So I messed up.

Top Pop Up was my attempt at creating a market for short term rentals of commercial real estate in Oslo. What AirBnB did for private rooms I wanted to do for storefronts that was free between contracts. In principle a very simple idea. Allow owners to capitalise on underused real estate, and open up the city to new forces. Nevermind that I had never worked in real estate, this idea was in my naive eyes so good and so easy to sell to people that I thought I could just bootstrap it by myself. He.

So, I failed. I’m almost out of money, but mostly, I gave up.

Let’s start with the best part first: What went well.

I’ve discovered an amazing market. Our cities are extremely constrained places that leave almost no space for anything different. The system is now so inevitably geared towards long-term contracts that we don’t realise that so much more can happen in our cities.

There are so many people that want to use our cities for really exciting things, and they’re not provided for at all. It almost feels like I’ve gotten a glimpse into what the future can hold for our cities, with all the crazy ideas I’ve heard from people. Making a dedicated platform for short term rentals of store fronts and other spaces in the city is a thing that has to happen. Every time I got up in front of a crowd to talk about what I did, I’d easily get 4-5 customers from word of mouth afterwards.

I got some insane personal experience that I don’t think I could’ve gotten any other way. The learning curve was steep as hell. I like to call it my ghetto MBA. There were some major lessons, such as the difference between an idea and an opportunity (which is where I got burnt), “just say no” (saying no to people you want to say yes to), and the vitality of dealing with details at the very first moment. What’s interesting is that these were things that had been mentioned before in some form of class or lecture, but having them tossed at you in real life was something different entirely. What seems clear-cut then, is of course never that as it appears. I’ve also become a lot more analytical of situations, and generally a bit more skeptical of other people and their motives (which sort of sucks). There’s also the more subconscious decisions you have to deal with all the time. You’re the CEO (AND the chief coffee monkey) of your company, so you learn how to deal with other companies at that level. This is extremely interesting, as you start to see how a lot of things actually work behind the scenes.

Getting to be interviewed on the BBC in front of 15 million people was also fucking cool, as well as taking part in a panel debate on urban development in Bergen.

So why did it not work? I didn’t know the market well enough. I choose a field that I knew moderately well (I thought), but that was nothing as compared to the on the ground knowledge I should’ve had before I started this. Over the course of five months I managed to find one space for one tenant, despite having tons of people that wanted to rent. Creating a marketplace from scratch is so hard, you need a large demand (which I had), to be met by an already large supply. But to come from the outside with little experience to back yourself up and convince people in a profitable industry to do things different just didn’t fly. AirBnB set up a two sided marketplace from scratch without any underhand tactics as far as I know, and that took them two years of walking block upon block in New York City and knocking every single door, to get a critical mass of supply to match the demand.

To actually effectively build something that will work, you really ought to build something you or a friend need, as well as something that you know beforehand at least ten people will be willing to pay for. Word of mouth after that will probably take care of a lot of your marketing, and word of mouth is a fucking great way of marketing, it’s like social media but real. Cue my next project.

The realisation that stuff wasn’t working came gradually to me, but what brought it into force was when I in early December was approached by a property company to take what I did in-house. I was almost out of money by then, and I realised that if I didn’t accept the offer I’d effectively doom my project. The thought of binding myself to work for several more years in real estate was one that didn’t appeal. Real estate is generally an incredibly old fashioned industry, think Mad Men but more secretive and sans Christina Hendricks or scotch. It was not a place I was going to enjoy being at the age of 24. The people I were talking to were a lot more forward-thinking and professional than what you generally see in real estate in Norway, but it just wasn’t right for me to bind myself. It was a life-line, and I threw it away. I realised it was time to quit, not throw good money after bad and spend my time doing something else.

So what now? I have no idea. I had a job-offer, but it fell through, so now it looks like my central Oslo apartment and AirBnB will become good friends to keep myself alive.

There is not an ounce of regret in my body that I did this. I messed up but I feel a lot more ready to start a new project.

Got any ideas? Let me know.

"Ship fast, ship early and know everything"

It's what you should aim for at the beginning of your start up journey, because there is one thing that is more important to stress than any other:

You really really should know more than everyone else about the market you've gone into.

People will be impressed by the passion you display (if you don't have passion: do something else), but you will go into meetings with people that are usually at least ten years your senior. When you get the meeting. Believe it or not you are usually the CEO/CTO/CIO/CFO etc etc (as well as low level designer/IT support/chief cold caller, but that's less fun to talk about) of your company, and so you need to engage with other companies at that level. The way to do this is that you need to be formidable in your knowledge of the market, its players, trends, history, trivia, and rumours. These people have business degrees or experience, and just like everyone else they know the stories of great entrepreneurs so they know you can replace them and will respect you for it. But they also know the ins and outs of their business well enough to quickly see if you're able to do this. If you can do this in a believable way you will make everything will be easier for yourself.

In danger of sounding a bit machiavellian, fear is a great way to make people work with you, and a good way of instilling it an early stage is exhaustive knowledge.

This might seem like it goes against the "ship fast and early" school, rather in my eyes it compliments it. It becomes: "Ship fast, ship early and know everything"

Your product might suck, but if it does something that no one else does, even if it's horrible, AND you can meet the CEO of another company, look them in the eye and bring some insightful analysis on some minute detail of the market, you're more likely to get the deal, on your premises.

