Growing a Housing Startup During a Pandemic and Recession
In January, our team at Knox Financial felt like we had the wind at our backs.
Knox was approaching its first full year in business, and every month more homeowners and landlords were putting their properties onto our platform that makes investment property ownership a hands-off experience. We were also just named Boston’s most promising new startup, closed a $3M seed round of venture capital funding, and were planning to expand beyond Boston in the early spring.
Then, the COVID-19 pandemic changed everything.
The way our team saw it in March, COVID-19 would push startups into one of three categories: For “tailwind startups,” like video conferencing providers, COVID-19 would be a rocket booster. The second group, “persevering startups” could likely keep operating virtually and have the opportunity to make it through the pandemic. For “impossible startups,” such as brick-and-mortar retailers, COVID-19 would likely prevent them from running entirely.
We agreed that Knox was somewhere in between the first and second categories. While COVID-19 would force us to change how we did business, we felt that our company had the opportunity to continue attracting new customers and operating successfully.
With this in mind, in mid-March, we made a series of decisions that have put our business in a stronger position as we enter the second half of 2020. My hope is that sharing these decisions will help other startups in the housing industry continue to grow during the uncertain months that lie ahead.
Focus on building
Startups can be defined as a group of people who share a common belief—the world needs something that doesn’t exist yet and the team is going to deliver it. COVID-19 has made many of us question aspects of ourselves and our businesses that we never thought to doubt. With so much in flux, it’s crucial to keep your team focused on a goal.
When COVID-19 hit and the lockdowns started, at Knox, we set a two-month goal. Very simply, we aimed to make our product dramatically more scalable—financially and geographically. To put it another way, we aimed to accomplish a year of product development in about two months. The result was a laser-focused, energized team striving to complete a large body of work on a short timeline.
De-emphasize brick-and-mortar presence
Prior to COVID-19, we had plans to open an office and brick and mortar location in the heart of Boston’s shopping district. We were also considering additional satellite offices in select New England cities. Since Knox is a consumer brand, we wanted to be where our customers spend their time.
We had, in fact, signed a lease. The owners of the building presented third-party data that showed 2.4 million people per year pass by their location. The value of our signage alone would make the rent worth it.
Now, the number of people passing by any retail location is a small fraction of what it used to be. While we’d love to gain the visibility that a premier location would bring, at the moment, this just isn’t possible. Instead, we’ve made an effort to maintain local visibility through branded lawn signs, which do get a lot of attention because ours are quite different from the usual ones you see.
Be smart with hiring
When the economy slows to a halt, the temptation can be to just put a hold on all hiring plans. We did this at Knox for a few weeks. No one knew which way was up, and it made sense to pause.
Now that we’re in a new normal (though a strange one at that) I’d encourage businesses to be smart about hiring instead of freezing hiring. If you have an open position for a role that is critical to moving your business forward, keep looking for that person.
At Knox, we filled a number of positions over the last few months, including our chief product officer. We also brought on one of Uber Boston’s first employees who is now our VP of Growth, and made a number of local hires in the markets we recently expanded into.
As our team is now completely remote, we’ve started to hire wherever the talent happens to live. As a result, we’ve added teammates in five states in the past three months. The broader talent pool makes hiring easier and faster and we’re finding great people.
Continue to grow (virtually)
Some might argue that expanding a business in the middle of a recession and pandemic is ill-advised. If your business is getting by ok and you want to just hold on and make it to the other side, there’s nothing wrong with that. But if you’re offering a product that people still want, and won’t put them in harm’s way, then there’s no better time to expand than the present.
While our team initially held off on our New England expansion, which was slated for early spring, we decided to move forward and launch in new markets in June. We’ve already secured our first customers in these new markets, and can see that this expansion will help us ensure the long-term viability of our business.
Posted on housingwire.com on 8/25/2020.