The Tao of We Are Pop Up
“Running your own business in a shop existed before We Are Pop Up, but now it’s a huge new sector of employment.” – Greg Hinch
On 1 October 2014, the We Are Pop Up team discussed customer behaviour. Specifically, how over 80% of our sales come from customers in their first month on the website. That may sound like a meaningless startup metric, until taken in context of how the property industry traditionally operates.
Before we launched, it took 8–12 weeks to locate and exchange a short-term retail property. And 9 months for a long-term lease.
In February 2014, two customers closed a deal in 7 days. In May 2014, two customers closed a deal in less than 24 hours. And today, customers routinely close deals within hours. Even minutes.
More importantly, we’re taking feedback that our early-adopters no longer look to agents for long-term leases. Whilst still in its infancy, We Are Pop Up essentially replaces the long-term lease with a real-time marketplace.
The Philosophy of We Are Pop Up
Internally, I use a well-known framework for categorising operations:
1. Raw materials > 2. Inputs > 3. Outputs > 4. Outcomes
As a marketplace, We Are Pop Up’s raw materials are (on the supply side) available spaces, and (on the demand side) brands with products and services.
Landlords, retailers, and proprietors create information records at wearepopup.com. We provide a structured process that collects information from each side of the marketplace, turning real-world assets into virtual inputs.
Matching a seller and a buyer results in a match – an output.
Outcomes: The true outputs of a business
The genesis of We Are Pop Up came in 2011, from realising contracts are AirBNB’s outputs. At its core, AirBNB creates an agreement between guests (buyers) and hosts (sellers):
If you show up at 18 Earlham Street at 11am on Saturday, 4 October at 11am, I will give you the keys to my flat and you will have use of it until Thursday, 9 October at 3pm. For that use, you will pay £150 a night in advance, plus a cleaning fee.
AirBNB’s system documents that interaction and provides not only a summary of the agreement, but also trust mechanisms for ensuring, first, each party is who they say they are, and secondly, a public reputation system that encourages (or perhaps enforces) respectful behaviour by each party.
A guest’s experience of staying in the home of a host is the outcome.
Splitting the difference between outputs and outcomes leads to a granular understanding of exchange in contemporary society.
British Airways’ output is an agreement. If a passenger shows up to Heathrow Terminal 5 at 11am on Saturday, 4 October, they will be granted access to an Airbus A380 headed to Singapore. Arriving in Singapore on Sunday, 5 October to see old friends is the outcome.
Louis Vuitton’s output is the transfer of ownership of a high-quality leather handbag with a distinct monogram. The outcome is the moment of satisfaction the buyer receives from sitting at Caravan on King’s Cross, and watching other customers look at the handbag and make an interpretation as to the socio-economic status of the owner.
We Are Pop Up’s direct outcomes are combinations of brands and spaces – new restaurants, shops, and other real-world consumer-facing experiences.
The Tao of We Are Pop Up: Data-Driven Property
Beyond those direct We Are Pop Up’s outcomes are indirect outcomes. It is these outcomes that truly drive the success of any business, from AirBNB, British Airways, to Louis Vuitton and We Are Pop Up.
On Sunday, 28 September, Clara Maguire and I spent the day reviewing our customers’ successes ahead of a Future Cities presentation at Google on Monday.
The title of that presentation – “Data-Driven Property” – reflected how We Are Pop Up changes the fundamental nature of the property industry, shifting it from asset-value to use-value. (For further information on data-driven property, please contact Clara directly.)
In the same way AirBNB enables fractional use of residential property assets, We Are Pop Up enables fractional use of commercial property assets.
Our thesis for the talk was fractional use changes everything and we presented five examples of how our customers use We Are Pop Up. They show a different property market is not only possible, but in operation today.
1: The traditional shop.
Landlords find they can charge a premium for short-term use over long-term use. Further, the process we’ve created is not only efficient, it is also “fun”. One of our landlords routinely fills a shop in less than 24 hours using We Are Pop Up. He doesn’t have to deal with the back-and-forth frictions and negotiations of traditional leasing. To date, he has received £22k in rent, and has another £51k in the pipeline.
Our first placement with him was in February of this year, meaning if we annualise the current returns to date (February – September), he will generate £33k in income in 2014. From a shop that agents reckoned would command £24k a year at best. In this case, fractional use has provided a 37% uplift on his income, reduced the time it takes to fill his shop (from weeks to hours), and he’s having fun. (“Fun” was not a word we heard applied to commercial property in 2012…)
(N.B. We possess full return calculations for each of the use cases. Due to commercial sensitivities, I will not publish more here today. If you would like to discuss financial performance, please get in touch with me directly.)
2: Micro-department stores.
Even with fractional use, full shops are often too great an investment for start-up retailers to undertake. Similar to co-working spaces, micro-department stores allow these start-ups to pool resources and test concepts in the market.
Camden Town Unlimited operates 159 Camden High Street, a micro-department store in Camden, London. Collective 159 takes 8–10 startup retailers at a time, filling a previously-vacant storefront. No longer is the department store limited to purpose-built buildings on Oxford Street. Now, any shop, anywhere in the world has the potential to be a multi-brand retailer – a micro-department store.
