We Grew Too Fast and Nearly Lost Everything - With Njål Elliasson, Proptonomy & Heimby

Speaking to a lot of property managers, they always recognize the same story. The first year you're kind of growing to maybe 20 units, the sun is shining, everything is really good. And then the second year, you're up to 50, maybe 80 if you're scaling fast, and then everything crashes. Welcome to this episode of the Pillow Talk sessions. My name is Jessica Gillingham, and I am your host. And today my guest is Niall Elierson, who is the co-founder of Heimbe, a Norwegian property management company, and also the founder of Proptonomy, an AI solution for short-term rental managers. In this episode, we go through the journey of Heimbe and then also the birth, if you like, of Proptonomy. A really interesting discussion that gets at the root of some of the challenges that we're seeing in short-term rentals around operations, but also around build and buying your own tech as well. So stay tuned and I hope you enjoy the episode. Niall, thank you so much for joining me for a Pillow Talk Sessions podcast. I'm really pleased to have you, especially in the way that we met. So we met at a paddle board competition, my first actually, but it definitely wasn't your first. And um we were teamed up together, we didn't know each other beforehand, and we I thought we came second, but you just reminded me that we came third, but that's still a really good place, isn't it? And it was a fun day. Yeah, it was amazing. So uh I'm pretty happy about uh third place. I think we played against really good teams, so uh yeah, it was uh you were competitive, I was competitive. We didn't get angry at each other, so I think that was a win at the in itself. So yeah, it was good, and we there was a lot of competition across lots of short-term rental people at that event. So um, we'll do a quick shout out for Leo from Truvi who put it on. So um, but it's been really it was really good getting to know you, and I just thought your story and what you're doing, what you've done, and what you're doing in the short-term rental space may would make a really good conversation for a pillow talk session. So thank you very much for sort of carving out this time. And and I know that you said before it's the one sunny day in Bergen, and we can see it in your background because you're based in Norway, aren't you? So uh it's the most rainy uh city in the world, I believe. No, not in the world, but in Europe. So uh yeah, I have to enjoy it, sit in the winter garden garden today. Yeah, great. So not rainy today. But now you're doing something really interesting. So actually, we're gonna talk about first about your property manager journey. You started Heimbe in, I believe it was 2021. Tell me about Heimbe and your experience there, what you built, and then what happened as you were building. Yeah, so we started actually late 2022. So we were three young students, uh, just saw this Airbnb arbitrage opportunity uh that was going viral at that time, and then we thought, hey, we could start this in Bergen. At the same time, there were also two other companies that started on this same journey, but they are both uh are pretty small players today, and then Heimbig grew to become one of Norway's biggest with around 200 units now, so it's growing quick quick. Great. And what was it that why did you do it? Did you just see like the entrepreneurial opportunity in the space? What was your motivation? Yeah, I was actually invited to it, and my two other co-founders have left now. I've gotten in some new people, and uh then it was kind of how can we get into the real estate market without having so much equity, essentially. And so we started doing some Airbnb ourselves over the summer, and then some other people asked us, Hey, could you do this for us ourselves? And then we saw, okay, this is actually a business opportunity. I remember cleaning all of the apartments myself, and not the least the linen. I had like a 10 square meter bathroom, a square meter bathroom, and it was just piled with dirty linen and clean linen. So yeah, it was it was a story, it was a start. Yeah, and that's the the story of short-term Randalls is cleaning other people's linens, which is nobody's favorite thing in the world to do. But uh you're at least in the starting uh stage of it, you're a glorified cleaner when you are a property manager. But that's how it should be. You should be on the field, you should know how it is, understand the day-to-day of the employees. So yeah. Great. And then so what happened when you started and and your first sort of one or two years operating? I actually saw a really good post on LinkedIn the other day, and I saw like um the trajectory of the listing revenue essentially. So the first year you're kind of learning, you don't put the highest prices and so forth, and it was the same for us. It was a really good year because we did a lot of the stuff ourselves, so costs were low, and then the second year you have a really, really good year, you know how pricing works. Maybe you have started using dynamic pricing tools and you're in there every day just getting better. And then the third year, there was this major fall in revenue, mostly and uh control really, because we noticed