Lamudi opened nine new markets in 2013 and 2014 alone, while enjoying revenue and traffic growth. This year’s Property Portal Watch Conference heard how it's done
CEO Paul Phillipp Hermann, also the founder of Rocket Internet, told Bangkok delegates it took the company just four months to become number one in Bangladesh; admittedly a very young market.
“In the Phillipines where there was more competition, Lamudi became the number one vertical in just 13 months,” he says.
With 3.5 million visits per month, the company is currently focusing on going deeper in each of its established markets to be the clear number one on all KPIs before expanding further.
In terms of visitors, Hermann says scaling quickly by buying traffic isn’t sustainable, so the company has put a great deal of energy into SEO.
“We got a boost from the acquisition of MyProperty in the Philippines, but even without it we have a 3X position in terms of visibility against Property 24 which had a head start in the Philippines market.
“Our revenue growth of 3000 per cent is faster than the growth we’ve achieved in paying clients so we’re looking very healthy long term."
In February this year Lamudi, which now operates in 34 emerging markets raised USD 31 million on top of USD 18 million raised in February 2015 and USD 7 million in April 2014.
So how is this achieved?
Enter emerging markets
Firstly, Hermann says the company deliberately chooses to enter markets with no dominant players where internet penetration is still low.
When launching Lamudi and co founder Kian Moini focused on emerging markets in Africa, Latin America and south east Asia, which are very attractive in terms of rapid growth.
“There are more people who need to find a place to live and GDP per capita is growing," Hermann says.
“In Latin America and South East Asia we expect a growth of about 55 per cent, from 2014 to 2020. With that kind of growth comes more affluence, a middle class so more people can afford to buy rather than rent.
“Of course internet penetration is growing really fast.”
As a result of data gleaned from a variety of sources Hermann predicts there will be roughly 1.9 billion transactions in the Latin American and SE Asian real estate classifieds markets with around 11.7 billion euros spent on advertising.
“Our estimate that 11 per cent of this spend will be online,” Hermann says.
“This still leaves a market of 1.4 billion euros in just four years time. Essentially if you do the maths, there is room for several billion dollar companies in the markets we are looking at.
“ It’s a massive opportunity."
Simple lean process
Hermann says there is no magic in what the company has achieved.
“It all comes down to hard work and execution," he says.
"In terms of making he first jump into a new market we use a very simple straight forward process."
“It’s focus on the basics first, then learn then scale,” he says.
“We go in, hire a good managing director for a market. He flies in, gets two three days to find an office and one or two weeks to hire the most important two employees, one sales guy one HR manager.”
Hermann says the next few weeks are spent going out looking at which are the largest brokers and developers, and the fastest source of listings.
“We go to the brokers, speak to them and get them on board for a free trial. Once we have a certain number of listings we turn the website on and we are live in the country."
Best of both worlds
Hermann says running Lamudi sites in emerging markts from its headquarters in Berlin has advantages.
"We have good understanding of the market overall by having teams in all of our markets. We have the best customer relationships with agents and brokers because we have a sales force on the ground."
He adds he and Moini always visit clients when travelling to the local markets to get feedback for Lamudi’s products.
“On the other side in Berlin we manage to attract good talent in marketing, in tech and this is critical. It’s much easier to find people in Berlin to help build the business."
Economies of scale
Hermann says Lamudi has huge economies of scale.
“In total for the Asian and Latin American markets we have roughly 300 to 400 people. Compared to Zameen which has 500 just in Pakistan it’s a very lean operation.
“It shows the economies of scale we have by leveraging one marketing team and one tech team across the world.
"However there are some things we do on both sides of the market and these include branding HR and finance.
“We help each of the markets using a kind of service centre with best practice sharing between us, other Lamudi markets and our other Rocket Internet companies."