Under the Radar: How Floorplanner Used Money From Cash-Flow to Buy Their Highly Funded Competitor
Under The Radar tells the story of entrepreneurs that fly under the radar. While the world was rambling about startups, they established a business.
Floorplanner is around for about 10 years. The company has developed a platform where real estate agents can easily create digital floor plans when selling houses.
I sat down with Gert-Jan van der Wel and talked about their business, crucial moments and biggest lessons over the past years. Gert Jan is a self-taught coder from Rotterdam, Netherlands. He joined as co-founder of the agency that preceded Floorplanner, called Suite75. As a typical product development agency they worked on side projects. One of them grew into Floorplanner.
Floorplanner started as a side project by your agency, many people try this. And it’s hard. How did you make it work?
“Let’s back-up a bit and explain the history before we became Floorplanner. We operated on the agency model. Building digital products on a project basis. We never really enjoyed the reality of the agency model. We didn’t enjoy always being on the lookout for new projects. I joined in 2004, 4 years after the agency started. We always had ideas of our own that we worked on. So we decided to devote more time to our own products, but it remained hard to set priorities. At first Floorplanner was only developed in spare time. After launching the project in 2007, we saw first traction happening. We knew it could be more than just a side-project.
In 2008 we raised a small seed round to be able and devote more time to the project. At the same time, a well-experienced founder who exited for a previous company successfully, started working on the same idea. He entered the same market from London, UK.
We were worried.”
I would be worried too, how did Floorplanner respond to this?
“Honestly we didn’t do much. We saw it happening, kept track of their moves. We decided to double down on our strengths, like 2D-3D floorplans for real estate purposes.
After building out our product we secured our first bigger contract in Italy. Later on we formed a partnership with Funda (a Dutch real estate listing site — red). This partnership really helped us. The rise of Funda gave us a good amount of new content to work with. Also it gave us a strategic edge. Funda is the go-to place in The Netherlands to find your next house.
We were able to make a good and important deal that was beneficial for both us and Funda. It obviously took some time to make this work. You know, imagine the average episode of Suits and you’ll understand how. We were not used to this, but we managed. After about a year of updates to our platform and by Funda we could roll out integration of Floorplanner into Funda. They’re still an important partner of us and we continue to explore new opportunities with them.
Important to note is that after a year and a half after our seed round, we were operating on a break-even point. A year later we turned in our first little profit.”
“Considering we are a technology company operating a platform, we opened up channels between real estate agents and agencies who can provide service around floor planning. This worked well. It also kept our focus on the product. Looking back this was a crucial decision. Investing in developing a service model wouldn’t have enabled to make the big step that was coming.”
So with a strategic deal in the pocket and a working revenue stream, sounds good so far. What was next after this?
“Having a stable company is a great position to have. We had a bit of money in the bank, grew new revenue streams. With that in mind we started to tweak our business model. Many of our clients started to ask for services around our platform. Instead of creating the floor plans in our tool, they wanted help. We considered hiring drawers to provide this, but didn’t end up doing this.
Considering we are a technology company operating a platform, we opened up channels between real estate agents and agencies who can provide services around floor planning. This worked well. It also kept our focus on the product. Looking back this was a crucial decision. Investing in developing a service model wouldn’t have enabled us to make the eco-system succesful. Which paved the way for the big step that was coming.”
That sounds curious. What happened?
“In order to explain we need to go a bit back in time. Remember the highly funded competitor in London? They actually phoned us in 2007 to ask if they could pay us to build their platform. We declined them, because we were busy executing our own plan. It showed that the funding you get is not a key to success.
Forward to 2012. The competition in London is not doing well. In 2012 we approached them with a proposal for an acquisition, which was huge step for us. It provided us with great technology, 3D content and community. The transition was hard. However, it felt like a super big achievement considering we bootstrapped our way and one seed round of funding.”
Let’s talk about 2016, what’s coming for Floorplanner this year?
“We’re working on some exciting projects. Based on the technology and traction we have with floor plans we’re developing a service for interior design. Called Roomstyler we’re providing this as a service on top of the floor planning people do. Partially for this we’re using the rendering technology we acquired through taking over our London competitor.
Roomstyler is also providing us with testing new technologies. We are working on VR support. For now this already works on mobile phones and using the cardboard Google goggles. People can look around in the render of their room.”
What have been your biggest lessons building this company?
“Many of course. The most important lesson is that cash is king. Coming from an agency background we know how it is to pay bills. Cash-flow is important. Funded startups have an inclination to forget this. Just getting funding and having a cash-out means you’re not building a healthy business. We focused early on revenue as priority that drove the decisions we made.
We also couldn’t game the growth in our market. We’ve been around for many years, now we’re seeing market traction. So the magical ‘product/market-fit’ seems to start happening now. It makes me proud because we reached our break-even point early on, we could wait for the market to mature enough for the growth curve.
One of our best decisions was to not scale on services. As a tech company we also didn’t invest in aggressive sales. It just never worked for us in this market. Early strategic deals were pivotal in our success, without it the future of Floorplanner would have been different.
Currently we’re 20 people. The company grows with a 30–40% rate every year. With our new products, competition will change as well.”
Thanks for your time Gert-Jan. It’s great to discover a story where a company was build from agency into a healthy product business.
Some thoughts on this interview. Floorplanner is a prime example of building a working tech business during that even survived the crisis. One of the main take aways is the power of having a working cash-flow. Especially since the cash-flow generated came from product and not services. Which makes it scalable. Building proper foundations for a business, even technology, makes you less depending on investors. I think all early stage businesses should strive to do this.
That’s it! The first article in Under The Radar is a fact. If you made it this far I’m looking forward to learn what you think. Thought it was good? A recommend of this post will help spread the word on building business instead of startups.
