Pbazaar.com, one of the largest online property marketplaces in the country, started as a one man army. Founder and CEO, Muhammad Shahin started the company in 2010 leaving his secure job at then hot startup Cellbazaar.com, one of the earliest ecommerce companies in the country.
The decision was a difficult one for Shahin. He already had a family and a steady monthly expense. Despite the difficulties and immense potential risk, Shahin took the bet and started pbazaar. However, while Shahin was determined to start something of his own, he also tried to find a balance where he can at least earn a small amount of revenue to start with and grow from there gradually. That’s when he first thought about building a revenue first company.
Constraints are good. They push us hard to rethink our predisposition and come up with better solutions. This exact same thing happened to pbazaar. Instead of following the predominant internet startup cliche where everyone runs after the growth and keep investing, at pbazaar, Shahin decided to find a model that can bring revenue from day one.
In a recent interview with Future Startup, Shahin explained his approach to building a revenue first company and the growing to become the largest online property marketplace in the country. We have collected key lessons and important cues from his experience and tried to put together a piece that might help you to apply the same principles and strategy in your own venture.
Find the right model and then start small[blockquote source="Muhammad Shahin"]Before launching, we researched a lot of examples related to e-commerce and property business around the world to understand the nature of such ventures. We learned that in many countries, like UK, USA, even in India, real estate agent is a pretty interesting business and everyone takes agent service to sell or rent property[/blockquote]
Shahin did not start pbazaar not knowing what to do and what could be a feasible model for such a venture in Bangladesh. Although it is hard to predict how a venture would do in the future, but he studied similar ventures from different countries and tried to come up with a model that might work in Bangladesh.
“Before launching, we researched a lot of examples related to e-commerce and property business around the world to understand the nature of such ventures. We learned that in many countries, like UK, USA, even in India, real estate agent is a pretty interesting business and everyone takes agent service to sell or rent property”, says Shahin. “We were a little confused over this whether we should choose to be a marketplace or an agent service. Then I thought to put the two ideas together and find something at the intersection. But it was not feasible to double down on both, instead, we wanted to start with an agent model largely because building a marketplace requires a considerable amount of investment, as I had observed while working at CellBazaar. But I didn’t have that option due to limited financial resources. I had to choose such an alternative in which I could establish a successful business and generate revenue. So, considering all the possibilities, I decided to start with the agent model initially and then morph into a platform later. We started with three areas: Gulshan, Baridhara and Banani.”
Keep your burn low
“I think the thing that really allowed us to bootstrap for a long time was that we had – and still, have – very good financial discipline,” says Habib Ullah Bahar of Field Buzz. “We were very very careful about not wasting money, and we worked really hard.”
This quality of running lean is incredibly important for early stage startups. It often takes more time than usual to validate an idea and it often costs more than what one estimates. Startups often overspend in people and other unnecessary areas like fancy office and tools. But you should only hire when you need to hire and buy things when you need to.
“I started alone and used to work from my home. Initially, I used to collect rent/sell data alone and make calls to owners. I was doing everything and it was a very difficult job. Then I hired my first employee after a while to help me with data collection,” says Shahin. “When we had no office at the beginning, we used to work outdoor. We used to collect information of vacant flats around Gulshan, Baridhara, and Banani. Then, we used to sit somewhere in Gulshan Park and make calls to flat owners to propose our deal.”
“We formally launched in April 2011. We were getting fewer deals but managed to keep us alive out of them. I was able to pay salary to my programmer and hired a new guy. We rented a 500-sqr.ft. office at Gulshan. We were a three-member team: me, my developer and another team member Lipson Chiran for data collection. Once we started we saw there was a real demand for our service. So we hired a fourth member and now we are a team of 28 people.”[blockquote source="Muhammad Shahin"]I started alone and used to work from my home. Initially, I used to collect rent/sell data alone and make calls to owners. I was doing everything and it was a very difficult job. Then I hired my first employee after a while to help me with data collection. When we had no office at the beginning, we used to work outdoor. We used to collect information of vacant flats around Gulshan, Baridhara, and Banani. Then, we used to sit somewhere in Gulshan Park and make calls to flat owners to propose our deal.[/blockquote]
Find a low-cost distribution channel
It is not enough to design and build a product, you have to spend an equal amount of energy in informing people about your service. But marketing and promotion is hard work. Moreover, the noise in the market is way higher now than any time before. It is hard to get your message across. But it is incredibly important for you to find a low cost but effective distribution channel for your service. Shahin found one for his startup.
“People were hesitant to work with us and dubious of whether we could really manage clients. It was an overwhelming challenge. We had a little help on managing clients, on the other hand, through CellBazaar. There was property category on CellBazaar website. We got a few clients by placing ads in that category’, says Shahin. “Moreover, we worked hard to make our clients happy so that they refer and talk about us. We invested heavily in building relationships with our clients. This approach has served us well.”
Find the right niche early
Product-market fit has been one of the most cited reasons for success or failure of a startup. It is important that you find customers who want your product and are ready to pay for it. If you could solve this problem, you have a good business. Initially, it is not important that you sell to a large segment of the market, but it is critical that you find a small niche that works.
“Soon, I began to focus on getting corporate clients. Suppose, a multinational company’s expat comes to Bangladesh and needs a flat to stay. In that case, we would help to get one and also try to make more corporate connections through that person. With this networking strategy, our business grew quickly and we managed to secure a client base we did not consider seriously before.”
Revenue is the key. Spend your days and nights in generating revenues
“From my experience, I will suggest everyone to focus on revenue instead of raising investment. I think, running after raising investment is a total waste of time. Some people might get offended by this, but I’m speaking from experience,” says Shahin. “When I first started my company, revenue in the first month was Tk. 100,000. Next month it increased to Tk. 120,000 and roughly within 2 years it was 1.5 million in Bangladeshi taka. When I was running my business on my own, the number of employees in my company was constantly on the rise. But when I started to look for external investments, I got distracted from my main plan and recruitments came to a complete halt. My operation costs, as a result, got higher but revenue didn’t because I didn’t have enough people. If I had focused on growing my revenue instead of running after investments, today VCs would have come to us, not the other way round.”[blockquote source=]When I was running my business on my own, the number of employees in my company was constantly on the rise. But when I started to look for external investments, I got distracted from my main plan and recruitments came to a complete halt.[/blockquote]
Only the paranoid survive
“There is a saying: it is hard to earn independence, but it is even harder to protect it. Creating a brand for your business is tough. But preserving that brand image is much tougher”, says Shahin. This understanding holds the truth. Business is an ever-changing space. If you don’t change and adapt yourself you will die. In a market like Bangladesh, competition is ever growing and you should be vigilant of what’s happening in the market.
“When Lamudi came into the business, we felt threatened. We used to constantly keep track of their activities. But luckily it didn't take much effort on our part to beat Lamudi in the competition”, says Shahin. “Then, Bikroy.com entered the scenario. It was a tough one for us. When we were competing with Bikroy, we saw that their biggest strength was the massive amount of data. But at our company, we focused on the quality of our service. So, we tried to increase the amount of our data. We hired a third party for it who worked under our supervision. And, surprisingly, it took us only three months to beat them in numbers. After a certain period, we had double of them.”[su_divider top="no" divider_color="#adacab" link_color="#edde29" size="1"][/su_divider]
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