Hello hello! 🙋‍♂️

If you’ve ever gone house hunting in India, NoBroker.com doesn’t need much introduction.

Whether you’ve rented a house or not, most likely you would have snooped their website to see the properties/rented houses available in and around you - places you can and perhaps, cannot afford. 😮‍💨

In fact, while researching for this piece, I went on a Nobroker binge, shortlisting rented properties in and around Bangalore, sharing them with Priyanka(my wife), and saving them for later when she is ready to move. Psst! She’s never ready.

Thankfully, I’m not alone. How do I know? Well, from the fact that NoBroker clocks 15 million visitors every month. Undoubtedly, if I’m ever able to convince Priyanka to move, my first destination would be NoBroker.

Today, we will be going deep into the workings of NoBroker, what makes them a huge success, and what are they doing today to force multiply their growth.

While we are at it, we will also cover tons of lessons for anyone interested in starting and growing marketplace businesses.

If you learn at least one thing from this newsletter, consider sharing it with your friends. It’s free, of course!

Well, self-promotion over.🙈

Here’s what we will be covering in our NoBroker analysis.

• How NoBroker Started

  • “Putting Power in People’s Hand” 

• Nobroker’s GTM and kickstarting the marketplace

  • Supply Strategy (and the network effects at play)

  • Building supply side defensibility

  • Demand Strategy

  • Acquiring marketplace demand

  • Expanding the marketplace

  • Building demand side defensibility

• What is NoBroker’s big picture today: Gunning for housing 360 with NoBrokerhood

To help me with this one, I teamed up with my friend Sushant Sahastrabudhhe who spearheads the packers and movers category at NoBroker. Thanks, Sushant! ❤️

Cool. Go grab a coffee. ☕ Let’s get to it.

 “Putting Power in People’s Hand”

If you go to a furniture store to buy a bed, you will quickly find yourself talking to a salesman. The salesman would know much more about the bed than you -  wood type, aging, fixtures, craftsmanship, and so on.

In short, he would be privy to information you don’t have. This imbalance in power is called 

Information Asymmetry.

The same applied to the housing market in 2014. There were 2-sided marketplaces such as 99acres and Magicbricks in the market but brokers primarily controlled their property listings. This meant brokers controlled the most important aspect of buying/renting a house - Price.  Broker's pockets got heavy despite adding little value to the transaction 

Lucky for us, Saurabh Garg, didn’t like this one bit. He was obsessed with how the internet should disrupt the information asymmetry - leveling the playing field for the customer.

So, Saurabh bought the domain “Nobroker.com” and roped in Amit Agarwal, his batchmate, and Akhil Gupta, his college junior to build a real estate search and discovery platform that took away brokers' biases, pressures, and manipulations.

The trio decided to find a solution in which a broker couldn't do anything and only genuine owners, tenants, buyers, and sellers could interact. And, that paved the way for the launch of NoBroker in 2013.

NoBroker’s GTM, and starting the marketplace

Anyone building a marketplace business faces 2 big questions:

1. How do you build the supply side (homeowners’ listings on the platform) to incentivizes the demand side (rented home seekers) from a cold start?

2. How do you acquire and retain customers in a commoditized supply side? In other words, what competitive advantage will you build that will err homeowners to choose your platform over others when it is free to be on all platforms?

Let’s look at what NoBroker did to build their supply and demand side of business.

1. NoBroker’s supply-side strategy

One of the big early questions for marketplaces is to decide on which side of the business they want to concentrate on first - Supply or Demand. In fact, if you look at it, it’s a chicken-egg problem. You need listings to bring buyers and you need buyers to attract home owners.

As per Casey Winters and Anne Lewandowski, the key is to focus on supply early on.

So, NoBroker decided to go after the homeowners first. Let’s call it chicken as per our chicken-egg analogy. 🐥

Supply Strategy 1: Comprehensiveness

A comprehensive strategy prioritizes building an extensive and diverse supply base, giving customers many different options for any single transaction. For many marketplaces such as Amazon, Flipkart, Udaan, and Airbnb, this is the core winning proposition that allows them to own demand and provide a sticky product. 

For NoBroker’s business also, it was all about how many options people wanted to move had while browsing for a home. Clearly, their play had to be building comprehensive supply.

NoBroker deployed the following three tactics to meet this objective:

Tactic 1: Mirroring broker behaviour

Several of the homeowners were senior citizens who weren’t tech-savvy. So NoBroker followed the process brokers were following to find new properties going on rent. They deployed feet-on-street to find properties going on rent and asked the owners to share the details with them the same way they would do it with brokers. Be it a call or WhatsApp of property photos or a visit to take property photos, NoBroker’s feet on street folks took ownership of making the property go live on their website. 

For tech-savvy second-generation homeowners, they built an intuitive platform to list their property on their own or connect with NoBroker on phone where an in-house team would list the property on the owner’s behalf.

