knok home knok home exchange house swap club tnooz
687 days ago
 

Fast-growing Knok thinks it can disrupt the home exchange market

Since the 1950s, home exchange clubs have been helping travelers trade their houses internationally. Most recently, the idea of bartering one’s way to a free vacation enjoyed its star turn in the 2006 movie The Holiday, where Cameron Diaz swapped her California mansion for Kate Winslet’s English cottage.

The old guard house swapping clubs—HomeLinkHome Exchange, and Intervac—have struggled to adopt to the Internet. They consider it a major accomplishment to have migrated from paper-based catalogs to online matching-making websites.

Sensing the weakness of these wheezing retrievers, startups continuously try to overtake their market share. Witness the past year’s much-hyped efforts by Love Home Swap and CasaHop.

Today more than 20 companies are working to encourage more people to try house swapping. No more than 100,000 people a year worldwide trade homes currently.

Now entering the fray is Knok, which aims to add personalization to the home swap game with the help of clever technology.

The Barcelona based startup began as a side project at a digital marketing agency Duplex, which has funded the project. The company now employs 7 people full time and is considering a second round to scale up its marketing in 2013.

Undercutting on price

Knok launched mid-2011. It claims to have 17,000 paying members.

If it has truly gathered 17,000 paying members in only a year’s time, then it is showing impressive growth, though there is no way to independently verify that number.

One key to its apparent early success is that it is undercutting competitors on price. This is a comparison:

Knok charges an annual fee of about $93 (€71), with 17,000 members, most of whom are in in France, Spain, UK, US, and Australia.

HomeLink International, founded in 1953, charges an annual fee of $119 and says it has about 13,000 members in 27 countries.

Home Exchange, the 20-year old giant, charges a fee of $120 a year, and says it has 41,000 members, with a heavy membership base in North America and Europe.

The longest running exchange club, 60-year-old Intervac, says it has 30,000 members. It charges  $99 a year, and its listings are concentrated in 45 countries, mostly in the US, Germany, France, the UK, Canada and Australia.

Year-old Love Home Swap has 8,000 members in 105 countries and charges about $127 a year. CasaHop is still scaling up, and doesn’t charge anything (nor does it vet any one).

Clearly, Knok is the least expensive offering. As with other clubs, the membership fee grants access to information on other members and to unlimited swaps.

Knok is available in 5 languages.

knok home knok home exchange house swap club tnoozQ&A with Laura Martinez, COO and co-founder:

How is the way you are solving this problem more special or effective than previous attempts you or the market has seen before and how different do you have to be to succeed?

Unlike most other players, we help users find home swap partners by affinity. During registration, users are asked to fill a detailed profile to describe not only the location and the services of the property, but also the member’s interests and educational background for better member-to-member matching.

Unlike most other home exchange clubs, Knok includes as a benefit of its membership insurance that covers members homes while swapping, for a value of up to €150,000, or about $200,000.

User experience: our platform includes over 100 innovations in the way you interact with the community, from searching to messaging and member profiling.

If trust is the new currency, reviews are the new cash. Trust is more than just connecting with Facebook; we do that, but we also provide a reviews system, both from friends and other Knok members that you have exchanged with. And we will add other trusting measures very soon.

Knok’s founders have understood that social is important to build trust, but it cannot be the starting point, as it’s usually inefficient to find home swap partners in someone’s first and second level circles. Instead, Facebook integration is used to ease signup and to provide endorsements.

Our membership-based business model guarantees a minimum level of quality, i.e. no test, unused or fake profiles.

Why should people or companies use your startup?

Knok is like couchsurfing for grownups. Free accommodation is an offer not many people can refuse.

Knok’s vision is to add not only trust, but also personalisation to the picture, by matching demographic patterns and interest profiles of home swappers, for a more accurate and hopefully stimulating match.

More can be done to bring to life the personalisation engine, which will become more effective over time with a larger member base.

The site is very well designed, simple, and clean, carrying brand values—simplicity, transparency, trust—forward.

Other than going viral and receiving mountains of positive PR, what is the strategy for raising awareness and getting customers/users?

We are deploying all the tools in the direct marketing manual: SEM, retargeting, affiliate marketing, etc.

We are also working with other collaborative consumption communities, whose users easily understand Knok’s peer-to-peer approach, and with traditional organisations like alumni networks. We have an affiliate program for bloggers and media companies who help us recruit new members. Our partners receive a share of the subscription fees.

