Paul Kemp: Welcome to another episode of The App Guy Podcast. I am your host, it's Paul Kemp. This is the show that truly goes around the world and gets lots of different nationalities, so that we can listen to these really inspiring guests, deconstruct their entrepreneurial journeys, their app journeys in their world of digital. The reason we do this is because it helps you in whatever projects you have going on, whatever startups that you have going on, or any kind of career that you're taking. We really do try to bring you the genuine, non-sales entrepreneurial journeys from our guests.
This is episode 536. If you have missed passed episodes, you can go to the archives; I've got another 500-odd episodes for you to go into the archives with and listen to there. Just search "Paul Kemp" in your favorite podcasting app.
Let's get onto today's episode. Today's episode is with a CEO -- it always tends to be CEOs and founders that I love to chat to. The CEO in this case is the CEO of Zumper. His name is Anthemos Georgiades. Anthemos, welcome to The App Guy Podcast.
Anthemos Georgiades: Thank you for having me, nice to meet you.
Paul Kemp: Nice to meet you as well. First of all, let's talk about Zumper, because I'm unaware of the journey you've had with this. Tell us about Zumper.
Anthemos Georgiades: It kind of all began actually when I was -- I'm currently based in California, in San Francisco, but I began as an undergrad in England, where for the first time ever you move out of undergraduate accommodation, you're 20-21, and it's the first time you really have to fend for yourself in the real world. For me it was kind of finding my first ever apartment rental. I had such a miserable experience, as I'm sure many of your listeners have had while moving home... Not just in trying to find an apartment to rent, but also in when you find the one you really want, how to lock it down. It just seemed incredible ten years ago that there wasn't a way to just book an apartment, and it just turns out that ten years on there was still no way to do this.
So it began with a personal frustration of mine ten years ago, that I felt multiple times, every time I moved. Then five years ago, when I was living in the U.S., I decided to actually be the person to try and fix that problem myself.
Paul Kemp: Already I'm inspired, and I'll tell you the reason why. There's so many people that get into this for the money, and they look at some successful idea and they think they can emulate it, but so many of the successful guests that I have on this show have had a personal issue, a personal problem, and they've kind of identified this as a decent problem to go after and really addressed it.
So you've got this personal problem, Anthemos, and I just wondered - did you do any other research to justify giving up your life to pursue fixing it?
Anthemos Georgiades: I did. I think it was a lifelong pursuit if we pull this off, or when we pull this off, so you had to be very sure upfront that there really was a problem here to fix, it wasn't just something that I'd noticed and I was just unlucky. A year before we raised the first one million dollars for the idea, I was at Business School in the U.S., which is typically a two-year course, and then the summer between those two years, instead of taking kind of an investment banking internship, I just went off and took an unpaid internship for myself and I tested the idea. I moved to San Francisco, I tested the concept of "Would a renter put out their iPhone or Android phone in an open house and press Book?" Literally, just something that simple, and we did it with 35 leases in San Francisco just to see if that problem I'd noticed - it was kind of crazy we were still transacting on paper - was actually real.
We could have abundantly and overwhelmingly show that renters would do that, and they wouldn't just do it, but they loved it, because it felt like e-commerce in moving apartments. So yes, I spent really a year researching, trying ideas out, and finally the validation was we put that year together into a 10-slide PowerPoint deck and went to Silicon Valley and raised the first million dollar for Zumper back in 2012.
Paul Kemp: I love this already. One part of that journey which I'm fascinated with is that you mentioned you could have gone to investment banking for your internship or your first experience after Business School... Of course, I went into investment banking. I do remember the fact that you're so drawn by peers, by media, by what society expects for you to go and get the best paying possible job. How hard was it then to resist the temptation to go for the 50k-60k/year and actually go to something that you're not really getting paid very well for?
Anthemos Georgiades: That's a great question, and to be clear, I succeeded in doing it the second time, but out of undergraduate, where I first had the idea... I went the same route, I ended up working for the Boston Consulting Group in London, working 20 hour days for three years. I didn't go the entrepreneurial journey route to begin with, so I think even for me, who's ended up running a 100-person company now, it wasn't inevitable and it was a really hard decision to actually turn down, the kind of "safe" career.