okay, yeah, we had one or two good years, but now we don't have any documentation, we don't know uh how the inside of the properties really look. We don't have control over our staff, and then we had, I think we we ended the first summer with 100k in profits, and then we uh six to eight months later we had a 200k loss. So, yeah, and that came out of my own pocket as a student, essentially. Not not what any student wants at all, or or can afford, not the least. Yeah, or can afford. Well, not what anyone wants, we should say, but it it's kind of like it's a typical journey that we may have seen. Everything like we see an opportunity, a sort of entrepreneurial opportunity to come in and do the short-term rentals, do the Airbnb story, if you like. It all goes well for a time, but then when you want to scale, suddenly the sort of the wheels come off and the operational challenges come in, and running a business challenges come in. Yeah, and I I see that what I've been speaking to a lot of property managers the last year, and I they always recognize the same story, right? So the first year you're kind of growing to maybe 20 units, the sun is shining, everything is really good, and then the second year you're up to 50, maybe 80 if you're scaling fast, and then everything crashes, and that's kind of the ceiling. You see it in in the market as well, right? The 5% of the market are small and medium-sized operators, and there's a big reason for that. And so, other than the financial losses of when it all started to go a little pear-shaped, what what actually happened? What was it that was causing the the problems and how did they sort of manifest? Yeah, I think yeah, so what we learned at that stage was um, yeah, I mentioned it, of course, property documentation, right? It wasn't there at all. We were just wiping it essentially, onboarding units as we go, thinking, okay, if if something comes up, we can just ask the guests to send images, it won't be a problem. And that, of course, led to really low reviews over time. And then the second thing was also trying to optimize for profitability rather than quality. So um I think everyone follows the same journey. They start cleaning themselves, reviews are really good, you're always in the property and see it uh almost every other day, and then you start either you hire a company to do it for you, or you hire your own employees and you push them to the limit the first one or two years because you just want profits to be higher. And that's really what broke it for us. So uh we had a really good partnership with one company, and then we were just pushing them. You can't clean more than an hour, you can't have higher pay per property. Uh, you need this and this and this, you need to document this and this and this. And they just finally said, you know, our employees actually are getting health issues and injuries from working with you guys. We can't do this anymore. And then we started thinking, okay, to reduce the cost, we need to hire people, and you kept having this turnover. Like we were treating our employees well, but we were more focused on profitability than essentially the quality of the work they were doing and how much time they needed to perform that quality. You can't just be running around in the properties every single day, it's not healthy. Um, so so yeah, essentially after that summer and during the winter, we completely crashed and we had to find out okay, we need to we need to scratch the entire thing and start start fresh. So it sounds like your expectations were not aligned with reality. No, yeah, and you can say that completely because you at that time you are used to how effective it was when you were cleaning the properties yourself, right? And then you are motivated to push the margins, but you need to align that kind of North Star together with the rest of the team and the partners you are working with. Okay, and then what about owners? What happened with your owners? So they were actually they didn't care about the reviews too much, they were fine with that. Um I heard uh one of a talk previously and where he said you should always try to push your owners to the limit. And I think that's it's a lot of truth in that. But when the revenue drops, they leave. And we didn't want to lose reputation, so we started to actually cover for a lot of the losses, which you can say maybe was a mistake or not, but at least it took it made them once we had fixed our operations, they actually came back this year, so yeah. Um, that's the story with our owners. So so it's obvious, you know. Obviously, you went through a really difficult time, very growing pains, if if you want to call it, but you learned from it, didn't you? So tell us about the turnaround and then where Heimbi is now, because it's you know it's very different picture that you have today. Absolutely. So the turnaround actually started in January 2025. So we decided the old team of Heimbi decided okay, we need to um let it go. And I then I brought on my current CTO, Matthias, and uh then we sat down, okay, we need to figure something out, right? So we actually fired our employees and decided why don't we try to replace a lot of the stuff that we are doing with one AI and two better partners. So we sat down with