In May 2007, the world was standing at the edge of the recession. 2 IIT Roorkee and a VTU graduate chose this period to voluntarily quit their jobs at Oracle and SAP. They had a lakh savings each when they set out to start their venture CommonFloor.
They figured that Rs 10k a month each, and one year was all that was needed to make it a success.
In their first year CommonFloor voluntarily ignored funding. For three years between 2009 and 2011, the company functioned with a team of 20, mostly interns. Eventually, CommonFloor became one of the startups that not only beat the recession, but used it to its advantage.
“One good thing about the founding team, is that we shared a very strong relationship. We fought a lot (for the company), and argued a lot. These discussions brought the best out of us,” – Sumit
Lalit Mangal and Sumit Jain were classmates at IIT Roorkee when they met. Vikas Malpani, childhood friend of Lalit, and an ex-SAP employee is the third co-founder. The three had explored several ideas before finalising on the property portal, CommonFloor.
Among these were e-commerce coupon sites and online classifieds. But the idea of the property site appealed to them.
“There was a clear business model out of it. Second is to build something really exciting and set rents. We did not want to serve markets outside India, not because we had apprehensions about them, but just because we felt India held a really big opportunity,” says Sumit
In Bangalore, the team not only found it difficult to find housing, but also to get residents to interact with each other. They discovered that residents of a society only interacted in times of a crisis. This was when they decided to provide them a “common floor” to discuss and debate issues online. This was their initial model for CommonFloor.
“But, eventually the property problem was not solved. The problem was that the typical property portals were more like a directory where you could find agents, but not properties. That became our opportunity and market. We did not start to disrupt, we started in order to solve a problem around homes,” says Sumit.
When they realised that buying and renting was a problem, they decided to increase the scope of the service.
Bootstrapping & The Importance of Being Frugal
“We used to have pizza parties every week before starting up, and once we started up, we had pizzas once every quarter,” – Sumit.
They had planned to fit both their personal and CommonFloor’s budget within Rs 30k a month for a year. When it came to frugality, little things added up the math for them.
They switched hosting from Java to PHP, simply because Java costed $20 a month as compared to PHP which only costed them $10 a month. They cut down on marketing expenses by printing notices and putting them up at CCD. A week later, they would remove the poster to reprint other notices.
The three also rented out an apartment which also functioned as their office space.
To scrape in money when it was running out, they developed Facebook applications for companies, and even gave talks at conferences.
“We saved money wherever possible. It was not required, but I think it gave us a lot of confidence to run the company without raising money. Did the $1,000 I saved matter now? I’d say that the culture of appreciating the value of what you have is what we learnt through it,” says Sumit, “To us, it was the obvious thing to do,” he adds
CommonFloor’s culture of saving saw it through the first year of operations, and subsequently caught the interest of the startup ecosystem.
Building CommonFloor Without Investment
The team at CommonFloor stands by the fact that they value their product over raising funds. Sumit says that raising funds was never their priority.
“We built the product, we gave it completely free. People used to ask us why are you giving it for free? Because, we didn’t want to have 100 paid customers, we wanted to have million users, and then find out how to make money,” says Sumit.
They knew that they were not chasing something that could be done overnight, he says. They consequently didn’t get carried away with raising funds he says.
“We used to code in the night and sell in the morning,” – Sumit.
The company initially launched a basic product to demonstrate to building managers and associations. After the demos that they made in the morning, they would collect feedback and prioritise and develop the product at night, says Sumit.
To better develop their product, Sumit, Lalit and Vikas went to the extent of buying laptops to demonstrate the product to people. Apart from this, they also visited and sat through association meetings to figure out what the problems were.
“You should not do what your customer says, you should do what your customers do. We understood what they were doing wrong, and we tried to build a product which will change their habits,” he says.
Riding the Recession Wave
“In 2008 the recession happened. Lot of people were very sure that we were thrown out of our jobs. For a lot of people Oracle and SAP were their dream jobs. To them, it was the end of a success story,” – Sumit
Sumit explains that contrary to popular belief, the recession made them stronger. The three hired from IIT Roorkee. They hired talented people for cheaper salaries. In addition, they also got their office space for a lesser rent.
They did have to face pressures on the personal front.
“The day I put down my papers on Oracle, I had an offer for a double salary. Then it becomes challenging. You say that I have saved x amount of money in one year, if I take the salary offered I’ll have 3x. So why don’t I start after a year? What really happens is you never start,” he says
The founding team believes that while starting out entrepreneurs need to have the courage to say no.
“You throw peanuts you get monkeys, you throw more peanuts you get more monkeys. You should have the courage to say no to a lot of things that are tempting, including offers, higher education,including calls from IIM,” he adds.
CommonFloor: Looking Ahead
“I feel it’s a privilege to bootstrap. When you bootstrap you are like a horse without a cart who can run in any direction. You should explore, but not go around in circles. We had a long list of ideas, we piloted some ideas and we failed, and we learnt a lot,” – Sumit.
CommonFloor has come a long way since the time it had 20 members on the team. Since 2011, the company has increased its team size to 600 people, grown to over 18 cities and are eyeing profitability next year.