growth. Our investor is an entrepreneur (he has a mobile gaming business) and an active traveler.

We are planning to spend the money received on attracting our the audience. Now the CAC from Facebook is about 100$, we want to reduce it to 20$. We expect to have some first interesting cases by September.

At the same time we are experimenting with B2B-partnerships trying to establish contacts with travel agencies. Curiously enough they have a lot of problems with guides. At first, there aren’t enough guides. Secondly they can provide bad-quality services. For travel agencies it is hard to predict it in advance. Thirdly, professional guides cost too much. Besides, hotels could possibly suggest us to their tourists (for a 10$ commission).

While we don’t have large scale statistics about retained clients, but people do return to the service. Though the majority of clients who are coming — are new to the project.

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Developing a startup in the Netherlands — how is it?

A great number of innovative companies from all over the world are concentrated in the Netherlands. It is so because local legislation allows startups in just a few easy steps to get the right to reside and do business here for a period of 1 year.

The country is also very nice from the geographic point of view: it is equally convenient to fly to Asia and the USA. There are many representatives of different cultures, both entrepreneurs and emigrants. But the Netherlands is a prosperous Europe, there are not that many problems here.

The Netherlands are considered to be a good sandbox for the young companies: 17 mln people with averagely high purchasing power live here. At the same time their mentality is so that they will never but something they don’t need. So trust me, if you learn how you sell goods to the Datch, you will easily enter new markets.

I can’t say we know the local ecosystem well. But it’s a matter of fact that there are many business incubators and accelerators here. Some time ago we were invited to become the residents of the Cambridge Innovation Center which is located on the south of the country. Startups and innovative companies can rent working places there for little money. So that to have this right for it, one should undertake an interview first, they do not invite all in a row. Workshops with experts from all over the world are regularly organized in this center.

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Problems and the roadmap

We started this project as literally ‘crazy dreams’ having no money at all. The only way to create a service was to make it on our owns. But both I and my co-founder had full-time jobs at that time. So we had two problems consequently: how to find some spare time and how to find people who could be inspired enough to work as volunteers at our idea.

Developing our project we came up with another problem. People usually travel one or two times in a year. So we had to put a lot of effort to tell our target audience about the project. What is more, it was very important for us to find the people planning their trips ‘right now’. Even if we managed to do this, most would feel sceptic about our offer. So we have to persuade people that our offer is worth their time and money. And we still are seeking effective ways to attract first customers.

One more problem we are facing is in attracting new Localies. That’s why we are concentrated on developing a community right now, a community which would be flexible and bright. We want to bring much useful information apart from booking localie services. It will be a big blog where citizens from different countries of the world tell about the places they live in. We hope that such articles will inspire to see new regions of the world and stimulate travellers book the walks with our localies.

We are going to release a new version of the website and a mobile app this fall. By the end of the year we also want to enter the english-speaking market — in november find us at WebSummit and Slush.

Localie 3

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Personal experience and advice to startup founders

  1. Patience and team building.
    I used to work in IKEA before Localie. In corporations everything is performed very slowly, this work experience taught me discipline and patience. So the most important point is to be able to listen attentively to both sides and never let other make you feel overboard. Cohesion and team spirit play significant role in the projects within big corporations, this is one of the success factor, honestly, If you don’t have it — you lose the game.

  2. Networking.
    It is extremely important for founders to actively participate in the relevant startup events.Great people usually come to such events, acquaintance with them can bring great value to you. My experience demonstrates that you get along best with those with whom you have something in common. That’s what I’m looking for in other people. I like the philosophy of the Dutch — here when first met you are a friend, and you need to prove that this is not so. On the contrary in Eastern European countries, the mentality assumes that when you meet you are an enemy, and must prove that this is not so.

  3. Promotion channels.
    Love experiments. We are still searching and optimizing our promo-channels. Though we have already found out that the cost of attracting people in facebook is very high, while the audience in instagram seems to be much more loyal. Attracting people there is a way cheaper than via facebook.

  4. Split the tasks.
    Whatever happens, cook the Elephant Carpaccio. The problem look pretty complicated? Split it into several parts. And solve the tasks one by one. Still complicated? Split again.

  5. Find an idea that gives you energy.
    In this case leaving your job won’t be that difficult. I’ve dreamt of quiting for many times. But investments became the trigger eventually. Money play crucial role in our lives, as we pay for rents, we are used to a certain standard of living. Even for a dream, it’s hard to give up everything and live in a garage. Especially when you don’t have a garage. We have enough money for the nearest 5 months. And if we don’t manage to overcome the break-even point (call it death valley) we will have to find a garage indeed. The truth is that I’ll hardly ever leave a startup that drives me so high and come back to the corporation routine.

  6. Work with the startup mentality people.
    Such kind of mentality is something opposite to the corporate culture. In startups each and every team member take responsibility for the decisions — either own or of others. You have to be able to generate hundreds and thousands of product hypotheses and implement them with lightning speed. Be prepared for the fact that there is no time to think about the difficulties, you have to go ahead, find the strength to achieve what no one else have ever done before, breaking through a storm of skepticism and reproaches. And most importantly — you need to be ready to forget about the weekends, because one can not build a unicorn out of nothing.

  7. Regular meetings.
    Our team of 9 is distributed. In order to coordinate the work once a week we old the team meeting on Mondays at the European 7 in the morning (to cover all time zones: California, Europe, Russia, Taiwan). Then go short daily briefings with the individuals from different departments: Growth, Community, Content Management, Operations. REgular sync-ups help us monitor the progress and stimulate the team to move forward creating a sense of deadlines. After all, it is impossible not to achieve some success, when you have only 24 hours between the calls — it creates a certain kind of psychological pressure.

15 Aug 2019

 

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