In this episode we meet Alexander Engl from ihopa, a Swedish based platform for co-sharing items. He shares the story of how we came up with the idea for ihopa; how they’ve pivoted, and how non-linear sales processes are positive for the future of business. Alexander also shares his top tips for scaling in this not to be missed episode!
To find out more about ihopa go to ihopa.com
Ihopa – Building the future of co-sharing
Gigapod as a podcast where we interview companies, building exciting and economically sustainable business models and the gig circular and sharing economies, make sure to subscribe and to find out more, go to https://gigapay.co/gigapod.
Welcome to GigaPod, we’re now on our third episode, and we’re joined by Alexander Engl from Ihopa. Welcome, Alex. So I’m super curious about Ihopa, and I want to know about what you guys actually do. So let’s start with that.
Yeah. Great. So Ihopa the concept which we are working on is all around group consumption. So we are currently focusing on co-ownership of items, what people buy together and use together, and basically use more efficiently because they would not use them enough if they would just use them as individuals. And what we built is basically a platform and a toolset around, making all of the co-ownership, easier and secure, and therefore taking on the challenges, which are preventing the people from doing this in the first place.
Okay, cool. So how did you come up with this idea in the first place?
So my background is actually in marketing and economics, and then I did an e-commerce driven career in London, where I did everything from being an online marketing executive to becoming head of product in an eCommerce innovation company. I did a lot of launching of new products there, that basically satisfied my entrepreneurial spirit a bit. But when you spend a lot of long hours and a lot of time on something, you actually want it to be like something you’re very passionate about something which has a purpose. That’s how I got into sharing economy and the circular economy approach because that’s something I was always passionate about, then moving over to Stockholm here, I was also in a personal need because I wanted to have access to boats to summer houses or like bigger sports equipment as kayaks.
So I started to really research this, and the group consumption was not really something I started with. I generally started with the sharing economy, and from the research, it actually crystallized out that at the moment most of the market places to do a peer to peer rentals, but when we talked to the owners, and we talked to a lot of owners standing out on gas stations for boats, talking to clubs, reaching out to Facebook groups, this is a very high hurdle for them to actually rent to strangers, to constantly meet new people, constantly like explain about the boat, give them the item. So the hurdle was too high and, actually, 80% of the owners we talked to said they would not rent out. However, we also saw that 62% are interested in sharing with friends and family.
Then we started to research a lot deeper and inquired why they are not doing that. There were common challenges, like finding a suitable co-owner and the security aspect, also peer scheduling. That’s where I started to actually create a product around this, which tackles this challenges and makes it super easy to actually go into, buy something together even, or also use something you already own together with others to make it accessible. This is a lower hurdle of entry for those people.
Yeah. I can imagine because they’re quite high ticket items, which make it more accessible to people, but again, trust is an enormous aspect if you’re going into co-ownership. So how’d you solved that?
Initially trust within a co-ownership is a lot easier than all of the other peers to peer, models, because you basically just have to give trust to one other person or two other people. Then we also see in our usage of the platform that most people are actually doing this with friends or family already. So for many people, the process and the idea is easy enough to actually do this. They don’t really need the marketplace to find new people to share with they already have this reach. That’s also a lot more efficient; it has a lot more value and trust.
When you talk about trust, I always give the example that we already live with people who are total strangers together in an apartment after meeting two or three times. When you think about the co-living about the whole shared apartments. So trust is something which is generally already there. So 20% of suites already co-owned something, for example. So it’s not a completely new thing to do.
Yeah. Because we are in Sweden today, are you targeting mostly Swedish users?
At the moment we’re using Sweden. When I moved over to Sweden, it was obviously also with the idea that this is a very good test market assessment. It is a sustainable drive in Sweden it’s very high at the moment and saturated market. People can also afford to think about sustainability. The drivers might very well be different here than in other countries. In other countries, the cost might be a little bit more than companies in Sweden. When we launched this, and we got more public with this, we got companies coming up to us to say, like, for example, [05:15 inaudible coroner] came up to us and said, like you are on the point, you’re solving a problem that we have. We have the problem that a lot of people think that it’s a bad thing to buy premium quality items for one or two times a year.
And they’re actively annoyed by that. Heartline came to us and said, we cannot sell enough heart starters to single families because it’s too expensive. This is how we also developed this B2B business approach. In Sweden, we have a lot of open ears because the companies or actively thinking a lot, now they have understood that their linear selling linear to individual selling models are outdated, they have a lot of competition, with cheaper products from abroad, and also the market is saturated. How many more lawnmowers can we sell? So in that space, they’re looking for new segments, and that’s also very interesting for us to being here in Sweden, but that doesn’t really mean that we want to stay too long here.
Sure. Yes. I mean, how do you translate the Swedish market into other European markets?
It is basically the challenges that we solve for users are very, very similar. So we have started to do research in Italy, in Germany and we have found that they’re very similar. However, the motivation is different. It’s more about adapting to the marketing language than it is actually adopting the product, which obviously is a lot more scalable for us. And we can also grow together with our partners. Once we have integrated with the big retailer in Sweden, it’s quite easy for us to do the same in Germany. There’s a transition method that we have to look into if our agreements are going to work in other markets. But other than that, the solution is scalable.