I think the second time after business school when I succeeded in turning my back on the more traditional career is -- I think to your point earlier, if you have the idea and it just burns a hole in your soul that if you're not the person to pull it off, it will kind of grate you for the rest of your life because it's so obvious what you're going to go and do... Whether you're delusional or not, if you feel that call, it's really hard to see any other job as delivering any kind of personal satisfaction to you if you feel that kind of urgency.
So back to your earlier point about "How could you have not taken the money in an investment bank and go all-in on this?", I think the entrepreneurs who start companies to make money, they're typically not the most successful entrepreneurs. I think the most successful entrepreneurs are the ones who want to solve a problem; they're the ones who will burn the midnight oil to solve that problem until it's finally done.
I think I just felt that sense of inevitability the second time around, whereas the first time I think I felt like it should be done, but I think in 2005 when I left undergrad the technology wasn't really there to do it. I think native mobile, iPhone and Android apps were much more developed and the ecosystem was there in 2012; it wasn't there in 2005, and I think that was the final tipping point which made me think "This is the time to go and do it" back in 2012.
Paul Kemp: Let's talk back on that period then, 2012. You mentioned that you raised a million dollars - how hard was that? Because we've heard some stories from ex-founders that "Oh, it just took a day of the first person I phone, I got the money from", others it took years. What was your journey like to raising that substantial amount of investment?
Anthemos Georgiades: We've raised a total of 39 million dollars now in the five years since then. I would say the first million was definitely the hardest. For the 38 million we've raised afterwards I wouldn't say it was easy, but I think there was more traction to point at. The first million was the hardest; we started with European VCs - I knew some of them - and East Coast VCs where I was based. I think typically look for revenue traction; some even look for profit traction, which you know, many entrepreneurs will sympathize with this... When you're just focused on creating a flame, it's really hard to also drive revenue. You're just trying to get users organically.
The first million ended up coming from West Coast VCs, who in my experience, in the early stage, they're more prepared to take an early bout in the product before any monetization. Once we realized that and changed the strategy to focus really exclusively on raising from West Coast funds, it went much quicker. The first million dollars actually came from a one-week trip I took out to San Francisco. I was staying in a motel, I was desperately sick because I had just been to a wedding of a friend of mine in India, and I got a horrible food poisoning and flu, so I was kind of sweating out every night in a crappy motel in San Francisco... But day to day we were having six or seven back-to-back meetings for a week. Once you got the first investor, once the first check is through the door - from a pretty well-known venture capital fund in Silicon Valley called Kleiner Perkins - the rest came very quickly after that.
I think we had a really credible story, we had really good traction to suggest that renters didn't just want to search using Zumper, that they would actually use Zumper to book apartments... And once we got the first person to say yes, the rest came easier. It would have taken, I guess, ultimately months, but when I found the right audience, it took a week.
Paul Kemp: Yes, and also we know from these venture capitalists that some of them have the school of thought that they go all in for the idea, others it's about the person and the entrepreneurs that they're looking at, the founder, and another is it's a mix of the two. But I'd love to go back to your confidence in that initial raise... Were there any particular metrics and things that you did that really gave you the advantage of raising that amount of money?
Anthemos Georgiades: Yes, I think it was probably at the early stages -- the best piece of advice I'd have is just focus on one story, one thing. If we had gone in and said "This is how many landlords we have, this is how many renters we have, this is how much revenue we had", I think a VC would be like "Sure, it's kind of early, there's various things, but I don't see what's going to be different to a big company in the US, the big guys like Zillow or Apartments.com, or like RightMove in the UK."
So just creating a mini version of a bigger company doesn't really appeal to them that much. What we did was focus on one metric which was very different. We said we'll spend our first few years building a very large search engine for millions of monthly renters, but actually at the very beginning we wanted to just prove that those renters, if you took them through to an open house, would actually book what would ultimately be sometimes a $50,000 transaction - say they were taking a 12-month lease with $4,000/month on that phone. Would they actually do that? because that was a really new behavior, and it still is today. That's what the VC's really bit into. They said "Sure, we believe these guys can build a website like all these other guys have before them, but there's one metric that they've built off 35 leases (which is still a really low number) that is really different, and I believe in this. This is their endgame, this is their true North. I believe if they can scale this to 50 states it will be massive."