What other options have you considered for the business and the team if the original vision fails?

There will be one worldwide leader in home swapping, and we want to be that player. Once the community is strong and engaged, there are dozens of monetization opportunities. For example, companies can already use Knok to create swapping communities for their employees, or even their customers.

What mistakes have you made in the past in business and how have you learned from them?

Things never develop as fast as you would like and are always more complicated that they seem at first. Timing is paramount, and resilience is the key competence for an entrepreneur.

What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?

The web is changing the whole travel experience (from starting to think about travelling, to coming back home), based on a simple idea: peer-to-peer communication and sharing. In our case, home exchange exists since the 1950s, but it’s the web that makes it available to the masses.

Home swap is a very promising sector fuelled by the success of Airbnb and its clones, who’ve made people realize they can make money through unused assets. Until recently only close-loop, almost sectarian offline clubs were driving trust, with members trying to match other members in a relatively limited marketplace.

Finding someone anywhere in the world that wants to stay at your place, while you stay at theirs, is pretty amazing.

Home swap is the going to be the third common alternative for travel accommodation, after hotels and rentals.  Home swappers save on accommodation (for example, €2,500 in saving during a 2-week home exchange vacation in Paris), stay at a real home (bigger and more comfortable space than a hotel room), and enjoy the local knowledge of their exchange partners.

Tnooz view:

People have been kissing goodbye the leading home exchange clubs for so long that their lips must be chapped.

It’s true that the largest marketplaces are decades old. Yes, they have been slow to adopt to the digital era.

Yet it’s also true that building a marketplace is a difficult thing. It’s essential that the market is “liquid,” meaning that it’s thriving with lots of activity and not a ghost town. Knok still has work to do here.

David Beisel, a VC at NextView Ventures, has charted a half-dozen proven strategies for making a marketplace come alive, such as “offer supply side value for being present beyond just buyers.”

Knok’s big “value add” is its promise, not yet fulfilled, of offering more of an eHarmony than an eBay experience—though it’s not clear why affinity in personalities will matter if you’re never actually meeting the people you’re swapping with.

Knok’s only clear differentiator so far is its large insurance offering.

That hasn’t been enough to boost conversion rates to a higher level than the market leaders yet.

Home Exchange, HomeLink, and Intervac still have high conversion rates in the 60% range — members aren’t paying $100 a year for nothing, and a glance at user profiles shows that many members have exchanged homes dozens of times.

One secret of Intervac’s continued stamina, for example, is that it guarantees that users can find a suitable match or an additional year of membership free.

Knok is apparently trying to gain market share by offering cheaper memberships. But cutting price only gets you so far. Eight-year old Aussie House Swap, for instance, has only 2,500 members, despite its relatively cut-rate membership fee of only $65 a year. Casahop is free and it’s still not yet vibrant.

More tellingly, Knok doesn’t yet appear to be as “disruptive” as it describes itself.

Its COO infers that it’s like Airbnb, bringing new technology, user interfaces, and fresh digital marketing to a stagnant market.

Yet Airbnb is far more innovative than it is given credit for, or than Knok has been to date. As Simon Rothman of Greylock Partners has explained in his article on how to structure a marketplace, Airbnb changed the balance of how much work was centralized by the platform and how much done by the user.

“Airbnb is a hybrid approach and sits somewhere between eBay and Uber.

They’ve centralized photography, payments, user verification, ratings and reviews, communication, terms, customer support, and insurance – everything that feels like booking a hotel room.

They’ve decentralized pricing, description, profile, and key exchange.”

When looked at it through the lens of what is being centralized and what is being decentralized, Knok isn’t really disrupting the model of the traditional home swap clubs. It’s nearly the same.

It also doesn’t look unique or disruptive when judged by the 10-point marketplace evaluation checklist that Bill Gurley, a venture capitalist with Benchmark Capital, published in November.

Knok’s COO says that the company is looking to scale up through marketing, but she doesn’t reveal the plan.

Will it make some of the common acquisition mistakes that the founders of marketplaces make?

Will the company question its tactics at each step, seeking feedback from its customer to allow it to understand if its value proposition is truly unique and truly addresses a pain point that the customer is willing to pay for?

There are many unanswered questions about Knok. Another one is how well it can last against better funded CasaHop.

