Inspired by the experience of the Indian budget hotel chain OYO Rooms, alumni of the Graduate School of Management of St. Petersburg University (GSOM) Emil Urmanshin, Feiruz Rahimov, Robert Sargsyan and Ruslan Fakhrutdinov launched a travel tech startup - Roomp hotel chain. In December 2017, the team attracted investments worth $ 250 thousand. Ksenia Karpova talked with them and found out what Roomp was all about, how to build a dream team and what to do to impress investors.
What is a Roomp?
Emil: In short, we are creating a single brand of the best non-chain hotels in Russia and the CIS. For example, you are going on vacation or on a business trip and you need to choose a hotel. You know that by choosing a well-known network brand, for example Radisson, you will receive a high-quality service. If you are limited in budget and you didn’t like the well-known chain hotels, you will look for independent hotels. You will need a lot of time to compare them at cost on different platforms and to study reviews. And even when you choose the hotel, it is not certain that your expectations and reality will coincide. At Roomp, we combine good independent hotels under one brand to give the guest a guarantee of the high quality standards, that you would expect when booking a chain hotel, but at the price of an independent hotel.
What is difference between Roomp and, for example, Booking and Ostrovok?
Robert: Roomp solves a problem that no one can solve on the market right now. We are consolidating and standardizing the independent hotel market. We are not creating another aggregator, but are instead creating a brand of independent hotels that guests can trust. To do this, we are developing competencies, building IT infrastructure and working to provide the best service in this market.
Feiruz: The main product of Booking is a platform on which it is convenient and quick to search for a hotel. They do not standardize the service, do not equip the rooms with everything necessary for living, do not conduct a private audit of the number of rooms and do not train staff. On the other hand, at Roomp, we work from start to finish — from finding a hotel to collecting feedback.
Emil: This type of cooperation is beneficial to both parties: we create a reputation for ourselves and the hotels, increase recognition and attract new customers. In Roomp, some hotels receive loyalty at the expense of others: when staying in one of the hotels of the chain, the traveler will know that no matter what city he or she comes to, Roomp will be provide the same good service.
How did this idea come about?
Robert: We thought about launching something of our own together and studied different business models. In the last year of university, we heard about the Zen Rooms project. And then, learned about the success of OYO Rooms, which were the first to start working on such a business model. We realized that there was nothing similar in Russia. We had the necessary competencies and enthusiasm. We found the starting resources and realized that we could handle it.
Fairuz: We studied the ranking of the fastest growing startups and analyzed them in terms of the necessary investments, staff and expertise in the industry. Despite the fact that travel is a highly competitive market with a lot of risks, it is, at the same time, not a biotech project, for the launch of which an impressive R&D foundation is needed.
How did you find team members?
Emil: We have been friends since the first year at business school, together we participated in projects, in the case competitions Changellenge and Business Diving. It turned out that the main thing in our company is that we are close friends. We look in the same direction: for us this is the main thing. Today, our team already has 14 people. We grow and pay great attention to the relationship between people. Choosing a person in a team, we focus on the way of thinking, potential and ability to communicate. Each person in the team has been given great responsibility. Therefore, when selecting a candidate, we devote a lot of time to interviews. On average, an interview lasts 3-4 hours. Once we talked with a candidate for 6 hours.
On the photo: Robert Sargsyan, Feyruz Rahimov, Emil Urmanshin, alumni of GSOM SPbU, founders of the Roomp hotel chain
What to do to attract investment?
Robert: For about a year and a half we worked on enthusiasm, but realized that we could find the necessary investments for the development of the project. First of all, it is important to understand that any investor is looking for projects in which he or she can get a sufficient return on his investments.
Basically, the decision is made on the basis of two indicators: the financial ceiling, that is, the general market that you can focus on, and the likelihood of achieving capitalization, on which the investor relies, in market conditions. The first depends on external factors — market size, market conditions, and so on. The second is based on how the business processes are structured and how effective the team is. If we are talking about an external factor — the market, then the travel market is one of the most successful in the world, but is considered not particularly attractive in the Russian venture capital market.
Feiruz: There have been a lot of unsuccessful projects on the Russian market. This is mainly because companies have followed the path of duplication of large projects such as Booking and Expedia, and did not withstand competition for traffic.
Robert: We occupy another field. We are not competitors of Booking, but partners. We are creating a single brand of good quality non-chain hotels. As for the internal factor, investors give money when they believe in the team. We all have experience in large companies and in a year and a half we successfully conducted the project on our own. In general, they believed in us.
Tell us in more detail where to look for investors and how to present an idea. How to convince them to invest in a young project?
Feiruz: First you need to contact business angels and study venture capital funds. In addition, it is worth looking for strategic investors who might be interested in your product. All this can be done on the Internet, studying already completed transactions. We independently built a database with the email and social networks of investors: acquaintances from venture funds shared some contacts, we found some through people who already had raised money.
As for the presentation, we did not try to convince anyone. We presented the problem, proposed a solution and described our vision of the market in the future. I am sure that a good idea does not need to be sold. If you have a viable business model and a strong team, the investor will definitely believe in the product.
Clearly, you work a lot. Is there time for personal life?
Robert: No (laughs). While we devote a lot of time to work, we are growing and building a team, so we have to invest even more resources. But it brings pleasure. We can realize our ambitions. For me, Roomp is an important source of strength and inspiration.
Feiruz: The most important thing is to use your time efficiently. If you correctly distribute it, then you can catch everything. Yes, sometimes our working day can last 12-14 hours. But for me personally, it’s important that this work is interesting to me, it makes me happy, here I am realized, therefore I am happy to do what I do.
And you are not afraid of burnout?
Emil: We try to maintain balance, monitor our health and do sports so that we have enough strength for everything. Of course, there have been difficult periods, especially when we did everything on our own. But we always continued to believe in our business.
Did GSOM SPbU help you in your career?
Feiruz: At GSOM SPbU, we became a team and decided to create this project. If we talk about my personal experience, it was while at the School when I understood that it can be different, that people can do the same things in completely different ways. Separately, I would highlight the impressive experience of the exchange education. I studied at the School of Economics and Management at Tsinghua University. Even before leaving for China, I realized that the whole world economy is built on financial formulas, but since I studied at the marketing department, I felt gaps in some specific knowledge. A semester in China helped me fill those gaps. In addition, I returned from China with the understanding that "the other” does not mean “bad."
Emil: I was taught at GSOM SPbU to solve non-standard tasks, to concentrate, to learn to achieve goals in a stressful mode of deadlines. I entered GSOM on the second attempt. For several months I studied in a technical specialty and realized that after all, this was not for me. I entered GSOM the following year. I was also very impressed by the opportunity to go on the exchange semester to partner universities. I went to the School of Economics and Management of Tsinghua University and the NUS Business School of the National University of Singapore.
Robert: I wanted to enter GSOM SPbU from the 9th year at school. I always wanted to be among people who like to work, set goals, are ambitious and decisive. Here I could find it all. There are a lot of practical exercises at GSOM, we constantly solved cases and worked on projects. It was great preparation for real life.