With $8.2 million in Funding, Zumper’s HBS Founder Focuses on Double-Sided Success

By Philip Levinson

With FIELD 3 teams working furiously on their startups, HKS alum and Learn Capital Venture Advisor, Philip Levinson, brings you the story of HBS-founded Zumper, who turned $18k in HBS grants into a serious startup backed by a number of Silicon Valley’s top VCs.

Anthemos Georgiades (MBA 2012) finished his first year at HBS in 2011, he reached a conclusion about the online apartment rental marketplace. “I’m British, and when I moved to America to attend HBS, I couldn’t believe how inefficient the rental search and application process was,” he says. “I decided in my second year to try to launch a company to address this.”

And Zumper was born. Three and a half years later, after raising $8.2 million over two rounds of funding from several top VC firms, Zumper and Anth (as Georgiades is known) have gained great traction. The San Francisco-based company with 18 employees now processes almost 1 million total apartment listings across every top U.S. market, generating over 500,000 consumer apartment searches per month and an annual growth rate of 15X.

Anyone who has used Craigslist to try to find an apartment may recognize the need for a better, more streamlined solution, as did Georgiades when he decided to launch his company.

“Zumper is addressing a painful problem for most people seeking their first apartment,” says Patrick Chung (MBA 2005), a partner at Xfund today and previously a partner at NEA, who helped manage both firms’ separate investments in Zumper. “What Anth has built – on both the renter side and the landlord side – is incredible.”

Anthemos Georgiades (MBA ’12) founded Zumper at HBS, earning two HBS grants and then raising $8.2 million in VC funding.

The challenges in building a double-sided marketplace are significant. So, how did Anth come this far so fast? As Ringo might say, he got by with a little help from his HBS friends – plus three non-HBS co-founders (Russell Middleton, Taylor Glass-Moore and Leah Jones).

Leveraging $17,500 in HBS Grants

Anth raised $7,500 from HBS’s MVP Fund, now known as the Rock Accelerator Award, at the start of Winter Semester in his first year. Anth said that this small grant from the MVP Fund, which was launched by his fellow MBA 2012 classmates Dan Rumennik, Jessica Bloomgarden and Andrew Rosenthal, was key.

“One of my best friends from Harvard, Daniel Rumennik, was in my section, Section E, and helped launch the MVP Fund,” says Anth. “I applied for a grant based on this real estate hypothesis in spring 2011. They gave us $7,500. That was the first point that I thought this might go somewhere, and I then decided to pursue this instead of taking a summer job.”

For his part, Rumennik says that it was great to see the MVP Fund make such a productive grant in its very first year. “In that first semester, we got 80-100 applications for the fund,” says Rumennik. “With Anth, he had a demonstrable hypothesis and a well-thought-out plan to address that. So, it was really exciting for me to see him get selected as one of the first to receive an MVP award.”

Anth then spent his summer between 1st and 2nd year launching a minimum viable product in San Francisco. “We wanted to test the hypothesis that you could empower a renter to make a one-click application,” he says. “So we built the worst possible tech stack, which we threw away 3-6 months later after we raised a million dollars.”

Upon returning to HBS for his second year, Anth entered Zumper in the HBS Business Plan Contest, where the company placed as one of three Runners-up in April 2012, winning a $10,000 cash award, the second HBS-affiliated grant he earned.

Zumper’s LTV and Innovation Lab Roots at HBS

One month later, Zumper closed a $1 million seed round right around the time of Anth’s graduation. The investor group included Kleiner Perkins, Andreessen Horowitz, Greylock and NEA, where Chung was serving as a partner. In fact, Chung had first met Anth while serving as a judge in the HBS Business Plan Contest.

“The thing that immediately stood out about Zumper was Anth and its team,” says Chung. “They had a strong group with real estate experience tackling a problem that needed to be solved, which is how to help apartment hunters that are getting thrown into the digital mosh pit called ‘Craigslist.’”

In addition to HBS’s MVP Fund and its Business Plan Competition, Anth cites the big influence of Professor Tom Eisenmann and his Launching Technology Ventures class on his founding of Zumper. “What Eisenmann did both with his class and with the Innovation Lab was amazing for us,” he says. “I would not be sitting here at Zumper, the head of an 18-person company, without that Day 1 influence of Thomas Eisenmann.”

Eisenmann credits Anth and his lean startup approach as being critical. “It was exciting to watch Anth build Zumper during his EC year,” he says. “He followed a lean approach to building and testing in Zumper’s earliest days. We were all very proud – but not surprised – when he raised seed funding from top VCs soon after graduation.”