Black Sheep Coffee started at 159 Camden High Street, and based on their success, launched a Kickstarter campaign to fund growth into a formal operator.
(There’s a greater point here as to the fact that a new F&B business went live an arranged financing without interacting with either a property agent or a bank…)
Then, micro-department stores gave rise to the next fractional use…
3: Shared Spaces.
If 159 Camden High Street was a purpose-built micro-department store, what if we brought that concept to existing retailers? What if we launched a feature on the platform where, rather than empty shops being the raw materials, we created micro-department stores within existing retail units?
We launched the first version – Shop Share – in July, and the results have been truly inspiring. Shop Share enables existing retailers to list rails, shelves, tables, windows, walls, and any other part of their shop. This creates instant concessions in every existing retail store in the world.
One of the first customers for Shop Share was Black Vanilla x McQueens in London’s Clerkenwell district. This collaboration paired Black Vanilla – a gelato concession – with McQueens, an upmarket flower store.
For further information, Mike Salter looks after Shop Share at We Are Pop Up.
4: P2P Urban Regeneration
The most exciting outcomes happen when our customers use the platform in ways we didn’t imagine ourselves.
Pascal created The Kiosk Cafe at a disused asset in an East London park. She equiped the space, and used We Are Pop Up to find chefs to fill the cafe on rotation. She found eight different chefs, including The Colombian Kitchen, who – as mentioned – has gone on to create a restaurant at 11 Camden High Street.
The outcome of this specific fractional use case is nothing short of revolutionary, for it represents empowerment of the individual citizen. A member of a community taking regeneration into her own hands. She took a blighted asset and turned it into a living kitchen. And the local community came out in full support. You can see what P2P Urban Generation looks like first hand @TheKioskCafe on Twitter.
5: The shopping centre.
In the 1940s, Kelly Johnson set up Lockheed’s ‘skunk works’ in the California desert. The skunk works detached traditional R&D from the core of Lockheed to allow esoteric ideas to come to the surface. Lockheed’s programme created the most advanced aircraft the world had ever seen. Xerox’s PARC laboratory would give rise to the Macintosh, and the user interface used by the majority of the world’s computer and mobile phone owners.
As over 70% of prime retail destinations are in the hands of institutional landlords, we have to bring fractional use into shopping centres to truly bring it into the mainstream.
We are operating a pilot project with one of Europe’s largest shopping centre owners. Two years ago, the majority of shopping centres refused fractional use – they saw it as a failure to acquire long-term retail leases. Thanks to the forward-thinking vision of our customer’s leadership, they took us up on the offer, and we’re six months into to operating fractional use in a beautiful European shopping centre.
At the heart of this type of fractional use is an advanced retail technology platform that we’ve been developing for the last two years. To our knowledge, nothing like this exists anywhere else. It brings together small brands and institutional landlords in a way that, only two years ago, we were told was not possible.
Today, we receive inquiries from around the world, asking us to bring fractional use into shopping malls, department stores, and shopping districts. The industry has woken up to the power of fractional use, and in Q2 2015, we will launch a product that formally delivers it.
A New Asset Class
Clara and I bookended our presentation on Monday with the idea that “We Are Pop Up puts the city in the hands of the people.”
The New Property Lexicon: “Hi, please… thanks”
In reviewing how customers used We Are Pop Up in 2013/2014, we left no stone unturned. One of the greatest discoveries was the new lexicon our customers are creating as they trade property.
A fellow entrepreneur described her new office lease contract last night, “You should see this thing, Nick, it’s nearly un-intelligible. I not only needed a lawyer to review the terms, I needed him to tell me what it says in plain English!”
Property is one of the largest asset classes in the world, and commensurately, an entire industry has developed around it. An industry with its own culture, customs, and language.
Our users have sent over 10,000 messages between them in the last six months. As we reviewed the content of those messages, the language struck us. From listings to payments, our customers do not use the lexicon of property.
They use everyday words and concepts. They describe spaces as if they were talking to friends. They describe brands as if they were talking to friends. And, most powerfully, they talk to each other as if they’re talking to friends.
This linguistic shift is one of the most powerful representations of what We Are Pop Up does. These are people arranging property transactions between themselves. They use the words of their everyday lives. They treat each other with respect. They are collaborating.
We Are Pop Up connects people in a new way, enabling them to create new economic activity for themselves, landlords, and chain of other stakeholders.
Far from these being ‘minor transactions at the irrelevant end of the property scale’ (as was said to us in 2012). These transactions, today, produce considerable economic output. If the the average turnover of a tenant business in London is 10x rent, in the last two years, We Are Pop Up’s customers created over £2M in economic activity. And over £1M of that in the last six months.
A Final Word, by CTO Greg Hinch
“Renting out your home as a vacation rental existed before Airbnb, but now it’s replacing other forms of accommodation. Giving people a ride for some extra cash was available before Uber and Lyft, but now it’s replacing the transportation industry. Running your own business in a shop existed before We Are Pop Up, but now it’s a huge new sector of employment.”