That even excluded some stuff that looks really good and was a pretty sexy metric because we just wanted them to focus on this one thing. In retrospect, I think that's the advice I would give myself if I was doing it again - get rid of the noise. Investors will assume a certain level of progress across the other stuff. Focus on the one metric that when they write a one-line e-mail to their partners after the meeting, they're only going to talk about that one metric. That's how the deals get done typically in early-stage venture, and that's where we ended up finding it works for us.
Paul Kemp: You almost reminded me a little bit of the presentation that Steve Jobs gave at Harvard that time where he addressed the graduates. He was talking about joining the dots, and you can only see it in retrospect. Listening to your story, I'm almost thinking your time at BCG, the 20 hours a day, burning the midnight oil... That no doubt helped you when you came to that daunting task of going into a room full of powerful people and being able to deliver a really succinct story that came across perfectly and managed to get you off the ground. Would you say that's the case?
Anthemos Georgiades: Yes, I think that's right, and I think in retrospect a lot of entrepreneurs you probably have on your podcast can tie a narrative together, that it was all inevitable. I started at BCG, then I went to Business School to finish the polishing of the skills, and then I was prepared for a startup... In retrospect I think it tells a great story, but the reality was it had never really felt like that. The idea of the BCG that was safe, and the MBA was also a safe idea... Starting Zumper was just from this constant restlessness that no one else was doing this booking engine for apartment rentals.
I think you're right, I think when we were doing the seed round, all of the skills that you could have amassed in completely different industries somewhat was super helpful, but you never know it at the time. It really makes you think "Yes, no way I could have probably done that without the training." But as you know, in the moment, so much that matters isn't your training or your education, it's the constant resilience of being buffeted by various different headwinds that try and knock you off your perch as an early stage startup. In the early days you just focus on staying afloat and pushing on.
Paul Kemp: Actually, just thinking about it, this does try to be a genuine show... We've had a lot of other guests, and what I always explain to the appster tribe listening to this is that we can't sometimes mimic or copy the guests that we have on the show; we wouldn't be able to go to BCG and then do a masters, whatever -- it just doesn't happen that way, but what we can do is learn from the bits that we can from you.
Let's move on then and get closer to now in terms of what are the big challenges that you face now in your business? You've grown so much over the years; you said 100 people, 39 million dollars raised... What are the big challenges for you now?
Anthemos Georgiades: I think the single biggest challenge any company that grows from zero employees to 100 which we now have in four and a half years is focus. As an early stage company you don't have any competition. The big public companies in your space - sure, they're competition, but they're not really... They're so big, and they have tens of thousands of people typically, so in the short term you don't have a hope in competing with their marketing budget or anything. So I think the most important thing we realized is that the biggest competition we have is our own ability to focus. In a 20-person company that's difficult, but in a 100-person company, it's everything.
What we tell the board, what we tell our exec team, what we tell the most recent hire who might be hire 98 is completely aligned, so that every single person in Zumper's business can see how their daily efforts and all the hard work they put in rolls up to one core purpose is critical. I think that a lot of companies at our level struggle with that; I know that we've struggled with that through the years. We've been better than most, but it's difficult, because you see competitors do interesting things, you could have hired people with really great ideas that are slightly different to the way you plan to implement... So I think as a CEO of a business as well it's super boring as a concept, but it's actually critical - driving absolute narrow, introspective focus, so when you ask the question of "What's the single biggest problem facing us?", I think how we can next grow from 100 to 250 people without losing our sole focus of building the first ever real booking engine for apartment rentals is everything. That's what keeps me up at night and I think that's the single biggest challenge we have.
Paul Kemp: In terms of your business as well, do you focus on all the markets, or are you just predominantly the US?
Anthemos Georgiades: That's absolutely related to the previous question. I'm British, as you can probably tell from my accent; I've lived in the US for a while, but there was no inevitability that I would start the company here. The opportunity presented itself at the right time here. Saying that, actually we're pretty narrowly focused on just the US, with currently really zero plans to move outside the US, in Canada, which we're kind of already in as part of an acquisition we did a year ago. So we're in all the 50 states with the search platform. With Zumper Select, which is the booking product, which really takes a renter beyond search, through to end-to-end, we're currently only is six markets in the US, six big cities. Now, the model will work in 100 cities in the US.