we started building our own internal AI tools that actually worked, and then we sat down with uh one of the largest cleaning contractors in Norway and told them, Okay, we know you don't have experience with rentals. We do, but we failed the first time, and now we want to spend the next year just working with you on how we can optimize quality and cost, but always put quality and kind of the guests first. And this was the turnaround, it was a bumpy ride for the first few months when we were going AI native and everything, and it was really, really obvious. And then over time, I would say from starting from November, December, January this year, it yeah, really took a turn, and I told you about that. So, you alright to share with our audience where you are at now with Heimbee and in the in the time span as well. Yeah, so I think that's the most impressive part, and we knew we could do it, but we in January we had scrapped our whole entire portfolio uh of around 150 units, and we were on the ground again with just 20 of our best units, and we were thinking, okay, now let's try to scale as fast as possible with the best possible quality, and in just three months we are up to over 150 units. Uh so yeah, I think that's pretty fascinating. Growth, it's we've onboarded 30 to 50 between 30 and 50 new units every single month with just a team of really one employee that are working in the business every day. And the financials, you're happy with the financials? Pretty happy with the financials. So since we are pretty streamlined, if you we take 15% commission, and out of that 50% commission, we are still left with around 70% in uh gross margins. So that's we're we're pretty happy with that. We don't spend a lot of work on the day-to-day operations anymore. It's pretty streamlined. Um yeah, most of our costs actually go to marketing today. And so, what did you feel is like the biggest lesson that you learned from from basically having to start again? So building something that worked for a bit, then it all going wrong, and then sort of deciding cutting your losses, which actually many people don't do as quickly as you did, but cut your losses and then re rebegin. What were the big lessons? Yeah, so we sat down and really analyzed it, and we knew that we didn't know everything either. So when we started going to conferences to ask the bigger property managers how did you scale to thousand, two thousand, three thousand units? And what we learned was property documentation, do it really, really, really good the first time, and then keep track of it for every single change that happens. Um, and then the second thing which goes along with that is processes. So uh write down your processes, follow them, update them, and so forth. And then the third thing was don't sacrifice cost for quality, try to find like the Parito optimal for that, and um then the fourth thing that we did was that we started giving more power to the owners. So uh I will talk more about that, but we essentially built a really good onboarding flow. So when we received a lead lead, uh the owner received a link. Hey, welcome to HMB. This is the information that we need from you. You are allowed to fill out all of this yourself for free, or you can pay us to do it for you, and that's what accelerated our growth. So you changed your model and your approach to your owners as being part of it. Um, and then so talk us through that, and and so so also maybe just for the audience as well, I I will kind of give a little context. So you Heimbe is doing really, really well. You're happy with the profit, it's one employee who's looking after it, you've got great partners now doing the cleaning and the housekeeping. What are you doing now? Yeah, so now me and uh my CTO is building proptonomy. So proptonomy is essentially an AI employee that helps with those four things that I mentioned. It's uh it fixes your stuff end-to-end. So either our guest or a cleaner reports an issue, the AI compiles it. Okay, these are the actions that we need to make it back or turn it back to 100%, and then it executes. And the second thing is, of course, this the onboarding portal. We're trying to build the best possible owner experience for streamlined onboarding so that everyone can reap the same benefits that we did internally at Heimbi. So let's talk about the internal agent first and how it's working in Haime B at the moment. So you've got your one sort of I want to say standard employee, but human person employee, and then you've got your agents there working with that employee. So we were trying a lot of these AI tools, and we still work with a lot of them when we were starting, but we noticed that you spent so much time onboarding them, and it took a lot of time to update that information as well. So uh what we did when we built Proptonomy was that immediately we gave it its own phone number and email. So we treated as its own employee, right? Uh we, for example, have a group chat with our cleaners. I know many property managers do that. Um and Proptonomy sits in that group chat, and whenever it's called, it can come in and say, Hey, yeah, this is the stuff that we need to do today. We can ask it, hey Proptonomy. Uh we were actually in one property a few days ago, and we saw that