It’s amazing how many different industries are still wandering around somewhere in one of the desolate cul-de-sacs of Web 1.0—low-quality photos, weird tables, endless lists of links.
Adam Doppelt, a co-founder of the restaurant-rating app Urbanspoon, ran into all of those hurdles when he was researching vacation rentals for a family trip. But it took a pissed-off customer experience to push him back over the edge from annoyed developer to startup founder.
After renting a vacation home that was much, much worse than advertised, Doppelt finished swallowing his $8,000 and got ready to leave a bad review. One big problem with that plan: since the listing site was bankrolled by paid placements from property managers, Doppelt figured his rant might wind up buried.
“So instead, I started a competitor,” he says. “It was a lot easier.” That competitor is Dwellable, a small, bootstrapped Seattle startup that helps consumers find private vacation properties to rent.
Dwellable is targeting a market defined by HomeAway, a network of sites (including VRBO.com) that made its public-market debut last summer. Another notable name in the market is AirBnb, the heavily financed Silicon Valley startup that is trying to tap into person-to-person rentals between homeowners and travelers.
It’s the HomeAway network that Dwellable sees as its main target. The Austin, TX-based company (NASDAQ: [[ticker:AWAY]]) saw its sales grow by 37 percent last year to $230 million, but it lost about $18.5 million for the second year in a row. Almost all of that revenue—nearly $200 million—comes from paid listings on the company’s various websites.
Dwellable is taking the opposite approach. Listings on the site are free, and consumers aren’t charged anything either. Yes, that means Dwellable is relying on the “get a bunch of users first and monetize later” model—although, in this particular instance, it’s a market that already exists.
Doppelt and CEO Brenda Spoonemore, a digital media veteran, say one of the most obvious revenue sources is probably a category of premium, paid listings to supplement the free versions. But they say those will be clearly marked, following the sponsored search results model that Google employs. And it’s critical to keep those listings from affecting the user ratings, Doppelt says.
“Then you can really start to service the needs of travelers. You can print those bad reviews—in fact, it’s to your advantage because that just makes your travelers happier and happier,” he says.
Doppelt says that philosophy was imported from the experience at Urbanspoon, which was sold for an undisclosed price to digital media conglomerate IAC in 2009.
“I try to imagine sometimes what would Urbanspoon have been like if we had only built it with paid listings … how would that have changed our business, how would that have changed people’s perception of the site? It would have been very weird,” he says. “That’s basically what HomeAway’s done. It’s a glorified Yellow Pages.”
Dwellable’s free listings also aim to romance property owners by making them look good. The free listings—scraped from other sources around the Web—emphasize big, well-done photos of the properties, and there’s no limit on the number of photos that can be posted. Spoonemore says that’s another departure from the HomeAway model, whose prices increase for customers looking to post more photos. And Dwellable thinks it’s a big advantage to tout when they contact property owners to tell them their listings are suddenly on a new, free site.
“I got an email from a property manager today that was something to the effect of, “How can you have these big photos on the site and get them to show up so quickly in my Web browser?'” Doppelt says. “I think people are just so used to these crappy websites, they don’t know that it’s possible to build something different. People have been trained by our competitors to expect a low bar.”
That points to another parallel with Urbanspoon. That app was one of the early stars of the iPhone ecosystem, with its “slot machine” random restaurant feature landing a coveted spot in Apple’s national TV commercials.
Dwellable is aiming to ride another Apple device, namely the iPad—and even more specifically, the newest version of the iPad, which debuts publicly this week. The new iPad’s higher-resolution display was high on Doppelt and company’s minds when they were collecting all those lovely photos for the rental listings, which are now available on an iPad app as well as the Dwellable website.
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“We just had a guy, a property manager in the Outer Banks, who was thrilled to work with us because this is the only way his properties are going to be on the iPad,” Spoonemore says. “They don’t have the means to do that themselves.”
That could be a pretty powerful pitch for property owners who don’t have the time or expertise to figure out their own iPad strategy.
“The fact is, we don’t need to kill VRBO. We just need to be a great competitor to VRBO and offer consumers a great choice,” Spoonemore says.
“Urbanspoon was always the small, scrappy competitor, and now they have 30 million uniques,” Doppelt says. “So there’s nothing wrong with being number two.”
