How We Build A $100K/Month Network Of Short-Term Luggage Storage Options With 40+ Locations
Hello! Who are you and what business did you start?
My name is Jannik Lawaetz and I am the Chief Executive Officer and Co-Founder of LuggageHero. LuggageHero is a network of short-term luggage storage options in shops, cafes, hotels, and more. The idea is for travelers to no longer have to drag their luggage all over the city or hunt for the elusive storage locker, where they often need exact change in the right currency. LuggageHero has a growing network of +40 luggage storage sites in New York, London, Copenhagen, and many more major cities across Europe and North America.
We know how much it sucks having to drag your luggage around when you just want to explore a new destination and we want to make sure people no longer have to go through that.
What's your backstory and how did you come up with the idea?
I began my entrepreneurial journey in Copenhagen and sold my first business when I was 14 years old. How this particular idea came to be was when I experienced the inconvenience of dragging luggage along firsthand. The idea for LuggageHero came when I was on a trip to Barcelona. On the last day of my trip, I experienced the inconvenience of being stranded outside of an Airbnb apartment at 9 a.m. with my luggage.
That day, my flight was scheduled in the late afternoon, so I had no idea where to keep my luggage all day. Soon after, I saw a local shop at the corner of the street and luckily managed to convince the owner of the shop to store my suitcases for the day.
This particular experience was how the idea for LuggageHero came to be and where the process started. Shortly after, I started the business in Copenhagen where it took off rather quickly. After that, an investor, Kristian Loekkegaard reached out to me after reading a newspaper article about the idea. Kristian initially showed interest in becoming an investor, however, he became part of our team as the Chief Technology Officer.
Together with Kristian Loekkegaard, we founded LuggageHero as it is now and expanded the service to London and New York City in 2017. In 2019, LuggageHero raised $2.25 million in funding and grew to more than 40 major cities in Europe and North America and continues growing in 2020. We hope to expand LuggageHero all over the world - and we mean it!
Take us through the process of designing, prototyping, and manufacturing your first product.
Since we actually sell a service, rather than a product, one of the most important things was to make sure we have a well-running website that clearly shows our service to potential customers. In the beginning, when we had to partner up with stores, I actually went around in Copenhagen asking stores one by one if they would like to partner with us and store travelers’ bags. It was tough in the beginning to find money to pay for all the initial costs, creating the website, making sure everything was running smoothly but we made it!
Don’t spend too much time overthinking things. If you have an idea you believe in, go after it and chase it with your all. Maybe don’t go into travel right now, but if you do — you have to be brave!
I am grateful to all who believed in my idea in the beginning, all the people who supported me and invested in the idea and I could never have been able to do it without them. It is so important to build the right team at the beginning that is willing to dedicate themselves and their time towards achieving a common goal.
You can check out this video from back in 2019 on how we would spread awareness of the idea. The problem with this kind of business was (and still is) that travelers don’t know the service even exists! Not only do we have to make them aware of our business, but also of the whole service of luggage storage on its own. We were meeting travelers face to face to do that.
Describe the process of launching the business.
The launch strategy was basically to try to have locations anywhere where we believe the customer would be, anywhere in town where we think luggage storage would be needed. When launching we relied on paid marketing such as Google ads and Facebook ads to acquire customers quickly. I shared the idea of LuggageHero with my father, and he said that he would like to invest DKK 50,000 ($8,000) in it, as he could see the practicalities of being able to store his luggage elsewhere than just at the main train station. Further, Kristian invested in 2016, helping us launch the business in London and expanding it abroad.
The following year, we received a total of DKK 6.5 million ($1M) from business angels and Vækstfonden. And last year, 2019, another 11.5 million came ($1.8M), of which two thirds from the VC fund Nordic Eye and the rest in the form of crowdfunding on the Seedrs platform, where approximately 740 micro-investors bought shares for €10.67 each.
You can read here about the success of our Seedrs campaign.
Since launch, what has worked to attract and retain customers?
We believe it is really important to adapt to different situations and find a way to make “good” out of a “bad” situation. For example, even though the COVID-19 pandemic has been hard on us, we also used the extra time we had on our hands to check-up on things we didn’t usually have the time for. We gave extra attention to certain aspects of our business that we normally didn’t consider. The situation also allowed us to help travelers differently - creating our COVID-19 resource pages where they can get relevant information about the current guidelines and restrictions in various cities.
We also believe that it is important to find a way to always provide value for customers and by doing that you will be able to retain customers in the long run. Apart from using paid advertisements, we have also spent a lot of time working on organically reaching our customers by doing a range of PR campaigns which would also bring value to them.
