“You have to force yourself to launch. That’s the most important, getting that out of the way as soon as possible.”
– Federico Folcia, Founder and CEO of Roomorama.com
I met Federico at an Echelon startup event in Saigon in April. His presentation about startup mistakes to avoid was outstanding. He spoke from the heart as an entrepreneur who has made painful mistakes and learned from them. I spoke with him after his presentation and we hit it off. Federico is a super friendly and passionate guy.
Key learnings:
- Launch! Launch right now! Don’t wait for your website to be perfect. The only way to know what will work and what won’t is to get customers using your product.
- Focus on what really matters. Figure out what is the most important thing in your business and focus on it ruthlessly. Don’t let yourself be distracted by working on cool features that matter less than the fundamentals.
- Get a technology leader on your team. Don’t forget that your job is just beginning at launch. You need someone full time on your team to take care of technology, making updates and product improvements.
- Understand who your customers are. Your customers may be different from who you thought they would be. Spend time to learn who they are and what they need.
- Hire a lawyer. Make sure it’s clear who owns the intellectual property and that you have written agreements with everyone who works with you.
- Be flexible. To be successful your business must be ready to respond quickly to market changes and surprises.  Keep your eyes open all the time looking for new opportunity. Don’t be afraid to abandon old ideas and go in new directions if it makes sense.
The interview:
If you’ve enjoyed this interview, please tweet a thank you to Federico here!
Chris: Hi, I’m Chris F. Harvey. With me today is Federico Folcia. Federico is the founder and CEO of Roomorama.com. Roomorama is a provider of short-term accommodations all over the world. Welcome, Federico.
Federico: Thank you very much, Chris.
Chris: OK. Federico, you and I met at an event in Saigon, where you did a presentation on top mistakes to avoid in a start up. I remember you did it with a lot of passion, so I thought we could talk about that today. But before we do, maybe you can tell us a little bit about Roomorama.
Federico: Sure. Roomorama is a one-stop shop for professionally managed short-term accommodations all over the world. We currently have 65,000 properties in over 4,000 destinations across the globe. We started the company at the end of 2008, that was in New York. And now we manage most of the operations from Singapore, where I’m currently talking from.
Chris: Federico, what gave you the idea to start a short-term accommodations website?
Federico: I’ve always had an interest in solving problems. I wanted to put myself in one that affected me personally. I’ve lived in different cities for the past few years, and I used to travel a lot. So my home would sit empty for a few days or a few weeks. I tried to rent it out through classifieds sites but went through a lot of pain. There wasn’t a way to vet the potential guests. People wouldn’t show up, and collecting payments was a real pain. On the other side, I found it difficult to recommend affordable places to stay for friends and family coming to visit me, especially when I was living in New York, and the hotel rate was $300 and above. I set up Roomorama on the principle that renting an apartment or a house from a stranger should be an easy process.
Chris: Federico, I’d really like to talk a little bit about the presentation that I saw you give at the start up event in Saigon. I thought it was fantastic. It was top mistakes to avoid as a start up.
Federico: When I started my own business, I was very naive and idealistic. Frankly, I had no idea how to run a business. So like you said, there’s a lot of mistakes that I made along the way. One of them was, for example, when we launched the website, it really took way longer than we expected. We thought that in a couple of months, the site would be up and running. It actually took us 8 months. The reason is because at the time I thought, we launch a new site, I wanted it to be perfect. I wanted it to have every possible feature I envisioned for the site in the future.
That was a big mistake because unfortunately, when you, the initial product should be as focused as possible on the valuable position of your company.
So you should trim down the product to the essential and not have too many features. One way to use the development cycle is first of all, have a very open communication with your development team. In my personal experience, my biggest mistake was to hire a company a few thousand miles from me. At the time, I was in New York, and the company I hired was in India. The mistake was on my side. I assumed that just by giving them a list of bullet points and telling them how the site should work, would be sufficient. That’s not the way you should be drafting out your website.
Chris: So yeah, I hear two mistakes here. The first mistake is not
launching, taking too long to launch. It reminds me a lot of what Marc Cenedella said in my last interview, “If you haven’t launched, you’re failing.” So that’s one. You waited a long time because you wanted everything to be perfect, and after you launched, you realized it was a mistake. How did you realize it was a mistake to wait for perfection?
mistakes. If I were to start again the same project, I would focus, like I
said before, on what really matters. I would try not to add too many
features but instead on the valuable position of your business.
Chris: The lesson would be, get it out the door and then make iterations
and fix it on the fly.
Federico: Yes. You have to force yourself to launch. That’s the most
important, getting that out of the way as soon as possible.
Chris: OK, great. Then you started talking about the second mistake. Which
was you hired a company in India and you didn’t communicate clearly. So
what would the mistake be there? That you hired someone far away or you
weren’t clear enough?
