Reshaping real estate is a big deal. And, Brazilian startup QuintoAndar is doing just that: changing one of the most bureaucratic and tech averse industries.
To understand how it’s been done we talked to Gabriel Braga, Co-Founder and CEO. He spoke about the company’s creation, its investments, growth and the decision of going global. He also detailed the strategy of expanding by launching new products and partnering with traditional brokers.
Gabriel, who holds an MBA from Stanford University, commented on how the experience in Silicon Valley fueled his entrepreneurial spirit and what is the main bottleneck when it comes to innovation in Brazil.
BayBrazil: QuintoAndar has changed the way Brazilians rent properties. Where did you get inspiration to come up with this business model?
Gabriel: My co-founder André Penha and I met while attending our MBA at Stanford and the idea for QuintoAndar started while we were still there. We wanted to create something that would have real impact. To do so, we believed we had to solve a huge problem, that would benefit a lot of people and be scalable. The first problem that popped-up on our minds was residential rental, and we quickly saw that it fit the whole bill: it is a hassle everywhere, it is something that many, many people have to go through (as tenants or landlords), and it could be improved in scale. We had our own experiences backing us up: since André had had trouble trying to rent-out his apartment in Brazil for the time he would be attending Stanford, and I, as a tenant, had bad experiences trying to find guarantors when I moved between cities in Brazil. Nevertheless, we did more research and talked to a few hundred people about rental, and these conversations validated our hypothesis: it was a big problem, it did impact a lot of people, and it could be improved in scale. That was what lead us to creating QuintoAndar.
BayBrazil: Startups are disrupting all sectors and traditional business are losing market share. How is QuintoAndar’s relationship with the traditional real estate agencies? Do you feel they are concerned technology may end their business?
Gabriel: When we began to really scale up, many traditional brokers saw us as a threat to their markets. We, on the other hand, never saw them as the enemy. We were just focused on making the rental process better, since in Brazil (as in many other places, in varying degrees and for different reasons) it was a bad experience for all: tenants, landlords, realtors and the broker agencies themselves. Our model did fix the process, making it less bureaucratic, easier, quicker and safer. Of course this reshapes the market and the dynamics for incumbent brokers. Actually, we see traditional brokers as potential allies. As we expanded, it became clear that although we were serving the digital savvy client extremely well, there were people who even though liked our guarantee and hassle-free model, didn’t feel too comfortable doing it all digitally. The answer to that was to partner with traditional brokers, opening our platform for them. They can provide the personal experience for those who want, while we take care of the process itself, extending our model’s advantages to more people, and benefiting from the partners’ reputation in their home markets. Currently, we already have partnerships with 15 such brokers in Brazil, and the results so far have exceeded expectations both for them and for us.
BayBrazil: You just received a new investment round of $250 million, what is your current biggest challenge for growing?
Gabriel: This round was peculiar, because we didn’t actually need the money. We had closed our previous round less than 10 months before and were delivering above the business plan agreed at the time, so both our investors and us were very happy. The challenges we had mapped were being tackled better than expected: we were successfully expanding in Brazil, launching new products, such as Originals – our property renovation initiative -, and partnering with traditional brokers.
We’ll use the new funds to strengthen our presence in the regions we already are in Brazil; to continue developing new products and services; to attract world-class talent that help us in this new phase; and to expand to international markets. Those are the challenges we posed ourselves now.
BayBrazil: QuintoAndar has relevant international investors. Is that an incentive to go global?
Gabriel: We definitely have some of the most relevant international investors with us, and we are proud of their commitment to and belief in QuintoAndar. Nevertheless, the decision to go global is not because of them but rather because we are confident in the potential benefit our model can offer to other markets across the globe. Our value proposition is the best for fragmented, un-professionalized markets with high levels of bureaucracy – of which there are plenty throughout the world. We want to move fast to start working on these countries and not lose the right timing.
BayBrazil: How much living at Silicon Valley influenced the creation of QuintoAndar?
Gabriel: It helped put things into perspective in a positive, constructive way. When you are doing something new, by definition you are going against consensus – and this is hard to do. Family and friends tend to value playing it safe, following and doing what is proven and established. In the Valley, the entrepreneurial environment makes it easier to be comfortable outside what is consensus and to explore taking more risk. It is also one of the best places to learn in depth how technology can change whole industries. Living in the Valley helps you learn the real power of technology and how to harness it to do change. This is what led us into creating a technology company to solve and change real estate, which is much more powerful than a real estate company trying to use technology to do the same. And, of course, the Valley is unique in its networking opportunities – which go way beyond meeting the right people. Although you do meet the right people, living there you also get a kind of tacit knowledge. It goes from the best language while talking to peers, investors, the market, all the way to the rituals that most effectively will take you where you want.
BayBrazil: Is it Brazil in the right path to become an innovation leader? What will it take?
Gabriel: There is still a lot of stream to go by, but we are getting there. In the past few years, we’ve seen a lot of talented people interested in enterprising and working with tech. The whole ecosystem in Brazil is better. Consumers are more connected and willing to experience new stuff. Investors are more experienced, have deeper pockets and their appetite is increasing. This actually fuels the whole cycle, as more competition leads investors to be bolder, giving chances to innovative ideas that might not see the light of day in a more conservative environment. On the other hand, there is a shortage of people with good training and background in technology in Brazil – this is the country’s main bottleneck when it comes to innovation.