there is mold on the curtains, and then we told Proptonomy, hey, there's mold on the curtains. And proptonomy told us, okay, before you leave, I need some measurements. Could you just pull up your measurement app on the iPhone and send me a photo of it? And from there, Proptonomy saw, okay, mold on the curtains, this and this, or have these and these measurements, and then send it to the caretaker and followed it up all the way until it was fixed. And from in this regard, you essentially have the property management employee that today really works as a logistics coordinator because that's what property management managers spend 80% of their time on it reacting to day-to-day issues. What about failures? Like what about mistakes or issues? And you know, sometimes in AI we often talk about the hallucinogenic, or the hallucinos, maybe hallucinogenics might not be quite the right word, but hallucinary kind of aspect of it. How do you how do you manage that and and mitigate for that? Yeah, so hallucinations mostly come because the AI doesn't have an exit. So the exit in our case is if you're not sure on this, uh say that in the group chat. Hey, I'm not sure on this. Can you help? Can you provide me with some extra information? And then it gives like a magic link. So I can press that link on my phone and then I can direct it. Um, okay, here I have some additional information, or I can just upload the photo that uh the AI needs in the group chat. Uh, but it's not fail-free. I will I won't say that. It's still in a testing period. We we monitor it all the time and we work with virtual assistant teams to just look after it. And we notice today that it doesn't like it doesn't collect messages and put them together in the same way that a human would. You can build that, but we're not completely there yet. And then what about the impact on guest satisfaction and review scores? What are you seeing there? To be honest, it's much better. I think uh many property managers have experience with outsourcing their operations to VAs across the world, and that can work, but if you don't have the processes in place, it often leads to the same shit answers as an AI without any context would do. So uh we have had an increase in reviews, the cleaners, not the least, have had an increase in the work that they do because now they get responses within 15 seconds. So one of the biggest struggles that we had before was cleaners coming to properties, and the smart look didn't work, the keybox didn't open, the key wasn't there, and that's all autonomously handled now. So yeah. Great. And then the other element of what you're doing with proptonomy or what and what you've done in Heimbe is around, and you touched on it, but about the onboarding, the streamlining the onboarding for owners. Yeah, I think this is a huge gap in the market right now. I know there's a few consultants that are doing really good work on how to market for property owners. Um, so we use meta marketing, they go into our website, they fill in the form, that form is automatically pushed to the website, and then they receive a link. Hey, here you have the opportunity to go and onboard yourself. And I think that's that's the key, right? Because it's not only about uh making homeowners able to or streamline the onboarding, but it's also about increasing the transparency about what you do, right? If you tell the owner, hey, here is a 15 step process that might take a lot of time, you can do it yourself, or you can pay us to do it, do it for you, essentially. And what we see is that most owners prefer us or prefer. To do it themselves, and the information is most likely much better than what we could do because we would have to hire someone to do it, push them on time again, and so forth, while owners have all the time in the world, often. What about the relationship with the owners, though? So many in short-term rentals for for them or for many companies, it's around building that relationship. That's the sort of the stickiness that you have with owners or part of it. Do you feel that your approach misses that? Definitely. I think this is one of the things we're working on right now. It's on the same time, it can be good because you should really give more responsibility to the owner than what most property managers do today. Like you are, for example, if an owner comes to you with uh shit property to be blunt, and you for some reason manage to take it and sign a contract, you should put the responsibility for the bad reviews and the needed fixes onto the owner. And when there's kind of this distance between us and the owners and really split responsibilities, they actually take more or take more accountability for their own property. So I think it's it's good and bad. Uh I believe you can have humans as a moat, which is a lot spoken about right now, but you can also have uh technology as a moat. What if we are one, two, three, four years ahead of our pro uh other competitors in the market, right? And this is how we feel in the Norwegian market right now. Yes, they can go out and be personalized with the owners, but we capture much more of the market at the same amount of time. We have higher profits, which means that we can provide better services essentially, because that's