Entrepreneurial Research

  • Lifelife: finding apartments without brokers


Everyone wants to live somewhere, and every once in a while some place else. But real-estate agents or brokers, the gatekeepers of the housing market, aren’t really that much loved anymore. But sometimes they are unavoidable. Their watches, cars and suits are indeed unpopular (we’re talking stereotypes, of course), but the commission they charge is the real source of disdain. The commission is dependent upon the sale price (in Germany around 5–6%) or on the basic rent (equivalent to 1–3 months worth of rent). If an agent finds a tenant for a four-room rather than for a two-room apartment, his or her commission nearly doubles – for the same kind of work: unlocking the door a few times, evaluating forms, and talking on the phone. Usually tenants pay the commission, even if the broker was instructed by the landlord - which is nearly always the case.

Algorithmic competition

It just so happens that three sympathetic Finns and their algorithm are about to become serious competition to brokers on the dynamic Berlin rental market. On Lifelife, landlords can find tenants and tenants can find apartments – or flats, as the British would say. What’s more, Lifelife is convenient and fair, thanks to the flat fee for a flat (pun really not intended): same service, same price. The Lifelife flat rate is only a fraction of what brokers charge today. A dream for tenants: the Digital Revolution enters the real estate market, rocking its foundations. First negotiations with major Berlin housing associations are already underway. Lifelife has a lot of potential to render a lot of real estate brokers superfluous with their watches, cars, and suits.

Lifelife automates the pre-selection for landlords and evaluates the profiles of potential tenants: details in the application form combined with data from non-public databases that provide conclusions on reliability and credit worthiness. The platform can also recommend new districts to users based on their friends’ preferences. Then Lifelife submits three proposals from the applicant pool to the landlord. Mass visits and elbow competition in the apartment hallway become a thing of the past. The pre-selection takes place discretely in data clouds.

Advantages for tenants and landlords

Thanks to Lifelife, tenants save a lot of cash: the commission is significantly lower than the average broker commission – much closer to zero than to the multiple of a basic rent. Also, housing associations and individual landlords have less overhead. Most importantly: empty flats find new reliable tenants faster, in a matter of hours or days instead of weeks – a dream for landlords. It makes the market much more efficient.

Tenants and landlords also save a lot of time: less paperwork, certificates of work, and credit-worthiness checks are needed only once for several applications. The landlord may decide on the basis of the data for which of the three proposed candidates he wants to unlock the door. That is, let unlock the door. For here’s the second highlight of Lifelife: crowdsourcing with Lifelife Ambassadors.

Set for growth

Lifelife would not scale if its team had to take pictures of each apartment individually and organise the key for every single apartment viewing. That’s why Lifelife outsources small services to their crowd. Ambassadors can earn an extra dime for real estate pictures or by bringing the key to open the door for the viewing. Scalability is a key criterion that makes Lifelife interesting for venture capital investors.

Founding team

The founders of Lifelife are three Finns: CEO Martti Mela is a software developer and a designer. He co-developed two patents registered in the United States, he speaks multiple man- and machine-languages, he’s networking from Berlin with possible investors and media representatives, and he keeps his eye on the project as a whole. Lauri Kainulainen is CTO of Lifelife, responsible for algorithms and web technology. Niko Knappe is a former watch designer who built UIs, UX and IxD for smart watches. Now he designs the Lifelife user interfaces for the website, touch screens and app – various points of contact with the users.

Lauri and Niko are still living in Helsinki, but will soon move to Berlin (using Lifelife to find an apartment of course). The founding team meets every few weeks for workshops and regularly talks over skype. They all met at the Media Lab of the University of Art and Design in Helsinki in 2008. Not only three friendships emerged from that time, but also a shared understanding of a common creative thrust and the pro-active working styles of each individual. Friendship and confidence paired with a professional working attitude are what comprise the Lifelife team formula. Everyone is a professional with many years of experience in his field. The business idea is important, but many a dreamer has a business idea. It’s the implementation that matters – says Martti. For the implementation, practical skills from previous projects and jobs are a great advantage.

The previous project before Lifelife is of 2013, which Martti pursued for about half a year. The goal was to make the foreclosures market more transparent and accessible. The website still offers a clear comparison of foreclosures. Martti also wanted the greater transparency to lead to higher prices and thus helps the debtors. However, Eqviti didn’t find a revenue model. So Martti looked for tappable money flows in the real-estate market and found the broker business. His founding experiences with Eqviti went directly into Lifelife. With his first start-up Martti got to know the market and started creating his network. After systematic adaptation and redesign of the business model Lifelife arose: first as an idea and today as a limited company – for implementing an idea with no limits.

Lifelife already has its first Finnish investor. From experience, Martti knows that it’s no use contacting investors out of the blue and simply sending out business plans. Hardly anyone ever replies. It was much more effective for him to meet potential Lifelife investors in real life – ideally introduced in person by mutual acquaintances or networkers. Then a friendly chat including the elevator pitch. Don’t forget sending an executive summary the next day. If the investor wants to know more, send the entire deck. With some skill and luck you may get to pitch officially. With even more skill and luck you will present the right idea with the right team at the right time to convince the right investors. With the seeding round of financing, Lifelife launches its first product this autumn.

Lifelife wants to help thousands of people every year to save time and money in finding a roof over their heads in Berlin. And of course Berlin is only the beginning.

[September 2014]