In an ever-changing business landscape, startups must embrace strategic shifts to survive and thrive.
Toomaj Freydouny is an entrepreneur and a marketing strategist with expertise in rescuing failing startups and small businesses, that has successfully navigated a strategic shift in his current venture. Currently serving as the CEO of KUMMUNI, a Berlin-based proptech startup that faced significant financial challenges in 2020, Toomaj took the helm in 2021 and spearheaded a remarkable turnaround.
Under Toomaj’s leadership, KUMMUNI transformed into a sustainable startup, achieving both profitability and a solid reputation by mid-2022. Toomaj attributes this success to the company’s ability to pivot effectively. In this interview, he shares insights into his strategies and offers valuable advice to young founders seeking similar triumphs in the competitive startup world.
Can a startup change its destiny and make a true change by pivoting and strategic shifts?
Startups are no strangers to change. In fact, their ability to adapt is often what sets them apart from the rest. When things aren’t going as planned, startups have the option to pivot – a fancy word for making a strategic shift. It’s like hitting the reset button but with a purpose. Whether it’s changing their product, target market, or even their entire business model, startups pivot to overcome challenges and seize new opportunities. It’s a bold move, but one that can lead to success in the ever-evolving world of entrepreneurship.
Pivoting is not a sign of failure, but rather a sign of resilience. Startups pivot when their current strategy just isn’t cutting it. It’s like realizing you’re going down the wrong path and deciding to take a detour. It takes guts to admit that something isn’t working and to make a change. That’s what separates the winners from the losers! Pivoting is a crucial aspect of startup success.
However, we shouldn’t forget that pivoting is not just about making changes; it’s about making purposeful changes. It requires a clear understanding of the current state, the desired destination, and the path to get there. Informed decision-making is key, relying on data, market trends, customer feedback, and intuition. Pivoting is not about abandoning your vision; it’s about discovering a better way to achieve it. So, yes! Startups can change their destiny by pivoting.
Why did you decide to make a strategic shift at KUMMUNI?
When my team and I stepped in, KUMMUNI was a run-of-the-mill real estate business. No direction, no strategy, just haphazardly going through the motions. It was a hot mess of mismanagement, poor financial management, and lack of project coordination.
The company was on life support, gasping for air. We had to act fast to stop the bleeding and simultaneously lay the groundwork for growth. Transferring KUMMUNI from a traditional business to a proptech startup was a no-brainer. With limited funds and a desire for a fresh culture, it was the only logical choice.
By making this move, we had the opportunity to build a new culture from the ground up. No more outdated practices or stuffy office politics. We could create a fast-paced environment that fostered innovation and creativity.
Frankly, my budget was also extremely tight! We needed to be resourceful and think outside the box. And what better way to do that than by diving headfirst into the world of proptech? It was a risk worth taking. And talking about risk, startups, those daring ventures built on innovation and risk, are no strangers to uncertainty.
What is the journey of KUMMUNI? How did you plan the shift?
As I said transforming the company from a traditional real estate business to a proptech was crucial. The old ways were stale and unoriginal, just like every other business out there. They all seemed to have the same tired slogans. I knew we needed something practical, yet revolutionary and profitable. It was time to shake things up and make our mark in the industry.
In our industry, it’s common to see businesses using similar slogans like “Welcome to your home away from home.” Yet, how can it truly be considered a Home if you’re only allowed a 6-month lease? How can it be your new home if you can’t even put up a picture of your family or paint the walls your favorite color? Living in our competitor’s units is like living in a hotel room with no room server and not home!
That’s why I came up with the “Choose Your Style” program. Our tenants have the freedom to choose their furniture for free. And if their apartment is already furnished, they can upgrade if they want. Not only can they choose the furniture model, but they can also pick the color. We will even paint the walls to match their taste, all for free. The idea was unique and original but also doable! Nothing fancy!
One thing that sets us apart is our approach to pricing. Unlike other companies, we base our charges on the size of the apartment, rather than factors like view, floor, or area. This means that our tenants have the flexibility to move to another apartment without worrying about the price. So if we offer our tenants the freedom to choose their own furniture, it also means that they can either opt for new designs or request the same furniture in their new apartment.
This sounds like a lot of work! What was the key element of this strategic shift?
My team is the biggest key element! I have always made sure to keep my team organized and efficient, as time is of the essence. Additionally, I needed to make significant efforts to cut costs wherever possible and as you know, human resources is one of the costliest ones!
We had no chance but to go digital! Although not the whole operation is digitalized, many departments for example the entire back office are now fully digitalized. Thanks to this digitalization, we’ve got software and algorithms doing the heavy lifting. In some departments only one person can do the tasks of a whole team of people but without the overwhelm or pressure!
Pivoting can present its fair share of challenges. What challenges did you encounter during this process?
Certainly pivoting is not without its challenges. One of the biggest challenges KUMMUNI faced during its pivots was managing the uncertainty. Pivoting is like navigating through uncharted territory. There’s a lot of uncertainty, a lot of unknowns. It can be intimidating.
A pivot is a big change. It requires everyone in the team to let go of the old and embrace the new. It can be difficult, especially if the team is attached to the old way of doing things. In the process of pivoting, it is not even uncommon for co-founders to have differing opinions and potentially disrupt the business due to personal preferences unrelated to the business itself. However, it is important to not be surprised by this behavior!
Also, when embarking on a pivot, it is crucial to thoroughly assess the legality of your business ideas. Without this assurance, your ideas will remain stagnant and impractical. Therefore, we needed to invest significant energy in ensuring that our ideas were both lawful and profitable.
Would you happen to have any advice that you could share with younger founders who may be contemplating a pivot?
My only advice would be to don’t be afraid to take risks and don’t be afraid to make big changes! But make sure those changes are informed by data. Thoroughly research and understand the market you are entering.
