https://youtu.be/kpZMVdbBZ7U
Bo Abrams, Co-Founder of Kommu, is passionate about creating solutions that empower people to develop a startup and share their homes with trusted friends and communities.
We discuss his Marketplace Blueprint framework, which includes recognizing a personal problem, evaluating its impact on others, researching competitors, identifying gaps, and developing a viable business plan. Bo highlights how his own frustrations with the affordability of short-term rentals inspired Kommu’s development. By building a platform centered around trust and personal networks, Kommu offers an alternative to traditional short-term rental platforms like Airbnb, making travel more accessible for Millennials and Gen Z renters.
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Develop a Startup With Bo Abrams
Good day, dear listeners, Steve Preda here with the Management Blueprint podcast and my guest today is Bo Abrams, the co-founder of kommu, a connected home sharing and travel platform that links users with their personal network and empowers them to host trusted friends, interest groups and communities in their home on their own terms. Bo, welcome to the show.
Steve, thanks so much for having me.
Well, that's a really interesting business you have there. So what is your personal “Why” and how do you manifest it in this business or through this business?
Yeah, I mean, I would say my personal “Why,” and it really starts with me as an individual, was to say that if I saw an opportunity where I thought there was something that needed to be built that I believed had the potential to go impact the world in that way, that I would go forward and build it and try my best at trying, so to speak. So for me, moving back to what happened, I basically took the GMAT seven times to try to get into business school. I paid for the business school consultants because I didn't get into the great undergrad schools even with great scores and everything else because I didn't run that process.
I didn't know how to play the game to get into great colleges. So for business school, I spent all the money I had trying to get in. And I finally got in, ended up going to UCLA. It's where me and my co-founder are from. We're both from LA. We both were supposed to go to other business schools, ironically. Covid hit, we didn't want to leave our families. And right in that moment, I decided to take a trip because I worked so hard to try to get into school and I go to Montana to clear my head, Whitefish, Montana. It was beautiful. And I could only afford four nights in a pretty crappy Airbnb in Montana. And that was half my rent for the month in Los Angeles. And as a renter in LA, I'm not able to list my home on a platform like Airbnb, a short-term rental platform for good reason. And beyond that, at that moment in time, and still today, travel had fundamentally changed.
People could now live and work anywhere and the demand for travel in the post-Covid era was surging. And so what did that do? It caused the pricings of these short-term rental platforms to skyrocket. And so, I remember trying to get a car, couldn't find one, we used Turo. I'm thinking, man, if people are able to list their cars in a peer-to-peer marketplace, why can't I do that with my home? And everybody would say, well, that's Airbnb. And I thought, well, that's unacceptable that there's this huge group of users, people like me, that cannot afford Airbnbs now, they're more expensive. They're not the economical version they used to be, and cannot list to recover any value while they're gone. And it's really as if, I say this all the time, it's as if UberX moved to just being Uber Black now, that professionalization problem. So in my case, I go and I meet my co-founder, Gus, in business school, and we were just talking as friends.
We were literally talking about how we were remote capable workers at our previous jobs before business school, but that we didn't travel a lot, because, secret's out, a lot of people go to business school to travel. And we were like, why is that possible if we had all the freedom to do that before the pandemic? Like, why didn't we take advantage of that? And we realized it was because we couldn't afford to. And so, we started doing this research and we found this website, homeexchange.com. It's been around for a very long time. It's a home swapping platform purely. And we thought it was built for older homeowners, not the people that have a need, millennials and Gen Zers that are renters in these cities. And we said, this company is doing $30 million in recurring revenue a year. If you build that for young people, you have a hundred million ARR opportunity.
And so that was that moment, back to my “Why,” of when Gus and I saw that, we were almost frustrated because we're like, we have to go forward and do this thing as scary as it is. It would be dangerous to ourselves and our identities not to go forward and try. We would always wonder, what if we went forward and built the thing that we really believed in? And so that is really, getting back to it, why I started kommu in the first place.
So you started it because you had a personal frustration and you figured out a potential solution and then you just couldn't resist jumping in and trying to build it?
Well, to some extent, yes, it started with my personal frustration. That piqued my interest into researching the market. And again, I will say I went to business school to go into venture capital. I did work in venture capital. And I was obsessed with it. I still am. The idea of investing in early stage tech startups. And as I went through the checkbox of things that I believe in would lead to $100 billion outcomes, Gus and I both said to ourselves, this is one of those opportunities. This is one of those moments in time that we can actually go and build this thing. And so the research and the first principle of saying, oh, well, here's competitors in the market that are not solving the solution appropriately.
Here's the market itself that we're getting a lot of user feedback from an interviewing and asking questions and testing with. It was that idea of, oh, we have to go do this because we will always regret it because we know on first principle, we believe there's a huge opportunity here and somebody is going to win big.
So how is kommu different from Airbnb? What is the unique difference that prevents Airbnb to just own your market as well and which allows you perhaps to get around some of the challenges that Airbnb is facing?
Yeah, I mean Airbnb obviously is facing a tremendous amount of challenges right now. Local ordinances and laws are cracking down on Airbnb. And it really, this actually gets back to even the similar, same origin story of being in business school. We used to be a company called Swapped. It was a home swapping platform, swap apartment. And we entered into the largest business plan and pitch competition at UCLA, where we had to work with UCLA law school students in that competition. And we reached out to the cities, LA, New York, SF, and we were like, hey, we have people swapping homes. Sometimes they do it with a point system, at this moment in time. We take a small fee for facilitating that.
Like, we're good. And the cities were like, no, if you take any transaction fees for facilitating these stays, that's commercialization. That is exactly what these ordinances exist to prevent. And that brought us back to our research and also all the conversations we were having about essentially preferences and trust. People were constantly asking, like, how do I trust this person? And obviously you can do things, like you can verify users, you can make it a very exclusive network, whatever it might be. But we realized that people trust most who they know and through who they know. They prefer to do these exchanges with people that are friends of friends or groups that they might've gone to school with.Share on X
And we went back and we're like, wait a second, why is it right now, if I were to log on to Facebook Marketplace or go in on Instagram and get the data of how many people are sharing their homes that are not able to be listed on Airbnb, if Airbnb is one, why is that happening? And it's because what Airbnb built does not service those core users. It now services professional hosts that are focused on maximizing profit. If I had an Airbnb, which I wish I did have, it would be a second home in a target city where I would be listing it for as much money as humanly possible. And it would be an investment property.
But that means these primary homes, people like me that maybe want to recoup our sunk rent, maybe want to swap homes, maybe you want a pet sitter or a house sitter, we have no other options. We're turning to these antiquated social platforms to list. And so fundamentally, we're different than Airbnb in two ways. One is they're a traditional open marketplace. You've facilitated transaction of value, take a fee, assurances and insurance and whatever on that platform to make sure and reviews to cover that network effect, the Airbnb story. For us, we're saying, charge a subscription model for access to these wider networks. To say, if you want to get to friends of friends or groups, people listening to all of kommu, that requires a subscription model where we put you in the flow of ID verification, home and address verification, a protection plan, customer support.
But if you just are somebody that wants to share their home and their travels with their 10 to 15 closest friends to let them know ahead of time, hey, I have a spare room in LA that's available to you or I'm going to be in New York, I'd love to see you, it's free. And so that subscription model in and of itself is impenetrable by Airbnb because it basically eliminates the need for an Airbnb. If you and me both know that we're connected in some way and we have that trust, we have a mutual friend and we met on Airbnb,
