Kenyan accommodation website, SleepOut.com, recently secured US$200,000 funding from the Dutch based Africa Media Ventures Fund (AMVF). The one year old start-up is set to expand to 10 countries across Africa and the Middle East by late 2013. SleepOut’s co-founder and chief executive Johann Jenson told How we made it in Africa’s Dinfin Mulupi about the company’s expansion plans and why he quit a secure job at the United Nations to join Africa’s start-up community.
Tell us more about SleepOut.
We are an accommodation marketplace. We match guests looking for a place to sleep with hosts and their empty beds. We don’t discriminate, if you have a houseboat or a cottage in your backyard, then you could put that on SleepOut. We are part of the sharing economy, which makes more efficient use of existing resources. SleepOut is simply offering better access to [the] accommodation inventory that is already out there but is right now under-used.
We launched last June and have seen huge uptake. SleepOut now processes approximately 3,000 monthly booking requests in Kenya alone. We have just over 1,000 properties in Kenya and within each of those properties you have several rooms, so we are offering over 20,000 rooms on SleepOut. To keep the service running, hosts pay SleepOut a small percentage of each confirmed booking.
How do you intend to spend the $200,000 funding?
While we have been somewhat profitable so far, the funding is going toward enhancing and scaling the product. The funding allows us to expand outside of Kenya over the next six months. Our priority regions are East Africa, North Africa, Middle East and the Vanilla Islands (Mauritius, Réunion, Madagascar and Seychelles). Our objective is to offer the most comprehensive and user-friendly accommodation marketplace in all of these markets. There is quite a bit of friction in accommodation pricing across these markets despite low occupancy rates. Whether it is traditional accommodation like a hotel room, or peer-to-peer accommodation in someone’s extra apartment bedroom or their holiday home at the beach, we are trying to bring choice and value to the market.
You have an ambitious expansion plan across ten countries before the end of the year. How do you plan on doing that in just six months?
There is a great deal of precedence for tech companies undergoing this type of hyper growth. It is not uncommon to grow at an extraordinary pace when a scalable system is in place. Enhancements to our software allow us to undertake this kind of multinational growth. Accommodation hosts in any country can easily manage their properties on SleepOut and there is essentially no maintenance on the ground for our team. If a property host in Morocco adds their house to SleepOut, once the guest has booked the house, the transaction is done online and via SMS. SleepOut does not need an office in Marrakesh although we do ensure that adequate customer support is available in case of any issues. We may eventually look to open regional offices, particularly as we grow our offering and require support in other languages. At the end of the day, SleepOut depends on communities of hosts and travellers. It is ultimately they who determine our success and expansion.
Describe the challenges you face running this business.
Most important is customer support; making sure that when guests use the platform, that they have a great user experience worth telling their friends about. Part of that is making sure there is always someone available for them to speak to if there is an issue. Travellers in East Africa still depend largely on face-to-face or phone communication to finalise their transactions and we do cater to this.
On the other hand we want to avoid as much as possible becoming travel agents. Travellers often call and ask ‘can you recommend a place to stay in Naivasha’. We often do offer recommendations, but you can imagine if you are dealing with such a high number of accommodation options it is simply not possible to be able to offer context and recommendations on that scale. So the software has to do that for the traveller and that is the second challenge – building software that is more intelligent and vastly more resourceful than a travel agent. SleepOut offers guest reviews and rich-content to describe each listing and we rely on integration with social media sites to provide personalised recommendations.
You quit a well-paid job at the UN six months ago to run SleepOut full time. Do you have any regrets?
Before leaving my job I had to make sure that SleepOut had some traction; that I wasn’t just making the biggest mistake of my life. It was a tough decision. You go from a very fixed, very secure income and then you move into the start-up world where you are living on noodles and bananas. I like it though. Some people really enjoy having that security, for me working at the UN was not terribly motivating and the work environment took away a lot of my ambition and drive. I am quite happy that I made the move and so far, so good.