Can you explain how your business model works and what THATSpace is all about?
Our idea is to turn idle space found at restaurants, coffee shops, hotels, lobbies, libraries, and art galleries into temporary offices. We realised during our market analysis that there is a lot of space available. Instead of just renting or leasing an office, our idea is to offer an office on demand. I give you an example: In the case of a restaurant, instead of just buying food and drinks, a customer can buy the space and then have the food, drinks and Wi-Fi included. The restaurants are technically losing money when they are not using their space for secondary purposes. We are helping these businesses earn money from underutilised space. As a result, we can also reduce the price of a working space dramatically. The concept is on-demand. For example, a freelancer who wants to use the space for four hours per day will just sign in via the app and get charged by the hour.
How did you get the business idea in the first place?
I got the idea when I was finishing my master’s degree. I needed a space to study because I could not do it from home. I ended up in a place that was very noisy and did neither have Wi-Fi nor plugs. I realised I needed to do something, and the first idea was to create a directory similar to TripAdvisor but with ratings based on criteria like Wi-Fi strength instead of service.
When I talked to people about the idea, I received so much positive feedback that I decided to develop the idea further by creating a true sharing economy concept.
At what stage is your business now?
We are still in the pre-revenue stage, continuously generating feedback to improve the product. We estimate to reach the break-even point by the end of this quarter while we are launching the full version of our app. We already have a live website which comprises a directory filled with spaces that people can rent on demand. The directory includes restaurants, shops and hotels where people can work.
How is your business monetised?
We have a commission-based model where we charge on performance. It starts at a higher rate and varies depending on the quality of the service of our space and the number of end users. The reason for this model is to incentivise the owner to improve the experience. For example, the commission for a popular place that is always full would go down to our minimum rate. This is a solution that benefits both us and the restaurant.
Can I be the devil’s advocate here, what happens when the owners of the spaces that you rent out develop an app like this themselves with no third-party charging a commission?
It is not only about the commission, our business is also a form of advertisement. We are providing foot traffic for free. For instance, a person working in a particular place for some time might end up loving it there. The office client is converted into a restaurant client. Basically, we are not just helping the restaurant to get immediate revenue, but also to develop a long-term relationship with their clients. When they see the power of foot traffic, they realise that this is a real investment.
Do you have any investors behind you?
At this point, we do not have any investor. We are at seed fund stage. Having said that, yes, we are looking for long-term investment relations to be able to scale up our product and to market it. Our vision is that within the next quarter we will have the concept working properly in Malta, and then we need to scale up by the end of the year by launching it in London. We are looking at London first because we don’t have a language barrier. Then we will proceed with Italy, Spain, Portugal, and the Netherlands, mostly cities where many remote workers and start-ups, technology companies are based.
What is the greatest challenge in building a start-up?
One important thing to know is that it is not always about the idea, but about the execution. You need to start by creating a movement, monetisation comes later in my opinion. The classical business concept would tell you to start with a business plan, then do some market research, then get a loan or a fund, and eventually start your business. However, that does not work. When you get an idea, you need to start with the minimum viable product. In our case, we started with an offline deal. We simply brought people to a restaurant to test the concept. The beauty of this approach is that you are building your product through user feedback.
Who is your biggest inspiration?
There are three people that really inspired me. Steve Jobs is the number one, followed by Richard Branson. He is a dyslectic, and so am I, and he has said that until he was 50 years old, he still couldn’t understand a financial statement. The third one is Elon Musk. There are a lot of internet entrepreneurs, but building a business in the physical space like Musk is doing with SpaceX and Tesla is much harder. I also like the founder of Alibaba, Jack Ma (Ma Yun). He was rejected 10 times from Harvard. He was also at a job interview once where there were 24 people for 23 positions. He was the only one who did not get a job. Now, look where he ended up.
What are the pros and cons of Malta as a start-up location?
Building a start up in Malta is brilliant since you don’t have many other companies working in the same field. This makes it easier to enter the market. However, as Maltese, we tend to be late adopters. If we are going to put a new product on the market, only a few people will be interested. People are afraid of change. Having said that, we still consider Malta as a very good test bed. If we can convince the Maltese of our product, it should serve as a good indicator that we can also make it elsewhere.
Eman Mifsud is the Managing Director of THATSpace. Eman has a background as a chemist within life sciences but decided to follow his passions for technology and starting businesses. While he was finishing his master degree in entrepreneurship he came up with the initial idea behind the business model of THATSpace.