Tactic 2: Photos of “To-Let” signboards

 In India, homeowners who don’t want to haggle with brokers and are willing to find a tenant on their own, put up a to-let signboard on their gates with their numbers on it. NoBroker’s feet-on-street team would take photos of these numbers and call them later - explaining the NoBroker model and turning their listing live

Tactic 3: Crowdsource photos of “To-Let” signboards (called NoBroker Ambassador Clubs)

Manual capturing of photos signboard was cumbersome and not scalable. So, later on, NoBroker moved on to a pull model from a push model. Anyone with the NoBroker app could click the “To-Let” signboard photos and upload them to their app. An algorithm would fetch the number from the image and send it to their call center team to list the property on their app. Once the property was listed, NoBroker would do a Paytm transfer of INR 100 into the submitter’s account (this amount is up to INR 120 today).

Supply Strategy 2: Fortifying supply aka homeowners

If you look at NoBroker’s supply, it is clearly commoditized. This means the they were discovering and listing properties that earlier were hunted by brokers with much effort. This also means it was in the interest of brokers to mask as a consumer and syndicate their listings with every possible channel.

Brokers could connect with homeowners with much ease via NoBroker. A homeowner who would’ve listed on Nobroker with the sole idea of avoiding brokers, was at risk of getting broker visits and calls, breaking their trust in the platform altogether.

So, what did NoBroker do to build defensibility on their supply?

Fraud and abuse-catching algorithms

NoBroker designed an algorithm (secret sauce) to keep the broker out of the system. When a new customer registered on its site, the algorithm worked in the background and validated the user in around 2 minutes. Once their system flagged “broker-like” behaviour, they limited the listings visible to such users and fortified the homeowner’s contact numbers.

While no fraud and abuse system is perfect, NoBroker erred on the side of some genuine users (false positives) getting limited app functionalities versus some brokers getting into the system. The approach shows their commitment to ensure they stay true to their identity of no brokers, whatsoever.

Supply Strategy 3: Bringing them back with the Rent-o-meter

NoBroker, by design, is a business model where the frequency of transactions is low - which is a problem for a marketplace. For other consumer businesses, frequency creates habit which creates loyalty which creates profit. 

So, how do you create a successful business if the ideal frequency is quarterly or yearly, or even once every few years? You would be unlikely to create a habit or loyalty, much less get the homeowner to remember your brand name. Without loyalty, you will usually have to re-engage with the homeowners when the need eventually arises again. This hurts customer acquisition costs and lifetime value. This fact makes building a successful business with low frequency extremely difficult.

Now, you might counter saying that low frequency businesses generally have a higher ticket size to compensate for the frequency. For example, an average order on BlinkIt would be INR 600 whereas on Narayana Health app would be INR 2000. However, this alone is not enough if the aim is to become a massive successful business clearing the competition.

Casey Winters finds that one of the ways to keep users engaged in a low-frequency business is by building a non-transactional experience.

With this in mind, NoBroker built a very engaging feature called ‘rent-o-meter’ - a place where one could see the valuation of the property.

This not only gave owners a place to check their property valuations and debate over it in their morning-walk friend circles but also helped them see what their friend Mr Reddy in Kormangala must be making with rentals 👀 - kinda snoopy, kinda personal, kinda cool.

The tool gave valuable information to both homeowners and tenants and emphasized on everything NoBroker was all about - transparency and power to the people. This helped NoBroker establish as a credible source of property information in the market.

Once NoBroker had supply, it was time to work on eggs (buyers) 🥚🥚

If you’ve learned something new so far, and this is your first time reading, subscribe for more deep dives just like this

2. NoBroker’s Demand-side Strategy

Peter Thiel says, “poor distribution - not poor product is the number one cause of failure” for businesses.

For marketplace businesses, they have to think about 3 different types of distribution

1. The channels used to bring supply into the marketplace

2. The channels used to bring demand into the marketplace

3. The value that you are adding in between supply and demand distribution (for example, an e-commerce website adds the value of an intuitive app, easy checkout, recommendations etc. in the middle)

So far, we have seen the channels NoBroker used to grow their supply. Now, let’s get into their demand side of things and see how they drew buyers’ attention towards them.

Lenny describes that there are seven unique distribution strategies that new startups can take advantage of:

1. Starting with a pre-existing audience

2. Developing a unique viral loop

3. Being first on an emerging platform

4. Having a remarkable story

5. Starting with pre-existing strategic relationships

6. Closing early strategic partnerships

7. Bringing extraordinary hustle

NoBroker relied on having a remarkable story. After all, they had the value proposition of 10X savings for buyers on their side. (Avg broker cost in bangalore is INR 30k vs NoBroker subscription is at INR 3k).

Here’s how NoBroker kickstarted their growth engine

Demand Strategy 1: PR and Word of Mouth

NoBroker’s first step towards demand acquisition came from press releases and word of mouth. As Amit’s excerpts from an Inc42 article explain their strong value proposition:

And this except from Business Standard explains their rapid growth

Key Takeaway: The more your idea is disruptive, the more you can extract from this distribution channel.  Find ways to see how your business is ‘remarkable’. What impossible obstacles have you overcome? How is it a no-brainer for customers to choose you above others?

