Israeli Founders Building a FinTech Venture: Omri Dor, Co-Founder and COO of Obligo (Part 4)

Sramana Mitra: What about customers? Did you have customers?

Omri Dor: That was the straw that broke the camel’s back. Roey and I did a couple of trips to London. We went there and were going door-to-door to residential brokers. We would walk in and show them the demo and a video. It was an explainer video. We would walk door-to-door getting them to sign letters of intent. I believe we got zero.

Roey had to travel home and I stayed in London. I spent another two days scouring the streets. I got 11 letters of intent signed. Putting 11 letters of intent on the VC’s table helped. That’s the hardest hurdle as a first-time founder.

Sramana Mitra: You then had made the decision to do London as your first market right?

Omri Dor: We thought we were going to launch in London. We had very good reasons. Then we had this notion that there would never be a fit in the US because the US is hyper-capitalistic. It’s obvious that the landlord is taking advantage of the renter. The landlord does whatever they want with the deposit.

We didn’t think there was a chance, but we went to a real-estate technology conference in New York. In Obligo, we have a value called buying a ticket. We thought that we might want to test if there could potentially be a fit in the US. So why not talk to some landlords? Maybe they’re going to like the idea. And maybe if we can offer some dates, they might be willing to meet. If we get all that, that would justify a trip to New York.

It took us a minute of thinking to realize that’s not the right way to do it. The right way is when we choose a date, we’re going to buy a ticket and commit. We’re going to do everything in the world to make sure that that trip is full of meetings. We chose a date and traveled.

We got to New York and got the meetings. In the first meeting, our jaw dropped about how much fit there was. By the second meeting, our jaw hit the floor. It was clear that launching in the UK was a big mistake. We realized that our network in New York was much more substantial. Jewish landlords here in New York met with us. That made us realize that we should reconsider.

Sramana Mitra: You launched in New York around what time?

Omri Dor: We raised funding in January 2018. We launched the product live in May 2018.

Sramana Mitra: How much seed did you raise?

Omri Dor: $3 million and we also had a term sheet for a debt facility for another $2 million. Our product is a credit product and we needed some kind of credit backing for it to work. That was a condition of the term sheet from the investors.

Sramana Mitra: Explain to me what the business model was. Secondly, did you figure out that you were now selling to larger property management companies or were you still thinking peer-to-peer?

Omri Dor: Even before we reached New York, we realized that the only place it’s peer-to-peer is Israel.

Sramana Mitra: What was the business model? How did you sell?

Omri Dor: The main indicator we had for pricing was surveys. We presented the price in a fixed value, or a percent of the rent. That took us to a certain price point.

Sramana Mitra: What was that?

Omri Dor: We arrived at a model where the renter would pay us a monthly fee. There were some limitations also as to how exactly you can show the price. If you show it in one way, it can be perceived as an APR on the loan. You might run into trouble. The price needed to be a fixed dollar amount. We launched with a price of $10 a month.

Sramana Mitra: $10 a month for each apartment.

Omri Dor: Imagine that you are a renter and you’re moving in a building in New York. You need to pay a deposit of $3,000. You have two options. You can pay the deposit normally. The other one is you pre-authorize your landlord to charge your bank account. Similar to the hotel check-in process, you’re going to authorize your landlord to charge your payment method of choice. There’s a service fee for this.

Sramana Mitra: $10 a month is the service fee.

Omri Dor: Yes.

This segment is part 4 in the series : Israeli Founders Building a FinTech Venture: Omri Dor, Co-Founder and COO of Obligo
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