Ever thought about fixing that broken stair in your house, but you made excuses just because you didn’t have the right equipment? Or how about that old movie you always wanted to see but you couldn’t find it anywhere so you just gave up on watching it?
Sadjad and Mohammad co-founders of “Lendem”, a Social network app that helps people share their belongings, had the same problem. The idea came to them about two years ago when Sadjad wanted some books for college and didn’t want to pay a bunch of money for the books he knew he wouldn’t need any more after passing the courses.
“I had to pay a big amount of money for all the books so I thought that maybe I could get them from other people that had the course in the previous semesters. I tried calling some of my friends asking for the books and I finally got what I needed, but the process was really hard so then we thought couldn’t this process of finding the items that you need be any easier? So we thought by creating a platform that people can actually broadcast their needs we can simplify the process of finding the items that you need.”
TechRasa spoke with the co-founders of Lendem, Sadjad Fallah and Mohammad Tootia about their startup and their journey in the past 8 months since they started Lendem.
- What does Lendem do right now and what problem is it solving?
We simplify the process of finding the items that you need, right now the current version of the app does this, but what we are looking forward to is creating a solution to simplify the process of lending and borrowing. The user needs finding items, a guaranty plan, reminders for returning the item, a list of the items that the user has given to others and a list of items that has borrowed from others. Currently we’re just supporting the broadcasting part, but in the near future we’re going to have the complete journey and support the other futures as well.
- Can we say you’re making a culture?
Well we don’t want to change the culture, this is something that is already happening. We’re just trying to add something new to what was already there. Friends share everything from movies, books, equipment for sports, instruments for music to even furniture. So the problem is you have a pile of stuff in your house that you don’t know who you’ve got it from. You know that it’s not yours but you don’t remember who you got it from. You have lost a lot of items and you don’t know who you gave it to. So all of these are just the pains that are there when you want to lend or borrow something. We are trying to simplify this process. So I guess we’re trying to shift the culture from something traditional to more digital.
- What is Lendem’s value?
Lendem has a few main values to offer. First one is that you can lower the cost of your living. There is no reason to buy an item that you’re only going to use once or twice. Lendem tries to change the perception people have about ownership, we want to help people escape from excessive consumerism.
These days people have become more distant in spite of all the social Medias they are on. So we hope by sharing and lending, people can actually connect more and be more social than ever.
Also we want people to know that if you want something you have to give something back. This is a cycle that can only operate if only people contribute to. So if you have something that you don’t really need, put it on the app, the worst thing that could happen is you’re going to lose something that you didn’t actually need.
We’re trying to shift the culture from something traditional to more digital.
- How do you generate revenue from something that is done free in the traditional way?
There is no straight forward way to generate revenue. What we’re thinking of is having lots of users, giving them values like the ones I mentioned before and after that we’ll reach critical mass. When we reach critical mass we start thinking about the different methods of generating and activating our revenue streams.
One way is charging the user daily to guarantee the item. Also since we have a lot of information on the items that people need or want to lend to each other we could do targeted advertising. If somebody borrows a camera then certainly they don’t have a camera and they are interested in buying one so then we can show them offers of cameras. We’re also going to do some kind of gamification, like creating points and badges to give trust to people based on what they have gained in the platform. Then, create premium features that only users with a certain badge or a certain amount of points can use. If the user hasn’t managed to get the badge, then they can activate the feature by paying, like a freemium model. And last but not least, we can have yearly subscription plans for using the app, something like WhatsApp. But all of these are assumptions and we’re not certain of anything because what we’re focused on right now is just creating a lot of users.
- When do you think you’ll reach that stage?
It’s a tricky question because right now we’re trying to find the best product market fit for this version of the app. We don’t know the solution we just know the problem exists. So we’re trying to figure out the right way to solve this problem. We tried 3 different ways in the past 6 months and the three versions of our application were trying to fix this problem differently. So whenever we reach the product market fit, then we’re going to hit the growth stage and gain a lot of users to the platform. Our plan is to reach 10-20 million users in 3 years.
- I know you guys were part of the Avatech start-up accelerator, how did that work out for you?
Accelerators are there for you to focus on your work. If we were not in an accelerator, the ecosystem wouldn’t be something that we could trust to start an application like Lendem. Lendem needs the complete support of the ecosystem because we’re not generating revenue right now. Before the accelerator we were working on other projects that actually made money. I had the idea of lendem which originally was named “Lendthem” for about two years but I didn’t do anything about it until we found out about Avatech. There we had the opportunity to focus on the idea a lot, and they gave us the exact amount of money that we needed to spend on our daily costs and to give to our employees and to do advertising. The network of our mentors were really reach. We had about 40 to 50 sessions with the mentors and got lots of training in the process.
