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—HomeLink, Home 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.
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.
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.
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.
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.
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.
Sean O’Neill is Editor-in-Chief of Tnooz.
Before joining us, Sean was the future of travel columnist at BBC Travel, senior editor of BudgetTravel.com, and an associate editor at Kiplinger’s. He now lives in New Jersey, after having worked in London for four years. He's on Twitter and is excited for #Rio2016.