In the next four years we're only really focused on getting our model from six to 100 markets in the United States. If someone -- and you know, occasionally we get a bunch of e-mails telling us that they're competitors and they want to partner with us in different markets, like Brazil, or Europe... I think England was an example recently. Sometimes the best answer is good luck to them. If they want to look into the model and they're going to help some consumers in that market - great, I'm all for it; it will make lives better for the people moving in those markets... It's just for us the problem is large enough in the US right now, so we're laser-focused just here, at the expense of international growth.
Paul Kemp: Anthemos, one of the other things we like to explore is to kind of get a sense of what it's like to do what you do, because it's hard -- when you have a corporate career it's quite easy to break down your responsibilities, your job, but when you have the founders and CEOs, it's sometimes kind of hard to get an idea of what they actually do day-to-day. Would you be able to give us an essence over the last week or so what's been your main tasks as the CEO of this company?
Anthemos Georgiades: Yes, it's really evolved... You start selling, fundraising, building product, hiring - you do everything; you are this all-seeing, all-dancing band when you start a company. Now with 100, the last week - three top priorities that I've been working on, and it's a good litmus test for really where you spend your time as a bigger company CEO... So one is on fundraising. Even though we're not currently raising money, we will be in 2018. In the last week I've had over a dozen meetings and coffee chats with potential investors that will invest next year. Not pitching them, not sending them a pitch deck yet, but just getting them to know me and know the vision and get excited about what we're building.
The second thing is around hiring and retention. Ultimately, it all rolls up to you, whether it's culture, hiring and retaining your best people. In the last week I've also been the final interview for probably over a dozen candidates that my team have been interviewing across engineering and various other roles, and then also working with other managers in creating great packages for our best-performing employees to make sure they're super happy and they continue to stay with us until the end. That's a really important second piece in my role.
The third one is just product alignment... The things we mentioned - making sure that on a weekly basis what our engineering team or our design team are focused on is exactly what we told the sales team, and exactly what we told the board and our investors. It's kind of setting guidelines so that people can execute with zero ambiguity.
Those are the three things that on a weekly basis I'll always be working on, and then every now and again something will come out of left field. For example, I struck a big deal with a huge partner that will go live in November last week that came out of left field three weeks ago and it made sense for the CEO as a business to do the deal, because it's with a very large player... We'll be able to announce that in November. Every week 15 different things will come out of left field, whether good or bad, that you need to deal with. But across the typical week, it was mainly those first three things that take up at least half of my time.
Paul Kemp: One of the big challenges that a lot of us find in doing all this stuff is information overload; you can get just so much information, you can get bombarded... You start to get a report that you think is going to be valuable, and then one report leads to ten, leads to 50 or whatever you're looking at, all these different metrics. How do you discipline yourself to take in what you need and almost dismiss the rest or delegate whatever else you don't need to digest in terms of information?
Anthemos Georgiades: That is super hard, and I think that's super hard in an early stage business or a late stage business. My head of business operations, a guy called Brian - he's very good at using tree logic for how things roll up. So if you think about OKRs or DRIs - every single business should be broken into its constituent parts, and that really helps incentivize especially junior folk who join, to see where their role is... That even if they don't control the main number, they have to understand how what they do in terms of like how many onboards they do, how many sales calls they do - how it leads up to a top-line revenue or lease number.
Brian, my head of business operations has a great exercise for actually rolling that down the organization, so that at the junior levels everyone knows their numbers, then it rolls up to their managers, and then it rolls up to the CEO. Ultimately, what I see is a dashboard of all the most important numbers, which in the day-to-day is enough for me to be able to understand if we're going in the right direction. But if I ever want to drill down into them, it's kind of logically put together so that I can get as granular as I want to... Not by pulling a completely separate report, but by just drilling into one of the top-line numbers I'm given, where all the details are underneath there and it's quite easy to explore.