Federico: I guess they’re part of the same mistake in a way, because
another reason why the product took so long to be developed was there was a
miscommunication internally. The problem is that I made a lot of
assumptions with the development team. I thought that just by giving them a
list of features and functionalities would be enough for them to understand
and layout everything. But effectively, the best way to do it would be to
design the flow of the site yourself, page by page, step by step. Don’t
assume that somebody else would do it for you, because they will not do it.
And again, that ‘s something that delayed the process of the development.
That leads me to another mistake that I made, and that was underestimating
the importance of technology. I see a lot of people starting their own
prototype, and even in the process of launching the beta site, they have no
idea what’s going to happen afterward. Who’s going to maintain the site?
Who’s going to push the new features and evolution for the company, for the
product? I think it’s very important… Sorry, go ahead.
Chris: Sorry. Is that a technology problem or a responsibility problem? I
don’t understand what you mean by that.
Federico: It’s a little bit of both. If you are a technology company, and
we are, by all means, a technology company, you should make sure that you
find a tech guy that can do the tech for the company as soon as possible.
Chris: Ah, OK.
Federico: The reason you want to do that is because when you have limited
resources, there are two areas in which you should spend your money. One is
the product and the other one is customer acquisition. So if you manage to
find some guy who can be your technology mentor in the process, then your
focus will be on the customer acquisition.
Chris: I got it. So the takeaway is not focusing on technology. And what
you mean by that is, getting someone on your team, who’s on your team, who
understands technology better than you do, because you’re not a technology
person?
Federico: No I’m not.
Chris: In fact, you know Federico, when I saw your presentation, I left my
old company a few months ago, and I have some ideas about starting
something. You inspired me, because I thought, “Wow, there’s a guy who
doesn’t know anything about tech, just like me, and he started a technology
company, or a company that uses technology to deliver a service.” So that
might be mistake number three, which would be, don’t, make sure that you
have someone who is responsible for technology, who’s on your team, who has
a stake.
Federico: Very, very important.
Chris: OK.
Federico: Another common mistake, and it’s a bigger mistake that we had
recently made in the process, was not take much time to understand who our
customers were. This is key when your product is out, because you must
understand who your customers are. Only when you understand who your
customers are, then you will have an effective strategy in all the areas of
your business, whether it’s product, communication, marketing, sales. So
it’s okay when you launch to not know exactly who your customers are, but
then you have to set it a priority, once your business is up and running
and your site is live.
One way to do it is you want to talk to your customers. You want to get
feedback from them. You want to do customer service, especially in the
beginning, you want to wear many hats. You want to put yourself in their
shoes and ask yourself a very basic question. Would you use your own
service or your own product? If your answer is yes, then you can focus on
something else. If your answer is no, you have to question yourself and see
what can be improved or what can be adjusted.
Chris: Or maybe you ask your good friends if they’ve used your product, if
they’d use it again, because they’ll probably be more honest with you than
you are with yourself. At least I would think that, “Oh yeah, my product is
great, of course.”
Federico: Definitely.
Chris: So when you launched you felt like you hadn’t focused on customers
enough. What did you mean by that and what was your experience like? How
did you realize that?
Federico: Well, because, I’ll give you a very specific example. When we
started the company, we thought that the demographic would be students, 18-
25 years old, people looking for very cheap accommodations. The demographic
that we have is very different. It’s 30 years old and above, mid to high
income or salary. We have a lot of business travelers. We don’t have many
students. We have young professionals, we have families. So we got it
completely wrong.
Chris: So you launched for a demographic, a customer segment that was
totally not the segment.
Federico: Completely different.
Chris: Wow.
Federico: It took some time to realize. In the meantime, to be very fair,
we went after the more professionally managed type of properties, which is
something that we didn’t really go after in the very first stage of the
company. Like I said, we thought that the demographic would be a young
crowd, looking for cheap accommodations. Now we are looking for people in
their 30s, looking for quality accommodations but for a reasonable price.
Chris: You know, it sounds like I’m going to make a connection between this
mistake, not knowing your customers well enough, and the first mistake you
said, which is not launching fast enough. You were only able to find out
about the mistake that you were targeting the wrong customer segment, by
launching, only after you launched.
Federico: Yes, yes. You have to dive into it. That’s the only way you’ll
find answers.
Chris: OK. OK, great. So, customers, know your customers. And you have to
launch in order to do that, because it might be someone totally different
from who you think. Now I remember one thing you talked about in the
presentation was legality that a lot of, that you didn’t pay enough
attention to legality. What did you mean by that? Can you describe that for
our listeners?
Federico: Sure. When you start a company, to be honest, hiring a lawyer
costs a lot of money. And hiring a legal team, a legal person full-time on
your staff, can be very expensive and can take a lot of resources from
things that are more important, which is building the product and spending
money on customer acquisition. In terms of legality, you should take every
possible precaution to make sure that you don’t run into bigger issues at
another stage. So there are two mistakes that you shouldn’t make. The first
one is to underestimate the importance of intellectual property commission.