This further illustrates why its easy to find a minute niche that will eventually grow to dominate at an early stage, since the smaller this niche is, the easier it will be to become formidable in the field. And if you're formidable in something that blows up a year later you're probably gonna have fun.

A very unexpected idea

This second blog post is going to be dedicated to the market I've somehow waded into, commercial real estate.

If someone had asked me three months ago if I was going to write a blog post about commercial real estate I would've laughed at them. Anyways.


The basis: The market is nowadays viewed as something you put your money into AFTER you've made a dime other places. Commercial real estate is usually medium yield, low risk, and with a very high barrier to entry. A decent investment can bankroll your life, your kids life and probably your grand kid's life. Other investors that view real estate as attractive are pensions funds and alternative investment firms. Probably a lot of others I forgot. It's an old boys game though, that's for sure.

For those managing real estate this is shown in that they have a clear long term horizon, contracts are signed for three, five or ten years, with longer ones common as well. A big shopping centre will often just have a couple of employees managing real estate that is worth billions of dollars. Similar to how an index fund operates, this form of passive management will usually garner a good return but is entirely dependent on the economy in general.

I had the crazy though, what if you applied the rules of running a hedge fund to running commercial property. Although talking about rules in hedge funds is silly, since there aren't any as long as you beat the market. You can invest in whatever you like as long as you get high enough returns.

Let's say you owned a storefront on street A, and you rent it out to an ice cream parlour. You can take 1000 dollars in rent a month even though they don't make enough to cover the rent the majority of the year, but that's ok since they probably have a three month window they use to pay for 9 months of loosing money. In this way everyone makes a nice clean margin and a space sits underused 9 months a year. Doesn't matter, made money.

SOOOOOO

What if you own storefront B right next to storefront A.

Storefront A gets its owner $12,000 a year for signing a contract once a year, but you decide you want to take a risk. You want to try to get a lot more than him, since you realise that the central real estate you both own is worth a lot to different people.

You want to rent out your space for three months at a time, but to the people that make the most possible money at that time of the year for much higher rent. So 1st of January to the First of April, the slowest part of the year, you rent it out to whoever makes the most money then. Let's say a yoga centre as everyone tries to get healthy after a long christmas. April-July you rent it out to someone else that makes the most money in those months. Let's say this is a clothes store as people get ready for summer. July 1st you get your ice cream parlour to move in. The first of October you get ready for christmas you get a toy store to take over until the new year.

Although these might be bad examples of businesses that are seasonal the basic message is there. The world isn't static, and if you own something that's potentially worth a lot to different people you shouldn't settle for mediocrity despite it requiring a lot more effort.

First post

This is an attempt to make time pass as I'm recovering from acute bronchitis. Also +Jon Gjengset once told me that to blog is free advertising and a good way of getting your thoughts down on paper. +Olga Abilova makes her life sound ridiculously fun through her blog, so I thought I'd one up her as well.

What I am working on now is a project for short term rental of commercial real estate in the Oslo area, Top Pop Up. The website is in Norwegian and made using Launchrock, the easiest possible solution, which gives you what feels like the functionality of a TI-83. I want to make it into something similar to AirBnB but for storefronts. This is obviously easier said than done. 

I want to expand to the rest of Scandinavia, as I doubt I can make a lot of money of just Oslo. Oslo is not exactly the centre of the universe, but has potential as a recent student that's chosen to become an entrepreneur after university. 

So why move back from what feels like the centre of the universe (London) to an oil bloated hysterically expensive place filled with people who by and large are probably on their way to their cabins already (it's a Friday and it's past 1 pm)?

well....

1. Markets in need of a native solution - You are going to see that applying a formula that works in one place does not always translate to other places. In my own case, through talking to people doing similar things there's huge differences in the commercial real estate market across Europe. In the Netherlands, 30% of office space is free, while in Norway we are still building more (although I personally cannot see how much longer this can go on). In Athens someone told me something like 50% of store fronts are free (don't quote me on that number at all). In Oslo I'd empirically put the total number at 5-7%, depending on area. These different markets require different solutions, and a uniform AirBnB approach will not work in my field. 

2. Safety- I can live in my dads house and I get to eat food from his fridge. Easily 8000 kr saved a month, that I can spend on a billion other things. The lower the fixed costs the happier you'll be. No discussion there. 

3. Market understanding - Norwegians are habitually horrible at answering emails sent from people they don't know. I have no idea why, but if you didn't know and have to learn the hard way it will take you time. In this country you have to pick up the phone, to get something. On the other hand this leaves slightly socially awkward norwegians at a loss and you can sometimes use that to your advantage. 

4. The economy - Hey, it's the worlds second richest country per capita after Qatar. A big mac costs £10. If you can get these people to pay for your stuff you can make a lot of money. Get people in Sweden and Denmark interested as well and stuff's getting real.

5 Not a lot of other people are doing what you're doing - This is such a two edged sword. You won't have a lot of competition and when you talk to people about what you're doing they get impressed and really want to help, non of the blasé you get other places where you're the eight person they've met that day doing a start up. On the other hand people aren't used to dealing with entrepreneurs, and when they ask you how many employes you have, how long you've been doing what you're doing (or god forbid) how old you are they'll look at you and tell you to come back in fifteen years and leave it to the grown ups. That usually sparks this reaction in me.

That's all folks. I will be back to write more. I have a lot of stuff to write about everything that is wrong in commercial real estate. It's worth billions and billions and no one is doing anything to challenge the status quo. Absurd.