An estimated 13.4 million hotel rooms and short-stay apartments across Europe and the UK, coupled with a growing industry of online travel agencies and marketplaces, that cater to the booming rise in the mobility of people who mix business with pleasure.
Enter Niko Karstikko and Sebastian Emberger, true digital nomads, who found themselves unhappy with the poor value-added of Airbnb’s scaling hit-or-miss market. They co-founded Bob W to redo the hospitality industry, promising a five-star experience to each guest.
Superangel caught up with co-founder and CEO Niko, to talk about Bob W’s plans for their latest investment round and discover their formula for growing a startup despite the Covid-19 pandemic-triggered downturn in the hospitality industry and achieving an unlikely success at a difficult time.
Becoming Bob W
Growing up in London in a family of entrepreneurs, Niko developed a keen sense of opportunity. A move back to London shortly after his studies in the U.S. and Paris saw him take a high-paying job in finance, where he stayed for five years. Realizing that he was drawn to another path – more similar to his parents – he took to the tech industry and founded a fitness app in 2012, SportSetter, which he later sold. It was during this startup venture that Niko met Sebastian, his future co-founder.
After a period of traveling and hosting several apartments on Airbnb, Niko realized that about 50% of hotel rooms and a just fraction of short-stay rentals were branded with a quality standard. Travelling was at its peak, but up to two-thirds of the time people couldn’t be sure of what they would get when booking a stay.
The idea of creating a proper quality standard for the short-stay rental industry led to the founding of Bob W in 2018. The first apartments were set up in Helsinki, and quickly became the best ranked in the city. Around that time, the team bagged a small investment from angel investors, including an early Airbnb investor and set their sights on Tallinn, where they put up their first proper building. The guys were spending zero euros on marketing, but the customers were loving their product.
Bob W offers a lean luxury brand backed by technology that allows them to eliminate variables such as not knowing what to expect, questionable hosts, the hassle of key pick-up, or the trouble of choosing a neighborhood. Bob W apartments are always in trendy neighborhoods, offer the same amenities, are locally designed and sustainable, offer easy entry, and link to local service providers through the app.
In 2020, with the Covid-19 pandemic at full speed and the hospitality industry in a downturn, the company awed the startup community by closing a €4 million seed round led by VC fund byFounders, with participation from Superangel and United Angels, as well as leading Nordic and Baltic real estate investors, NREP and Kaamos. The investment put the company into full speed towards expanding across the Nordics, Baltics, the UK, and beyond.
Bob W building the puzzle
From the beginning the founders built and sold the product for people like themselves, having realized that there are many more potential B2B clients like them: ‘The Airbnb generation’, who are mixing business with pleasure, looking for exciting interactions and fulfilling cultural exchanges, packaged in a quality standard. Today’s B2B program includes happy customers Bolt, Pipedrive, Fotografiska and much of the tech and startup scene. Building brand awareness was backed by influencer guests and brand ambassadors, who had no problem getting behind the product whole-heartedly because of it’s great positioning and high quality.
The company’s value proposition is embedded in the name. It is built on the cross-section of hotels and short-stay rentals, which attributes the product with ‘the Best Of Both Worlds’. This positioning allows them to optimize a large playground to their advantage, using a variety of traditional marketing channels of the industry as their customer acquisition channels; marketplaces typically targeting different customer segments, like Booking.com and Expedia for hotels, and Airbnb for short-stay rentals. Furthermore, with a 78% repeat customer rate, there is little need for retention marketing. As Niko puts it: “Just build the best product on the market and you don’t need to press the right touch points too hard to get a customer converted.”
An important aspect in developing any product is the flexibility that allows it to be reused for new use cases. “For example, doctors relocating to other cities to help out during the Covid-19 pandemic, who would rather not spend 90 nights in a hotel room,” Niko explains.
Bob W caters to the needs of a wide range of target groups, from the mobile workforce of international tech companies to freelancers working remotely, expats on holiday within their home countries, and tourists that appreciate traveling like a local. For business customers booking in bulk, Bob W actually saves days of work compared to Airbnb, says Niko.