The second one, you should try to stipulate, actually, you shouldn’t try,
you should do it, you should stipulate written agreements with every
individual who works for or with you. That’s something you should be doing
from the get-go. Don’t make an assumption just because someone is a nice
person or is your best friend that things will always run smooth. Just look
at “The Social Network.” That’s a perfect example.
Chris: Another one of your mistakes, I see, is lacking focus. What did you
mean by that one?
Federico: That means that you’re not focusing enough on, you’re not
focusing your time and energy on what really matters.
Chris: How do you know what really matters?
Federico: Well, you get distracted by features you want to implement,
projects that you’re adamant to make happen, people you want to please,
effectively, you should focus on the valuable position of your company, and
on the endgame of your stretch. So on a shorter-term strategy, what I
recommend everyone should do is to set deadlines for each of those
milestones. Make sure they’re strict but realistic. If you realize that
they’re not, maybe you should separate your goals into smaller milestones.
The rule that I always follow is that of low hanging fruit. What gives you a
big reward with a small effort should always come first. That is what is
most important to me each time I make a decision.
Chris: So can you give us an example of that? What’s one feature that you
were working on, your team has been spending a lot of time on, when you
realize, “This is crazy, we shouldn’t even be thinking about this, because
when we’re spending time on this, we’re not spending time on this other
thing that’s more important.”
Federico: Sure. It happens every day. There’s a lot of features I want to
launch. But the most important feature is the conversion of the site.
Number of times X people coming to the site, how many bookings are we
actually converting that into? That’s the most important thing, and that’s
what really matters. Sorry, go ahead.
Chris: Sorry to interrupt. So your focus was number of people coming to the
website, how many of them end up booking?
Federico: Well, the focus should be that. Unfortunately, sometimes I get
distracted, especially in the past, I used to get distracted a lot by the
possibility to launch a new feature that may or may not be appealing for
existing and new customers.
Chris: Which would take away time from a feature that you know will
improve conversion.
Federico: Yeah. Yeah.
Chris: As a leader, as a CEO, you have to tell people or you have to
communicate the focus. “Nope, we’re only focused on conversion. Does that
help conversion? Yes or no? You think it does? How?” And if it doesn’t,
then you have to say no and kill the project. Sometimes it’s killing
people’s favorite ideas. How do you do that? I’m kind of going over a
management idea, a leadership thing. Which is how do you… People love to
work on their pet projects. So how do you kill things, features that are
really cool that people want to do?
Federico: Well I don’t kill them, I just delay them.
Chris: OK.
Federico: And I’ll keep them busy with something else in the meantime.
There’s always a lot of work to be done anyway.
Chris: I got it. Sounds like a good strategy. So I think we are almost out
of time. Is there any other or one last mistake you think you could share?
Federico: Let me think about it. One could be maybe being flexible.
Chris: OK, flexible.
Federico: In other terms, not reacting quickly enough to opportunities or
issues or, like we said before, priorities that need to be made. The
concept here is you start with an idea, and that’s going to change over
time, because of the market, because of the customers, because of the
competitions. So you must be able to listen to each one of those voices,
adapt your product or your service, so that you can deliver what your
customer wants and what you expect your customers will want in the near
future. That’s very important. To share another example with you, we
started up in New York, but we saw the opportunity to be one of the first
companies to pioneer this type of concept in the Asia region. It was very
risky, because effectively, Asian travelers are still very unfamiliar with
the concept of staying in an apartment instead of a hotel. And we took a
lot of risks.
But not only did we move our service here, but we moved most of our
operations to Singapore. I think it was a good choice because things have
gotten better ever since.
Chris: So when you say flexible, you mean keeping one ear to the ground all
the time, keeping your eyes open, looking around and seeing if things are
changing.
Federico: Yes.
Chris: We always have certain expectations. You had the expectation that
you were going to be serving backpackers and young people, who wanted cheap
accommodations, and then you realized that wasn’t the case and you
changed. So you’re talking about staying constantly aware, getting input
all the time about what’s going on and not being afraid to completely
change direction.
You guys started in New York and you moved the entire operation to
Singapore. You never thought you would do that.
Federico: Absolutely not.
Chris: You did that as a reaction, you thought there was more opportunity
in southeast Asian and Asia in general, and Singapore is a great
environment to do business. You made the decision to change, just like
that.
Federico: Well, not like that, but yes.
Chris: OK.
Federico: It took us some time.
Chris: OK.
Federico: I think it was a risky decision for us, but I think it paid off.
I think it was a great decision to make.
Chris: That’s great. It sounds like a success story so far. So Federico, I
think we’re out of time, but I really want to thank you for your time
today. Thank you for sharing with our viewers some of the mistakes you’ve
made so they don’t have to make it. It reminds me of a quote, “You can
learn from your own mistakes, and that’s costly. Or you can learn from
someone else’s mistakes, which you get the same result but it’s a lot
cheaper.” So thank you for sharing your mistakes with us today.
Federico: My pleasure.
If you’ve enjoyed this interview, please tweet a thank you to Federico here!