that's what it's about. It's about creating value for them, not always just about the relationship. Yeah, so it's value rather than experience, maybe. But anyway, it's experience can be um very good with technology as opposed to human. And um, yeah, you to you touched upon that, and I think that's what we are seeing now as well. So uh, not not just AI, not everything is AI, but um we now have a policy where if we see that there is an owner's day or the owner will be going to the property when uh the cleaner is doing the final cleaning before the owner comes, they leave a goodie bag with Heimbi merch. So where it says uh welcome heim or long way heim, and then you kind of are able to create that experience with technology, right? And I think AI will do the same for guests. It's even for a 3000 uh unit property manager, you can get it down to the individual level and say, Hey, I see it's your birthday. Here is uh a present or happy birthday, essentially. That I that's you know, really good point, and we're seeing more and more of that, especially also with personalization, so knowing when it's their birthday and and and knowing certain things about them. But there's a few things I want to go back to that that you said, and I really love that technology can be the moat. So, yes, maybe the old model might have been, or maybe in some models, relationships are the moat, but in here, technology is the moat. And then something else that you said that I thought was really interesting is that your approach of having technology is the moat sort of pushes back that responsibility on the owners that that maybe isn't always so clear or doesn't actually really work so well for other property managers that haven't done it that way. Yeah, and I I think I I will be a bit controversial here. I I Yeah, go for it. Uh so I think there's a reason why 95% of our market is uh consist of such small players, and I think that's exactly it. Yes, it's one is it's really broken operations, you're essentially running decentralized hotels with systems that don't fit decentralized hotels, and the other thing is what we mentioned here, we focus so much on uh experience and relationships, which is a good thing, I would say, but uh you could probably have a larger uh I don't know the English term for it, but in uh Norwegian we call it something so that's good. So you could go and translate that. I'll have to look that up afterwards, the translation of it. But it's sort of what you're saying, really, is maybe the industry, the short-term rental industry, is over-indexed on hospitality and over-indexed on that, whereas maybe people just want a place to stay or they want revenue for their property. Yeah, and I think what actually one of our competitors in uh when we started up, they were originally the biggest property manager in Norway before we came along, and they went into the hotel industry building really personalized experience in hotels, but they were never able to build that personalized experience on a large scale in short-term rentals. So we need to do something. I think AI will be the fix of it, but at the same time, you will have kind of artificial experience where the happy birthdays and the personalization really comes from AI. Yeah, and you know what, that sort of opens up something, which is maybe the guests you know want or or or expect what they get from a hotel in a short-term rental, and actually it's just kind of is leaning into that, the fact that they they're not really looking for what they might get from a hotel. Um, whereas I think sometimes we kind of think that they do when we're all trying to give experiences, give whereas actually maybe that's not um not really what the guests are actually looking for. Um now there's something else you said, which is that you think maybe your market in Norway is three or four years ahead, perhaps, of other markets. Yeah, um I I don't know if I would say that. I think Norway is quite a mature market. There's just a few really, really big players that are much bigger than than us and have their own booking channels, doesn't rely on the OTAs at all and so forth. Um but I think we are kind of if you want to be a short-term rental operator in Norway, you really have to be focused on the margins because we pay $75 per hour in cleaning. So if if you want to have the same profitability as other places, you would have to have extreme prices, which we don't. So yeah, the margins generally are really low for doing this kind of things here. Uh yeah. Yeah. I think I think that is across many markets, not all, but across many markets. It is that that real kind of balance of getting it, everything has to balance to make it worthwhile. Um, but I want to be a little bit controversial with you now and and talk about talk about two things, I guess. One is, and and I had a hosted a webinar recently that was around, and it was on the back of a tech investment index that my company Abode Worldwide published. And we looked at the 40 investments across short-term rental tech and hotel tech in the last 12 months. And anyway, I hosted this webinar with some experts in short-term rental and hotel technology. And we were talking about how one of the speakers was sort of saying on the on the webinar, if you're a