I think my team are usually pretty devastated if it ever comes to that, because then I'll ask them several dozen questions from the stuff that I haven't understood. The models evolve so much since I've last looked at it, but I think most CEOs should really have two or three numbers maximum that they're focused on, and as long as they're either leading indicators showing that there'll be future success later, or they're lagging indicators because you really believe in your leading indicators so you just want to see the outcome... If you're tracking more than 2-3 obsessively, it's probably too many.
The final anecdote from that is I think Mark Zuckerberg at Facebook was very well known for only having one number in a lot of his daily or monthly meetings, which was DA (daily active) users over MA (monthly active) users, which was a proxy for saying "How many people came back to Facebook every single day who used it at least once a month?" Facebook could have tracked a hundred thousand numbers, but they were very good at actually just tracking one, and it's a really hard discipline, but I think it's really important.
Paul Kemp: Yes, and also, the people we'd love to help here as well are those that are thinking about going into either a business school or maybe taking that job with one of the big consultants, so what I'd love to know as well is that the stuff that you'd learned from business school and BCG - how applicable is it to what you're doing with your role now?
Anthemos Georgiades: I think BCG, which is consulting CEOs of large Fortune100 companies equips you great for board meetings and for managing a business revenue. You're never involved in product decisions at BCG in terms of you're consulting a supermarket, typically you won't get down to helping build their product. You're going to structure how to do it at a high level, in terms of online product. But BCG was great for managing a business that now we're growing into, which actually has revenue, and the margin considerations.
I think where business school was really helpful was on the way you angle business school. I went to Harvard Business School on the East Coast, and the second year at Harvard you can choose your electives and slant them to things that you really want to learn. For me, I didn't want to do any more strategy classes or economics classes, because BCG just drilled me in that. So I angled very heavily in my MBA to stuff like negotiation. When negotiation comes in at every single point in the startup journey, whether you're negotiating your first hire, you're negotiating your series A, your series B... A class like that has just permeated every single interaction I've had through the business, and it's not something you really pick up at BCG, because you don't have the time to abstract out, to do that.
We had a world-famous professor teaching us the art of negotiation in my second year in business school, and stuff like that you can really use immediately after business school. I'd say for those of your listeners who are considering BCG or a consulting firm or bank - it's a fantastic training on how to run a business. In terms of business school, I think it has two advantages. One is you can really focus on the things that you weren't experienced in, and two - business school, let's just call it what it is... It's a 12-20 month time off to really soul search about if you're ready for a startup and if you have the right idea. For me it was as much about learning negotiation tricks and finance tricks, as it was about actually just having the headspace to take time off and research an idea.
They're amazing things to do, even if you wanted to do a startup down the road and you weren't ready tomorrow; they're fantastic journeys. Saying that, some people are just ready now and they won't need to take either of those options. If you have a burning idea, the best thing is to just go and execute against it and figure out as you go.
Paul Kemp: I love that advice, fantastic. As we draw to the end of our chat - it's been wonderful - how best can people find out about Zumper? Where is the best place to go?
Anthemos Georgiades: Zumper.com is our web platform where you can search for apartments if you're in the US. If you're in one of our first six markets: Denver, Atlanta, New York, Chicago, Dallas, Houston, in those markets you can actually go end-to-end, where we'll actually help you sign your lease and go the whole way through Zumper. Then we also have iOS and Android apps. If you just hit "Zumper" in the App Store or Play Store and download our app, you'll be able to search through those.
Otherwise, just googling around, because we have really interesting announcements coming out, and we also put a lot of stuff out on rent prices. It's being a common topic in the US about how markets have been quite hard so maybe things will be cooling off... So you may also come across us just through reading your local newspaper. Real Estate Trends, they talk about that.
Paul Kemp: And for all of those who want to go to a resource, you just go to theappguy.co and search for episode 536, and you'll see links to all the stuff that we talked about.
Thanks for coming on the show, that's so inspiring... I love doing this podcast and meeting people like yourself, because it's enormously motivating to hear the enthusiasm, the passion. And the fact that passion's still there after all these years of you doing such a hard job, and the fact that it just sounds so much fun... So thanks for coming on The App Guy Podcast, and I wish you all the best for the future.
Anthemos Georgiades: Thanks very much, Paul. I enjoyed it!