“Lendem tries to change the perception people have about ownership, we want to help people escape from excessive consumerism.”
- Have you closed any deal with an investor so far?
After the accelerator’s demo day we had investors who liked our startup so we started negotiating but we haven’t closed any deal yet. A few weeks ago we won the TEDxKish prize, which was an offer from Plug and Play accelerator to go to Berlin for three month and use their network of investors. The international investors might be quite better than the ones in Iran, because the ones in Iran don’t have that much experience in investing on startups.
The thing is we don’t actually have any problem that money could solve. Our platform needs users that interact with each other, so we have to push this community by giving them real values. We may not go after investments right now.
Investors expect us to reach the metrics that we have put on our spreadsheet. To get the next round of investments we have to specify the exact number of users and the time we want to reach to that phase, so there won’t be any excuses for that. But we’re not thinking of reaching any growth metrics, we’re thinking of reaching the metrics which show that we are finding a solution to deliver the value, so this is the challenge we are facing with right now.
- Who are your local or international competitors and how are you going to compete with them?
We didn’t clone our idea. After investigating the international market to see who our competitors were we found one in the Netherlands and it’s called “Peerby”. What it does is it connects people in one neighborhood for lending. This was one of the most popular ones, the others mostly failed.
Right now even this app is not our competitor, they are connecting the neighbors in one place and we are connecting friends with each other (the users contact list). We believe that our method is actually more efficient and we’re mostly working on the social aspect of the app.
- Do you ever think of going to the global market?
We see the plug n play opportunity as testing the international market. We want to see how our application works overseas with other cultures and people who can actually own a credit card (unlike Iran!) and see how they react and examine the opportunities we have there. But definitely we’re thinking of going to the international market, the potential of the Iranian market isn’t that much to have like 10 or 20 million users. In Iran you can reach up to 500 000 users or 1 million max but if you want to expand and grow more we need to expand to other countries.
- What were some of the challenges you faced in the process of running your startup?
Finding a good developer was a big challenge for us. The first two developers we had on our team had to leave because they had to serve the military. This is a real problem for entrepreneurs who want to start their business right after finishing school.
The other challenge we faced was finding a good working space after leaving the accelerator. The startup community is really young right now so there aren’t many good workspaces for us.
- Imagine there was a genie right here that could solve one of the biggest challenges you are facing with your startup right now, what would you ask from it?
We have to experiment and test and do a lot of assumptions and try hard to figure out if this model we’re working on is actually going to work or not. So if the genie could show us the right path we can focus on the developing process! Also if he could give us investments without asking for any percentage that would be great too!
- Can you share with us some of the lessons you learned in the past months since you launched your app?
- Focusing on an audience for targeted marketing is really important. In a platform like Lendem which is a social network, releasing the app on app store didn’t help us a lot. We gained a lot of users but the users couldn’t deliver any value to each other because they were far apart from each other. So we thought limiting the application and giving invitation codes to targeted audience would be a lot better. Right now the only reason we have the application on the official app store is to let the users know that the app is safe and will not give their phone any harm.
- Something that might have been pushed to us was that you should keep your startup growing. In any startup, you are the only one who can evaluate your startup stage. So in the early stage you only need to evaluate your users and get feedback from them and growing is not that important. This is especially important for startups that are working on new ideas.
Another thing is there are a lot of good books and articles out there, but that is just the outcome of one person’s experience for a startup that might be really different than yours. You have to read them carefully to know if you can actually compare your startup to them or not.
- Spend as much time as you need before going to the next version. Creating multiple versions and releasing them fast is not a goal. Understanding the users and giving them value is the goal. So don’t fail your ideas before you are sure that it’s going to work or not.
- Don’t mistake Iran’s ecosystem with Silicon Valley! Iran’s startup ecosystem is on its early stages and it might take up to 10 years until it really shapes.
- The biggest and most important part is not the development but rather understanding the needs and giving users value and marketing that startup.
- Don’t trust easily when signing a deal!
- What advice do you have for entrepreneurs like yourself?
Before starting a venture think deeply if this is something that you could spend most of your time on. You need to have savings for at least 6 months, you need an ecosystem that could support you completely. It’s not like you’re going to launch your application and it goes BOOM! Investigate the ecosystem!
I’ve heard that for startups in Turkey are growing to reach series A or series B from then there are no investors anymore. The investors have small amounts of money and since they won’t support startups after series B, their startups usually fail. It’s not like each time you grow someone’s going to support you.