property manager, don't think you can build tech and then sell it to others. And it's a little bit like what how PMSs have come about is a lot of operators solving their own problems have built their own tech. For some it's worked really well, but not for others. So that's one thing I'd love to talk to you and get your view on. The other one is the rise of vibe coding and then the rise of um vibe coding slop and how some are sort of saying it's you know, don't try and do it yourself. Um, and that's a kind of a problem because we've got you know stories of everyone building their own agents, their own this, their own that. Um, whereas maybe that's not always the right decision for every kind of company. But what's your views on those two things? So you've sort of done both, haven't you? I I've done both, uh honestly. And um I resonate a lot with uh property managers that want to wipe code everything themselves. Uh I I'm non-technical myself, I'm a finance graduate originally. So um, but I think there really is a value in being able to provide or build these technical tools when there is nothing else that exists on the market. So that's essentially what we did with onboarding portal, right? I can't name a single onboarding portal in the entire short-term rental industry. Okay, I built it myself, and then I and then once we decided okay, we can actually sell this to provide value for other property managers, then I handed it over to my CTO, which built a commercial version of it. That's the way I believe it should be. I don't think I think it's a long way till property managers can go ahead, wipe code a full product, and then hand it out to someone else. I still think it needs to go through a proper QA process, through a proper training process, and um some pushback that I've received from my mentors is if you want to commercialize this, you need to be aware that you don't just build it for your own property management company, but that you build it together with others. So we've been out and speaking to 30 other products, our property managers, but then if you wipe code it and it fails and you have spent so much time on wipe coding this tool, what's really the cost and what's really the ROI instead of just buying it from someone else? I think you should always keep that in mind, and that's why most fail in doing these things. Great. And what about you know, property managers in the past built their own PMSs to solve their problems, and and you're doing the same thing, but in the next generation of tools now? Yes, so so first of all I I wouldn't call it a PMS, I would briefly call it uh yeah, an onboarding portal and a maintenance tool. That's so we hook up to other existing PMSs uh to be able to provide value for other property managers, but I uh I I don't believe in it, uh to be honest. I especially when it comes to the size of uh PMS where you want to go ahead and build everything yourself, you're still in technology, there are so many constant changes. That's the only constant is that there will be a change. You have the OTAs changing their APIs, you have the partners here that are changing their APIs, and you will be stuck in this loop of always developing. While as if you invest in someone who has a really big developer team are able to track all of the changes, then you can get value from buying their product. Um I still believe it will be like that for a really, really long time. So yeah. Yeah, good, good. And then finally, what are you excited about? What do you have? You know, what is it that's really getting you excited in the morning about what you're doing at Proptonomy and also Haimbi? So the biggest thing is of course that we manage to turn around Haime. We have happy owners, we have profitability, we can we have really, really, really big growth, which is expected to continue. And then taking that and giving that to other property managers and seeing if this can work in New Zealand, can this work in South Africa, UK. Uh, I think that's I I often say it's about fixing a shit industry in a way, and what I mean by that is not that the people is shit, but it's really, really, really complex logistics and operations and demand. Uh, I would say so. That that's what uh drives me every single day. As a communications person, I might help you rephrase that to fix the challenging industry industry. That might be uh a way to sort of reframe that, but we know what you mean. You know, it's a it is a very difficult, challenging, fragmented, all of those kind of words industry. You know, in uh there are a lot of uh when soccer players or football players go from uh the Norwegian League to the UK League or Premier League, they always struggle with the media because they're used to being able to be much more open in the Norwegian media. Uh yeah, we're a little less forgiving over here. Um, but that's so thank you so much for um sharing, you know, particularly that journey, the Heimbe journey, and then what you've you know, what you've created and what you're doing next as well. And we will put links to all of it in the show notes as well. And I'm sure that anyone who would love to hear more can get in touch with you. Thank you. Yeah, get in touch. Lovely to be here. Looking forward to see you in uh UK soon. So yeah.