While the company promises a five-star experience for every guest, their prices range somewhere in the middle of the 3-to-4-star hotel equivalent, or an amateur-hosted apartment. All thanks to the technology that allows them to run 50 apartments with one person. Automating traditional hospitality allows an unquestionably high quality of offering with less human capital, lower costs, and more profit – a whopping three times more, compared to traditional hotels.
Bob W taking on the world
Being physically located at the Palo Alto Club – the Tallinn-based co-working space founded by early Bob W investor, VC fund Superangel – pinned the Finnish German founded startup on the Baltic startup map and earned them a nomination in the Estonian Startup Awards Foreign Founder category. Becoming well-known in Estonia later helped the founders recruit an incredible team. The largest share of which is now working out of Estonia, including the company’s German co-founder, Sebastian.
“Estonians have a great sense of opportunity and I love their startup scene,” Niko Karstikko, CEO of Bob W.
The company recently raised an A-round, increasing investments to €10 million. The founders had built a product that showed resilience during the pandemic, when many others were failing, and exhilarated the changing trends of the market. The redistribution of the real estate market provided momentum to grow, with office spaces emptying because of the pandemic, and the investors celebrated the opportunity. The new investment was raised from existing VC and angel investors and Finland’s state-owned investment company, Tesi, which invests €100-150 million in venture capital, private equity funds, and growth companies, annually.
With its clever branding and Net Promoter score (NPS) of 93 , Bob W is dramatically growing revenues. With hundreds of units signed, the company has several new buildings coming live in many parts of Europe, like London; making Tallinn and Helsinki, where it all started, the smallest markets they operate in. In the next year or two, the founders are moving towards asset-light management with technology to fill the gap in the hospitality market worldwide.
According to Niko, going international is ultimately about weighing the effort against the opportunity. To pick new markets, the team uses intuition combined with data to make even better decisions. While the fundamental directions are guided by their gut feeling, the team now replicates patterns that have worked previously. Bob W currently has a team of analysts, who are building scalable scripts on different markets, which is helping to funnel large capitals down to a few. The analysis is typically based on multiple data sources, looking at the competition, the type of customers, rental rates, demand and supply data, real estate fundamentals, compatibility with the brand and in-house skill sets.
It takes effort to grow out of one’s nearest region and comfort zone – what the Baltics and Helsinki are for Estonians and Sweden is for Finns. According to Niko, entering a new market might only, depending on the product, be about learning to operate different distribution channels, but usually, the barriers are more psychological than anything else.
“Targeting markets that are big enough, like New York, London, Paris, and Germany, makes all the difference to investors, who are above all looking at market opportunity. In London, we are much more relevant to a big part of the world,” says Niko and elaborates: “With hotels struggling for survival, there is a massive opportunity. A thousand apartments are a drop in the bucket compared to 70,000 units available.”
“Going to London, we can be a unicorn based in one city,” Niko Karstikko, CEO of Bob W.
Team Bob W
The company culture centers around problem-solving and making a change. “We are a bunch of hustlers that want to create a new benchmark for hospitality,” says Niko. The team grew from 6 to 36 people in 2020 and is now at 40 and fast-growing. The company has successfully recruited from Pipedrive, WeWork, and AirHelp to build prominent tech, real estate, and growth teams.
The company goes by hiring only the best people, investing a lot of valuable time on sniper recruiting to achieve this. “The process starts with identifying the people we want to hire and then we try to figure out how we can afford and attract them, and what we need to do to relocate them, not the other way around,” explains Niko. Rapid growth during the corona pandemic has created challenges with recruiting online, which lacks the socializing aspect necessary to read people and make the hiring decision. Building a company culture and achieving harmony, while working remotely, has required coming up with new ways of working, ideating, and connecting with people. Bob W new hires are supported by a professional onboarding program, which is now executed online.
