The one big opportunity Commonfloor and ApartmentAdda Missed

Consumers still can’t figure out how many apps would they need to change a light bulb.

This article has been in draft since 2014. After reading¬†Naman’s piece (Is it possible to scale hyperlocal startups without burning much?), thought I will go ahead and¬†share some perspective.
2014-16 saw massive funding in hyperlocal startups. Close to 55+ hyperlocal start-ups have raised $400+ million, with most of it going down the drain.

Hyperlocal isn’t about creating a new demand. There is already a huge demand of hyperlocal services.
It’s largely about playing the matchmaker (i.e. marketplace) – efficiently.
But for most of the hyperlocal startups who shut down, they couldn’t manage to generate enough demand – the customer acquisition cost was damn high. And since they had no deeper connects in the domain, they couldn’t really take the scale to any level.
The flow was : Spend marketing $$ -> Get customer to install the app (remember, 14-16 was a sudden awakening of mobeel-only world). -> Spend more marketing $$$ (discounts) for customer to use the service -> Absorb the service cost (pay 1.5X to the vendor) ->repeat the loop.
There was no stickiness of these services. For these startups, they had to start from scratch –¬†from a new customer every damn time.
But then, two companies had better inroads and they could have done something bigger and better.

Commonfloor, ApartmentAdda and the App Store that never was.

Both these competing products are used by a lot of gated societies for several apartment related activities Рright from very active discussion (groups) to maintenance payment to buying/selling things (classifieds).
There is a good amount of daily activity¬†on their platforms – i.e. DAU is quite higher. In fact, on a daily basis, there are N number of questions around ‘can somobody recommend me a <provider> in this area?’
Now, imagine a Commonfloor / ApartmentAdda app store which could have been the meta player among all these companies. Think of it as a play store for hyperlocal services – a different game at a very different scale.
Both these companies had good enough demand (and a very active one) to start with and could have built on those, unlike several other startups.

It’s not that demand for hyperlocal services are gone, it’s just that consumers¬†couldn’t figure out how many apps would they need to change a light bulb.

Both Commonfloor and ApartmentAdda, probably got busy in their transactional game*(Commonfloor : selling real estate. ApartmentAdda: selling the app to communities) – lost the sight of the BIG BIG hyperlocal market and in the end, Justdial wins it all (?).
What’s your take? Wasn’t hyperlocal a big enough market opportunity for these companies? Can they still do it?
*They tried – but not whole heartedly. There were very small experiments.

  1. I had a chance to interact with couple of companies in the space, as we were discussing partnerships for the marketplace. I always felt they all viewed this as a ancillary opportunity, and remained focussed on their product.
    In a sense it was good that they had good focus, but then like the article argues, you may miss out on large adjacent opportunities. But rememeber the DNA to run a Hyperlocal market is very different than running a portal like Common Floor/Apartment Adda. Also, few of the players were self funded/less funded, so that meant more focus was needed.

  2. It’s not to say common floor wasn’t actively thinking and building product to solve in the very opportunity areas mentioned in the article.
    It’s just that CF, like most product companies, took a product first view of how to solve human needs ( such as, ‘ where do I find x provider ‘) and by the time they started thinking holistically, they ran out of time.

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