How are you doing today and what does the future look like?
Like every other travel business, we have currently been hit by the pandemic, bookings are a bit slower than before and things seem to be on pause in certain ways. We are still making efforts to keep ourselves in the eyes of the public through our campaigns and social media accounts, but it is definitely a lot more difficult when people are not traveling and one is not supposed to encourage travel right now. However, we are using this time to prepare for the future.
For the future, we are thinking a lot about expansion and we hope to be able to fuel it soon. We use a smart POI algorithm to predict new city launches and scale to +1800 locations. The majority of LuggageHero’s users stay in short-term rentals like Airbnb, 39% of users stay in hotels. This user segment represents an even greater market opportunity, with 700 million people expected to book hotels online by 2023, thereby expanding the market opportunity beyond EUR 3.7 billion. Our hopes for the future are high and expansion is definitely in the cards for us. On top of that our service is increasingly being used for domestic travel and we believe that will happen a lot more after the pandemic, as well as domestic travel, will be quite popular.
I guess we are always rather optimistic about the future and even during the current pandemic we are trying to optimize our time as best as possible and prepare for travel is a major part of people’s lives again soon enough. We hope for a future where everyone can travel wherever they want and that is what we are preparing for.
One of the most important things is to get a good team in the beginning.
Through starting the business, have you learned anything particularly helpful or advantageous?
Like every other business, we have surely made a lot of mistakes. However, I encourage mistakes not being seen as “mistakes” but rather as “learnings”. We have a lot of learnings from all areas of business.
For example, in the beginning, we spent a lot of money on Google Ads but then we found that there is no point in spending money on Ads for a location where there is no supply. It made no sense, for example, to make ads for locations that did not work on Sundays, which is exactly when the majority of people travel back home.
One of the helpful habits or abilities I would say I possess is being able to think outside the box and see possibilities in everything. I often see the positive side of things even when it may be really difficult to see. Lastly, I believe that it is best to get your hands dirty and try out new things - if you fail, then at least you learn something new that you will definitely be able to apply to something someday.
What platform/tools do you use for your business?
Certain tools and programs have been an essential part of the organization of LuggageHero, the workflow and communication between our team. I would say that these tools have been most useful:
Perdoo – Setting the Objectives and Key Results (OKRs) to ensure the strategic alignment of employees and departments, helping the company move in the same direction. Perdoo is probably the most important tool for making sure we all have aligned goals.
Slack – Slack helps us communicate faster and improve collaboration, share ideas, and use chat rooms where employees from each department can communicate together. It’s great for sending large files without reducing quality and keeping up with one another even at a distance.
Monday – For task management for bigger projects that require collaboration and communication across various teams. It is a great tool for remembering which tasks to focus on first and which ones have a lower priority.
CircleCI – for automating software builds, tests, and deployments
GitHub – a repository hosting service that has a Web-based graphical interface with access control and several collaboration features.
What have been the most influential books, podcasts, or other resources?
One of the most influential books for me has been Getting To Yes: Negotiating Agreements Without Giving In by Roger Fisher and William Ury. The book has helped me many times to make sure that I can secure win-win agreements when negotiating. In any business, the most important aspect (and often most difficult) is getting to a yes when negotiating.
The book explains how to separate the people from the problem and insists on objective criteria to create mutually beneficial agreements and get to that “YES”. I highly recommend it to anyone who has a business or is considering starting one. Even if you’re not, the book is likely to help you in your private life as well.
Advice for other entrepreneurs who want to get started or are just starting?
I would advise entrepreneurs to just go for it! Don’t spend too much time overthinking things. If you have an idea you believe in, go after it and chase it with your all. Maybe don’t go into travel right now… but if you do — you have to be brave!
One of the most important things is to get a good team in the beginning. Build a team that has the basic skills you need about tech and marketing, business, sales, and anything else that applies to your type of business. When it comes to naming and branding, choose something that stands out but is also not too complicated and confusing. And remember - simplicity sometimes works best.
Are you looking to hire for certain positions right now?
Due to the pandemic, we are currently not looking to hire for new positions. However, we expect that when travel picks up we will soon possibly be looking for new members to join our team. Keep an eye on our LinkedIn page to find future open positions.
Where can we go to learn more?
To learn more or just say hi you can go to our website, check out our Instagram, or visit our Facebook page. You can also check out our LinkedIn profile where future open positions can be found to join our team.
If you have any questions or comments, drop a comment below!
LuggageHero has provided an update on their business!
About 1 year ago, we followed up with LuggageHero to see how they've been doing since we published this article.
Hey! 👋 I'm Pat Walls, the founder of Starter Story.
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