Yes. Before, when we were talking, you said that you’re pivoting from peer to peer, to B2B focused. Can you talk a little bit more about that?
Definitely. Initially, when we started, we are solving a consumer problem. So obviously our initial thought was, yes, we built up a platform similar to Airbnb where we say, everyone can come and can list their items or list what they want to buy together with others who maybe cannot afford, or it doesn’t make sense to buy alone. However, once we started to talk – because the companies came to us and talked about their challenges, we show that this is actually a super scalable way for companies to access this economy. A lot of these companies know that the new distribution methods or new selling methods and they are trying, for example, rentals subscriptions, most of them fail in scaling those because they simply don’t have the logistics in place. They don’t have; their whole organization is built on a linear selling way.
Now, we come in with a solution where we tell them, you can still sell in a linear way, but you sell to a group which becomes their own sharing economists. It’s a super scalable aspect for them. We have understood that we have talked to several companies, and we got validation from many different industries. We now build B2B integration, where you can basically integrate the whole flow of building the circle, using all the sharing tools, like booking calendar sharing agreement, directly on the customers, like on the eCommerce websites from the retailers.
Okay. That’s really interesting. You already have customers today who have integrated with this?
No, we have not integrated yet. When you’re with the bigger customers, you always have to also consider their road maps. We are aiming, or we are integrating it with the integral life in the spring of the next year because a lot of our customers also have very seasonal products for now. So when you talk of [09:23 inaudible corner] in the winter. Now we are doing several marketing campaigns buying snow floors together, for example, that’s a good case; gardening tools, are sold it in spring. So it is with a lot of water sports equipment, boats.
In Sweden, as you mentioned before, and I would say globally, there is a huge movement to be more sustainable and to be more conscious of what they’re consuming. You said earlier that this had been something that you’ve been passionate about when it comes to sharing and circular economies, where does that passion come from?
Well, it comes mostly from your own experience. It started all with going to university, living in a shared dorm, seeing what you can afford. I started in Sweden. So we had a [10:21 inaudible] together. We could buy all the; we haven’t had a gym together. That’s how it starts to realize if everyone just pays a little bit, you can afford a lot. Also in London where I lived there, wasn’t a co-living space. All of this is about what you can afford when you bundle your resources. That was always a passion for me. This is how I got into testing out as an early adopter in the sharing economy concepts. I also like the idea, for example, Airbnb, you can rent out your apartment if you’re away for a weekend and how it’s now used for many people. It’s not really the sharing economy idea anymore, but in its core, it could be.
That is where the passion comes from to say; we don’t have to suffer from being sustainable. If we would just use the things we already have more efficiently, we actually can have access to a lot more for less cost and also even more sustainable. This is where I see many of these circular and sharing economy concepts going. It only makes sense if it’s sustainable for the environment, but it’s also sustainable for your wallet. It’s a sustainable business concept, and that’s how we can crack the code into becoming a more sustainable society, so to say.
When you were talking earlier before about expansion for ihopa, and perhaps the Swedish market, and maybe the Nordics, it’s quite unique in a lot of ways compared to other economies. How do you see this being challenging from a marketing perspective? What other challenges do you see when you expand?
The trust element of this is it might be completely different in different countries. In the Nordics, we have quite a higher level of trust; in other countries, you might need help going in. Support and trust can be a lot more, for example, with sharing agreements, as I said, so you also legally see that you own part of something, then in case something goes wrong or someone wants to go out you don’t want to have these discussions also insurances, maintenance program. It’s basically making it easier, making it more trustworthy too, to go into a relationship with all other co-owners.
That’s surely something which might be a challenge in other countries. But in other countries, you also don’t have shared ownership. It’s not necessarily something which only helping sustainability.
It might actually be a necessity in other countries. You have a lot of people who are actually excluded a little bit of accessing a lot of products because they simply cannot afford it. You don’t even have to go far. If you think about the South of Europe, where 40 to 50% of the people in the young ages are unemployed living at home, they want to have access to having a cool drone or having some big boy toys, as we often call them. These things suddenly get very affordable if you share them. We cannot have a rental economy for every item in every city, mostly sharing economy, as we currently see it, it’s very exclusive. If you don’t live in a big city where it makes business sense, or if you’re not a fan of fashion or boats, then it’s actually not really working because these companies, they look for exactly where the scalability is. And that’s where we also see a co-ownership. The critical mass is two, if you and I decide, we want to buy something together, I can be in the smallest village, and the logistics don’t exist to send it there. So we don’t need to scale in that sense. So it is, this play of different motivations, but also different challenges, which will be a challenge, but it will definitely be very interesting to go into this market.
So talking about scalability and looking at logistics today, is that something that you handled through the platform?
