Arnaud Bertrand isn’t your typical startup founder. Where brogramming cliches about “crushing it” bounce around Silicon Valley’s coding galleys, the French entrepreneur is mild-mannered and unassuming. Where his peers are brash and bombastic, the 27-year-old is careful to keep his monster-sized ambitions under control.
And yet the ambition is there — and company he runs, online vacation rental company HouseTrip, is doing well right now. It just raised $40 million and is pushing the much-vaunted Airbnb into second place in Europe.
The businesses are not exact rivals — HouseTrip focuses on helping people rent entire homes for their breaks, rather than rooms — but in a highly competitive market that includes rivals like Wimdu, OneFineStay and many, many more, that’s no mean feat.
And the fact that Bertrand cuts against the grain is, perhaps, part of the reason for that success.The Insider
After all, unlike most of the people fighting for this market, he didn’t end up in the business by accident: he started out in the world of hotels. The idea for HouseTrip came to him and his wife, Junjun Chen, while they were studying at Ecole Hôtelière de Lausanne, the oldest and most famous hospitality school in the world.
“When I studied hospitality over five years I guess what you really understand is service — how to make people feel welcome,” he says.
“If you ask the team I’m very, very detail-oriented, and the product is all in the detail. What gave me that focus on the details, certainly, was studying hospitality. In Paris hotels, if one pillow is not perfect, or one knife is not exactly two centimeters from the edge of the table, it’s a big, big deal.”
Hidden underneath his crop of curly red hair, it seems, is a mind focused on getting it right and almost nothing else.
The company, which started in Switzerland but now has its HQ in London, became unique when it took on its latest funding. The round was led by Accel, making HouseTrip the only company that all three of Europe’s leading venture firms — Accel, Balderton and Index — have backed. They’re all on board because they see a massive opportunity, and (perhaps) a chance for Europe to exert its power over foreign competition.
This, says Bertrand, plays to the continent’s natural strengths.
“When you look at most of the big travel companies, they’re European-based,” he explains. “By far the biggest is Booking.com, which is a Dutch startup. Travel is different maybe because that’s our DNA in Europe: Most of the market is European; Most of the schemes for decades have been European; We invented the hospitality industry, and so on.”
He may be overstating the case a little (Booking.com is a powerhouse, but it was acquired by the Connecticut-based Priceline back in 2005) but Europe is definitely HouseTrip’s stronghold right now. Its biggest cities include Paris, Barcelona, London and Berlin, where demand is high and the company is working hard to keep its supply of listings closely matched.
But while Bertrand says those large locations are profitable — Paris, he claims, hit breakeven nearly two years ago — the company is taking on a lot of funding: near $60 million at last count. He is using venture money, he says, to try and achieve scale. This means opening up new destinations and bringing on fresh listings, which can be an expensive, arduous task.
“Destinations that are big and have reached critical mass are profitable, but we’re expanding to lots of new places at any one time and that’s what really costs the money — but that’s what gives us so much growth,” he says.
“We could decide tomorrow that we’re happy with the existing destinations we have and become much more profitable, but we still think there is huge room for growth, so we want to capture the opportunities.”Focus, focus, focus
For now, however, that need to grow is tempered by the desire to keep quality up — his obsession with quality. That means that although cities outside Europe, like New York, are growing fast, the company is primarily sticking to what it knows best.
“I think Europe will still be our focus in the medium term. This market is a European market, and if you conquer Europe you can conquer the world.”
For all the drama and talk of competition between HouseTrip and Airbnb and the rest of them, though, it’s only a small part of a very large story. Holiday rental is a big industry — big enough to support a public company like Homeaway, which is currently valued at around $2 billion — but it’s dwarfed by the much larger hotel sector.
And long-term success may require a change in strategy for many of the players in the game. Like others in the collaborative consumption sector, I have spoken to, Bertrand believes that Airbnb is soon going to have to move sideways into some unexpected markets to maintain the growth its investors seek.
After all, there’s a certain kind of pressure that comes from the $220 million that Airbnb has now had pumped into it — maybe more soon, if rumors that Peter Thiel is interested in investing another $150 million pan out. Building a company that can match those expectations may mean expansion into areas like, say, car rental, or a deal with the hotel industry to offload empty rooms.
Bertrand doesn’t think the same sort of pressure will come to bear on HouseTrip, even with the bundles of cash it has taken. For a start, he says with a smile, his wife and co-founder Junjun is the CFO. But more importantly, his business fundamentals are more sound: renting entire homes means that the average booking on the site is higher than many of its rivals. And that, in turn, gives it a stronger position to attack new destinations, new places.
But more than that, it’s a philosophy.
“My whole vision from the beginning is that holiday rental is much better than hotels, more authentic, and a much better way to travel,” he says. “I wouldn’t be able to look at myself in the mirror.”Still room at the inn
It’s clear that this game still has a long way to go, and the market in two or three years may look very different from today. The vast number of names currently in the mix are likely to consolidate, and perhaps one or two of them will get snapped up by the bigger travel giants.
Still, though, Bertrand says there’s a lot of headroom — even at the most basic levels.
“We’re still focusing on what we call internally the low hanging fruit — on the rental side, that’s people who have been renting out holiday rentals for a long time and are simply looking for a more efficient way of doing it. When you look at that market in Europe it’s 3 million properties, it’s massive and there’s a lot of room to grow in there.”
And how many of those 3 million properties would HouseTrip need to make Bertrand feel comfortable?
“Three million is the answer,” he says, without blinking.
Oh yeah. There’s that ambition again.