Professor Thomas Eisenmann and his LTV class helped Zumper take flight.

Anth also points to HBS lecturer and Flybridge VC Jeff Bussgang (MBA 1995) for his influence as he was launching Zumper. “Jeff brought real teeth to the lessons from LTV,” says Anth. “You would read the case and intellectually think, ‘This will happen, I understand why.’ Jeff would then say, ‘This is not actually how it gets done.’ And that was a really important thing for me.”

Solving the Chicken-and-Egg Problem

Beyond the tutelage of Eisenmann and Bussgang, Anth is now laser-focused on meeting the challenges of building a large double-sided marketplace in a hyper-competitive environment. The two sides refer to both the supply and demand sides of the apartment rental marketplace. While we’ve all heard of the successful online marketplace examples – eBay, Uber, Lyft, Etsy, AirBNB – there are many more unsuccessful ones.

Another HBS MBA VC alum with a good perspective on this double-sided challenge is Greylock partner Simon Rothman, considered a marketplaces expert having served as a former eBay Vice President and an advisor to Lyft. He says, “Marketplaces have a cold-start problem. How do you get enough supply and enough demand at the same time and in the right proportion? It’s essentially overcoming the chicken-and-egg issue,” states Rothman.

While not directly involved with Zumper, Rothman brings a valuable outside perspective, having served as an advisor to competitor Apartment List before he joined Greylock, which has a small seed-round stake in Zumper. Compared to other tech businesses, Rothman says the scaling challenges facing any marketplace “are an order of magnitude more complicated because there is no playbook on how to scale a particular one in a specific industry. The timing and proportions vary considerably by domain.”

Anth is acutely aware of the challenges Rothman articulates, pointing to discussions he’s had with Ruzwana Bashir (MBA Class of 2011), founder of the online travel marketplace Peek. “Ruzwana and I are both building two-sided marketplaces from the bottom up,” says Anth. “Every few months, we’ll go out for a coffee or a drink and trade war stories because it’s so difficult.”

To overcome the chicken-and-egg problem that Rothman describes, Anth counts on his company’s resilience and step-by-step progress. “It’s little growth spurts, but then a dip, and then a plateau,” he says. “You need to have a company of resilient people that understand that when the growth spurt slows or even when it dips, that’s normal.”

Becoming a Powerful & Valuable Business

With competitors that include Zillow (which just acquired Trulia for $3.5B), Apartment List and others, Zumper seems to be experiencing enough growth spurts – and in the right proportions – on both sides to succeed. On the demand side, Anth points to a 15X consumer growth rate in 2014. On the supply side, the Zumper Pro landlord and agent product originates 20-30% of all rental listings in the top five U.S. rental markets, according to Georgiades.

“We’re on track for one million monthly searches by this summer,” he says. “You can’t just have compound growth day after day, week after week, but if we’re growing 15X year over year, then it doesn’t matter what other competitors are doing – we will succeed.”

Professor Thomas Eisenmann and his LTV class helped Zumper take flight.

Indeed, Rothman points out the huge upside for a successful marketplace: “While hard to build, marketplaces can become the most compelling businesses. Once they gain liquidity, they tend to grow quickly and get very big very fast,” says Rothman, citing eBay, Uber, AirBNB (a Greylock portfolio company) and others. “They can become quite powerful, defensible and valuable businesses.”

Indeed, with strong 2014 growth in both its supply and demand sides, Zumper may be turning the corner in getting there. It has succeeded in raising a second round of funding, a Series A round of $6.5 million in February 2014, led by Kleiner Perkins, with participation from NEA and other funds, bringing its total capital raised to $8.2 million to date. In doing so, Anth gives a shout-out to HBS Negotiation Professor Deepak Malhotra. “I negotiated aggressively on every single cent of that money on behalf of me and my team,” says Anth. “In doing this, I have to credit my negotiation lecturer, Professor Malhotra, whose class was genuinely life-changing for me.”

One Word of Advice to HBS Entrepreneurs

When asked to offer a key to success for other HBSers thinking about launching a tech company, Anth has a simple response: “The one word answer is ‘Focus,” he says. “Everything can be a distraction. I think the biggest challenges other companies have is a lack of focus. They try seven things because their competitors are doing seven things, and they fail. If you define the right metrics and build a team around yourself who are equally obsessed with those metrics, nothing else matters.”

With his unrelenting step-by-step progress in building Zumper, Georgiades has clearly taken his own advice.

If you’d like to suggest another interesting HBS-founded high-tech or venture capital-funded company for a profile, please feel free to reach out to me (philipl@post.harvard.edu).