Bob W’s team members are chosen by the same values, with radical transparency, 360-degree hospitality, and responsibility topping the list. ‘Don’t just be nice to the customers, but also to the lady in your lunch cafe, to your friends and colleagues’ has become the company mantra of sorts, according to Niko.
“We choose the people we’d like to grab a drink with,” Niko Karstikko, CEO of Bob W.
In order to cultivate success in the company, the team regularly gets together, whether it’s virtually or physically, to battle it out and make sure they are on the same page before they start something new. The founders take efforts to support the team in a way that gets the best version out of everybody. “I love having a beer on a Friday afternoon with my colleagues to ask them how they are really doing,” Niko says.
From the founders up, the widespread approach to getting more done is taking time to explore personal limitations and to be able to identify the point where actions start giving diminishing returns. “When you can’t sleep two nights in a row, you should probably be doing something differently,” Niko explains.
A ground rule for keeping the team going, according to Niko, is to always keep the door open and be both the pep rally guy and waterboy, to help people do what they do best. “The price is finding the best team. People’s abilities either match your company or not. Hire better than yourself,” Niko noted.
“We can guide and help people grow, but usually you want to hire amazing people and let them do their thing,” Niko Karstikko, CEO of Bob W.
In a team of 15 nationalities, Bob W broadly celebrates diversity of gender, nationality and skill sets in all its activities. The management makes sure that the HR strategy includes hiring polar opposites, a concept proven at the founder level. This means finding complementing skill sets and personality types, like the gibbery marketers and structural-thinking engineer-types, for different roles and encouraging these combinations in the teams. The approach brings amazing results, according to Niko, who has experienced burnout and failure in his previous ventures fueled by toxic founder combinations of too similar personalities, with clashing goals.
There is an enormous amount of respect between the two founders for each doing what the other hates and doing it on a world-class level. The founder pair is determined to replicate the pattern throughout the company to achieve success in a Zen environment.
Bob W keeping it real
Niko and Sebastian were lucky enough to choose their own investors, who have proven their value as a motivating force in terms of scaling and fundraising. Bob W uses monthly reporting in order to keep their investors in the loop, and social media apps like Whatsapp for more casual ad hoc interaction.
When asked about keeping investors on board during hard times, Niko says there are two ways: “Consider them a party that you’re trying to impress or make them a part of your team so that they feel your pain when you’re hurting.” Nine times out of ten you find that there is a lot of empathy and willingness to help solve the problem on such occasions, he adds.
“It’s all a game and we are all trying to be happy with the journey,” Niko Karstikko, CEO of Bob W.
Having recognized that financial incentives are very much an afterthought for him, Niko follows a concept of success that differs from the conventional understanding that it has something to do with a Ferrari badge. “I like the idea of not having to worry about money because, in my teens, I saw the bankruptcy of my family businesses during two economic downturns. But for me, it is more about reducing the background noise of the personal economic situation so I can do what I was born to do and enjoy the journey to the fullest,” Niko noted.
For Team Bob W, being successful means making a positive mark in the world and leaving an impact on people. Next to leading the industry in sustainable hospitality, the platform aspires to do its share to reduce prejudice and other pre-conceived notions through the meaningful cultural exchanges it opens travelers up to.
“Bob W is the avatar of the best host you’ve ever had, times ten. He is that guy who put a whole lot of love into making the apartment perfect for you, sorted your restaurant booking and remembered all the details, like leaving the toilet paper in the triangle, as he rushed off to rescue koalas from Australian fires,” concludes Niko, who without a doubt, lives his brand.
Bob W’s formula for building a successful startup:
- Avoid toxic founder combinations with clashing goals
- Build a 10x better product than what’s already out there
- Target big markets
- Choose investors who bring value and are team players
- Combine intuition with analysis
- Become a community player
- Don’t compromise with recruiting
- Choose people with the same values
- Diversify your team
- Always aim to make a positive dent in the world
This article was put together by Anari Hagel.