But Knok has two things in its favor. It has the most intuitive user interface and smartest, most appealing digital marketing campaign of any of the home exchange companies we’ve seen.

The Q&A above also shows that its owners have done their homework about the market and the company’s efforts to date show that the employees are hard workers and are keeping a hawk’s eye on cash flow.

So there’s hope.

Snap poll:
[poll id="76"] tlabs logo microscope

NB: TLabs Showcase is part of the wider TLabs project from Tnooz.

 
 
Sean O'Neill

About the Writer :: Sean O'Neill

Sean O’Neill is a New Jersey-based reporter for Tnooz. He's also a regular contributor to BBC Travel.

Follow him on Twitter, Google+, and his personal site .

 

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  1. M G

    In addition to my post below, if anyone has concerns or questions, I can forward you a copy of my emails with this “company” and you can read it all for yourself. I would not trust them at all.

     
  2. M G

    I just tried to leave a comment about knock.com and it didn’t post. So, without typing it all over again, here’s a shorter version. DO NOT USE KNOK.COM They have ripped me off and refuse to cancel my account. Long story that I’m not going to re-type but basically if you don’t believe me, try to find a phone number to contact someone there-there is none. Only an email address where you get a response from a lady who is not helpful. So, imagine if you have to file a claim under their supposed insurance coverage-you can’t even call them. You have to wait for this girl in Barcelona to respond to you and she has zero customer service skills.

     
  3. Brian Luckhurst

    Swapping Homes for a vacation is certainly becoming more and more popular. Why pay to stay in a hotel or rent a villa when you can stay for free? Yes it will not suit everyone and yes location at times can be a problem but people swap for lots of different reasons and they are not all for the tourist things. Many of our members will travel for family celebrations like weddings or the birth of a grandchild so being near a beach etc is not the reason for swapping in that scenario.

    There are many home exchange websites now available and no doubt the numbers will increase but if Love Home swap can obtain £1.8 million in investment money there are investers out there who think it can pay and potentially the numbers stack up.

    Cheers

    Brian

     
  4. Psycho

    Well. the whole home swapping model lacks the flexibility of Airbnb. I don’t think that many people would like to go to Moscow in winter, for example, so, guess, there’s not much oppotunities for those who live in Moscow to “swap” their house.
    It’s good to make “swaps” when you live near the beach in a house that is always a desired place to stay in. But that’s not always the case…

    Besides, on Airbnb you can rent a single room if you want to. Or you can rent a tree-house if you want to have some unusual experience. So my heart is still on Airbnb’s side.

     
    • Sean O'Neill

      Sean O'Neill

      Thanks for the comment.

       
    • Charles Ehredt

      I agree that Home Swapping is not for everyone, but if there are only 100,000 people that swapped homes last year (in the WHOLE World), then there ought to be opportunity for significant growth.

      We have brainstormed some Use Cases regarding Home Exchange and think it could encompass some very interesting lifestyle changes. Take an average family that visits relatives during one or two holidays per year and takes a 2 week vacation in the summer. In this scenario, they might be seeing one new place per year (the long vacation), yet still spending $5,000 per year on travel.

      Now lets imagine a specific family in Barcelona that would be willing to swap their home (not only for a week or two at a time, but also for a long weekend). They could travel 6-8 (or even 10) times per year and see Paris, Rome, Amsterdam, London, Casablanca, Malta, Munich, and Prague. And, they could stay in a real home (I´m guessing most people who get into home exchange have nice homes – but a few might not be very pleasant). They could even stay in the same city as their relatives, but not have to deal with all the relative´s ¨issues¨ by being able to escape to a home.

      With the cost of flights these days, I would bet they could even reduce their annual expenditure on travel. Next year, they could go to New York or Rio or Moscow or Capetown. Over the course of 10 years, the quality of their travel (at least in my opinion) would have been much better and their total expenditure would be less.

      I doubt this niche segment is going to produce a company with the valuation of HomeAway or Airbnb, but I think there is probably some nice opportunity for investment upside if your investement goals are not to hit a home run.

       
      • Psycho

        Well, you’re right about an interesting opportunity that is delivered by this niche product. The only problem is that it’s really not a big niche – you also pointed that.
        Still let there be more opportunities for different kinds of people – guess, that’s the right point.

         
      • Sean O'Neill

        Sean O'Neill

        Charles,
        What you say makes completely reasonable sense. Thanks for providing some perspective and context.
        –Sean

         
 
 

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