For years, Adam Doppelt refused to take venture capital financing, using a strict bootstrapping ethos to build companies such as restaurant locator Urbanspoon and tech talent identifier CubeDuel.
“Just build little things, and then see what happens,” Doppelt told GeekWire in an interview nearly three years ago.
Well, Doppelt’s latest “little” startup — the online vacation rental service Dwellable — is getting bigger with a round of cash being announced today.
Howard Schultz’s Maveron and Boris Wertz’s Version One Ventures led the deal, joined by prominent Seattle angel investors like Zillow CEO Spencer Rascoff; Redfin CEO Glenn Kelman; Mixpo CEO Jeff Lanctot and Farecast founder Oren Etzioni. In addition, former HomeAway board member and ex-Groupon president Rob Solomon invested.
Obviously, venture and angel investors like Doppelt’s track record, and are hoping he can take on the 800-pound gorilla in the online vacation rental space: HomeAway.
The $2 million cash infusion marks the first outside investment since Doppelt started Dwellable three years ago after a Hawaiian beach vacation didn’t quite go as planned.
Dwellable CEO Kirby Winfield, a former Marchex and Mpire exec, laughed when asked if his business partner had given up his bootstrapping ways.
“Adam is not the kind of guy who can be convinced, except for by himself,” said Winfield with a laugh. “We got to a point over the winter where we didn’t see a seasonal downturn. We saw an uptick, where there should have been a downturn.”
Winfield said the company’s highly-regarded mobile apps continue to get a “ton of traction” — buzz which has come without any real marketing dollars being spent.
“We all kind of looked at each other and said: ‘We really have to try to accelerate the growth here.’ We’ve got something special, so this is the beginning of that next stage of our lives,” he said.
Dwellable continues to grow its base of users and vacation rental property owners, with more than 300,000 listings from around the world. Visitors can now find flats in London; ski lodges in Park City; and beach houses in Cabo.
More than half of the company’s users discover properties on mobile devices, an experience that the Dwellable crew has always prioritized and continues to enhance. The company continues to experiment with various business models, getting paid for inquiries it sends to property managers and by taking a cut of the transaction once a property is booked via Dwellable.
“We are still in the early stages of working out monetization,” said Winfield. “And that is something that the company will become more focused on on the heels of the financing.”
Dwellable tallied about $10 million in gross bookings last year sending out about 25,000 inquiries. Winfield said that number is expected to mushroom in 2014.
One of the challenges with Dwellable — especially as it compares to Urbanspoon — is that people are only occasionally looking for vacation rental properties.
“That’s endemic to the category, and the good news is that you are talking about an average transaction size of $1,250 in the vacation rental category,” said Winfield. “It may be a tougher path, but it is a much clearer path to monetize demand.”
Dwellable also faces a big rival in HomeAway, the juggernaut in the $100 billion online vacation rental business. The Austin, Texas-based company, which operates VRBO.com, VactionalRentals.com and other sites, boasts more than 900,000 listings and a market value of $2.7 billion. And that comes after shares have fallen nearly 30 percent this year.
“We see a huge prize in maintaining and growing our lead as the top-rated mobile app,” said Winfield, adding that mobile converts at twice the rate of those browsing on the desktop.
In fact, Winfield said that HomeAway has shown an appetite to purchase other startups in the vacation rental arena.
“There’s really not a lot of competition for us, except for HomeAway. It is always great when you can put a target on one player, instead of 10 or 20,” he said. “There is still a real vacuum when it comes to brands in the category.”
The company — which plans to double its staff of six people this year — recently moved into the City Club building in Seattle’s Pioneer Square neighborhood. Money from the round will be used to move faster, with Winfield calling his syndicate of investors the “brain trust.”
One of those investors, Boris Wertz of Version One, is excited to be involved. “It’s the only vacation rental brand to truly leverage the tidal wave of mobile adoption to reach travelers wherever they’re planning a trip,” he said.