We are at the moment, not very involved in logistics because our partners are doing that. So every eCommerce shop already has the logistics. We don’t need to ship anything back since we don’t rent it. It’s basically selling. What we’re looking into is more of the storage options to solve these kinds of challenges, where it has to do a little bit with hardware, where we also look into expanding these models into, instead of only co-owning also do co-renting, co-leasing where definitely there are other financing models, but we’re not really so much interested in tapping into the logistics because that’s not really a challenge for them.
I understand. So let’s change topics. Tell us a little bit, so how long have you guys been operating for now?
We have launched a platform in June, so at the beginning of the summer, so we’re quite new, but we have already learned a lot. We have been pushing for the summer, especially the learning part of the business along with a pilot project, with [15:40 inaudible Husqvarna], with some other partners. Now we have learned where to send our message. We also have learned that when we need to reach our customers. Also, another reason why we do this e-commerce integration because we have learned that customers, when they browse the products, then they need to know about this option and not just seeing it in a commercial. It was a good journey so far. Now we’re basically ready to scale this to several more consumers.
Okay, fantastic. So, how are you funding yourself?
So until now, we were bootstrapped. We had like one early grant from Winova. That was like two years ago. But until one year ago almost we have also been having this as a side project, but since like about half a year, one year, we are doing this full time, since then we’re completely bootstrapped. We have a good, efficient setup and we are very much focused on learning and not so much on scaling, which helps. And now we are raising our first angel round.
Okay. So when you guys are planning to close that, okay. Well, there must be a lot of great things from that experience. So if you launched in June this year, and then two years previous, you had the grant from Vinova, then how long did it take to build the platform?
It’s not about so much building the platform. Two years might be exaggerating. A lot has to do with research. I have launched a lot of products. I have had products which didn’t work. So using a very good methodology, the lean methodology, before we built anything, we have done a lot of research, and product testing. My co-founder Johanna’s and I actually did this on parallel tracks. We had actually two different companies running before we joined forces because we didn’t know of each other. That was quite interesting because, at the beginning of a startup, you are a bit like low key, but we have worked in the completely same business parallel for several years. We luckily did completely different kinds of tests. Johanna did a lot more prototype testing. I did a lot more like research.
Okay. Yes. So, how did you meet each other?
We met when I was reaching out to another founder skipper, he actually introduced us and which is actually also a reason why we started the sharing in circular economy events, what we’re doing now because we should have met a lot earlier, but that was simply not the right network and the right setting for us to meet. From the experience, that I have so far is that there’s a lot of companies and also entrepreneurs, who are working on similar ideas, which are not early enough going out there networking and, and seeing that there are other people that they can collaborate with because with Johanna and me, it was like, so to say a very, very good opportunity because he was exactly looking for someone with my skills and I was looking for someone with his skills. We were very lucky in that sense that we actually met.
That’s great. I know as you mentioned, the community that you’re building right now, and I was lucky to get a chance to go to the last meetup just for a short time. I think you had around a hundred people there or something like that. I mean, of course, it’s great to see a validation that there is a real need for this community.
So what we are trying to do there is mainly also connect startups with each other, but also connect startups with businesses because there’s a lot of businesses out there, which try rental concept, circular concept themselves. Most of them do it very, very inefficiently because they don’t really know, or they don’t see that there are other companies which are really doing this as their main focus because, in most of these companies, it’s like a side project somewhere and which is not really getting the attention it needs, but with this company, we’re living on it. So basically we try to engage, and we actually had two collaborations already founded in these startup events. That we’re very happy for, it’s also good just the founders to know each other now in an accelerator program with other circular economy startups, and it’s super interesting just to work together in the same room, how much synergies we actually have in questions in support, what we need in investors, anything. So it is very, very good to have these communities.
Cool. So we’re on to our last question now. So just looking back over the last six months, especially what’s your top three tips for scaling?
That’s always a hard question. I mean, I think the first tip what we always discussed in the founding communities, the healthy scaling—not scaling too quick in a way that you are actually risking what you do. Don’t build something too quick, build it, lean, making sure that you have the information you need because that’s going to be a little bit different for the Swedish startup community. Also, in the US, we hear a lot of this hyper-growth of these companies, which gets millions and millions of investments. But might not always be the best way to go because many of them as a founder has actually had to fire their employees because it’s not going so well and not taking a lot of money also means there aren’t many expectations on you because a lot of circular economies also needs to find their product-market fit.
So I think you can scale after your reach product is fit for market, then it’s good to scale quickly because then you have something, that you can bring out into the world and including also is the whole lean thinking of research, but also outsourcing. I see people always trying to do it all themselves. Don’t reinvent the wheel. If there’s something out there, talk to other startups, talk to other companies which already have this feature or this thing, what you need and use it for now. If you want to improve it later on, do it, just get it done. You cannot do everything perfect yourself. And that’s very important.
I like networking. Before you start a startup, if I had known before I started how important that is to have this network in a city where you live, in the sector where you work, go to events, reach out to people on LinkedIn. Just meet people. It’s first of all, it’s interesting. Second of all, it helps you meet people who potentially have done it before, or you can also get on a podcast.
Yes, of course. I think that’s a great way to end it. Thank you so much for your time, Alex. Thank you. Great to have you.
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