Demand Strategy 2: SEO

If you look at NoBroker’s traffic, you would see that over 90% of their traffic comes from organic searches. That’s disneyland for most of the companies operating at their scale.

SEO is a big channel for NoBroker where they have invested heavily since the inception. While there are other competitors having higher monthly traffic than NoBroker, NoBroker’s ranking beat them on high intent keywords like rent flats in Bangalore or Gurgaon.

NoBroker is highly focused on content marketing through blogs, hyper-localized landing pages, continuous technical SEO improvements, and link building.

If you google flats for rent in your area, you’ll most likely find NoBroker as the first option. 

That’s how NoBroker is driving millions of visits to its app every month.

Demand Strategy 3: Building defensibility with a Data Network Effect and making it gluey.

Even though NoBroker is well-funded (valued ~ 1billion today), the online real-estate market is highly competitive. And honestly speaking, customers can find the same properties on NoBroker, 99Acrers, MagicBricks and so on.

So, why should a customer stick to NoBroker?

NoBroker’s finds the answer by flipping the question from “how to serve demand” to, ‘how to own demand’.

This is where Data Network Effect comes into action

Wait, what is data network effect? To put it simply, a product or service’s value increases when more people start using it. The new people yield additional data which in turn creates additional value for everyone.

NoBroker started community forums where both supply and demand side users could ask relevant questions related to renting or buying homes and get other point of view.

Some questions which have great traction are (and is ranked 1 on Google, NoBroker SEO you see)

For buyers
1. Who Pays for Rental Agreement in India?
2. Who is Responsible to Get Leakage Repair in Society Flats?

For sellers

Key takeaway:

The more information NoBroker has, the more valuable the site becomes for people. The better the user experience the first time, the more likely customers are to continue to add more data and trust the platform.

NoBroker’s big picture:  Nobrokerhood - One-stop shop for all housing needs

In 2018, NoBroker brought in NoBrokerhood - A visitor and community management app for societies in India. This was their another move towards bringing data network effect into play.The app moves NoBroker from a once-in-two-year usage app to an everyday app (superglue-y), opening new opportunities. 

To make sense of this move, it’s best to understand it with what Ben Thomson said about Disney’s move to Disney+ : 

Similar to the Disney’s move, NoBrokerhood aims to strengthen its customer's relationship with the visitor and community management solution. NoBroker currently manage over 21000 societies whereas the market leader MyGate works in 27000 societies.

With NoBrokerhood, they are equipped to handhold customers from their willingness to move houses to the housewarming party - end to end. The image below, explains it well:

From the core business of broker-free listing discovery, NoBrokerhood offers one-stop for all housing-related services -  increasing the customer transaction share across the entire value chain of moving houses.

With this bold move, NoBroker is up against multiple integrated service lines and aims to take down some strong rivals:

• Painting and Cleaning Services (Core competitor - UrbanClap, Asian Paints)

• Packers and Movers (Core competitor - Aggarwal Packers and Movers)

• Home Loans (Multiple established and new financial institutions)

• Home Interiors (Core Competitor: HomeLane)

• Property Legal Services (Multiple SME’s)

Gearing towards this ambitious goal of becoming the everything app for housing, this is what looks like their go-to strategy.

NoBroker’s 5-point growth strategy

The five points are:

Point 1: Acquiring new users via NoBrokerhood

NoBroker is bullish on acquiring societies with NoBrokerHood. During the launch of their visitor management system, they started for free in a market where rivals were charging 15-20/flat.

Point 2: Financing

Home loans are an integral part of home buying. The process of home buying is often taxing and requires a lot of paperwork. NoBroker is making the whole experience seamless - approvals, background checks, and the home loan - all facilitated by NoBroker

Point 3: Expanding Buyer Solutions 

NoBroker keeps finding new ways to add value to their customer’s lifecycles. Their Find My Flatmate feature reduces the renting friction for bachelors and boosts their subscription period

Point 4:   Enhancing Partner Network

Zillow continues to invest in working with more homeowners — curating their offerings as per their owner type such as NRIs providing end-to-end property management and rental offerings.

Point 5: Integrating services

NoBroker’s offering to meet all home service needs under one hood - from plumbing to painting to packing and moving, makes them go up the value chain and draw high margins. 

NoBroker is on solid ground as they cruise through their IPO rumored to be in 2025. Their traffic and brand are extremely strong, with about 4 million unique monthly users on their website. This puts them in a great position for future growth as they execute the vision of a one-stop solution to help people across all their real estate needs, breaking down all the black boxes and complexities along the way.

More power to the people. ✊

And that’s a wrap on our NoBroker analysis. This was fun. 🙃

I hope you learned something new here today and will remember me during your next house-hunting trip to NoBroker.

PS: Other random, interesting highlights of my last week:

1. An ad I laughed a lot on: here

2. A thought I thoroughly discussed with my wife and office colleagues: They say, No one has all the answers at the beginning. Trust yourself and take the first step. How often did we trust ourselves and make the first step in the last year?

3. A post that made me think twice: here

Until next time! 👋