The BBC’s weekly The Boss series profiles a different business leader from around the world. This week we speak to Rune Sovndahl who co-founded home services firm Fantastic Services.
Every entrepreneur expects a challenge or two in the early days of starting their business – but few expect to be on the receiving end of threats or even vandalism.
But two years after Rune Sovndahl and Anton Skarlatov started Fantastic Services in the UK in 2009, the tyres on about 10 of the company’s branded vehicles were slashed over a two-month period. Mr Sovndahl suspects a competitor was behind it.
“We’d already been receiving nasty Facebook messages saying they ‘will make your website go down’, then this happened at the same time,” says Mr Sovndahl.
“I think they realised we suddenly had more cars on the street than they did and they got jealous,” says the talkative Dane. “We had about 100 cars on the streets and they saw us coming from nowhere.”
While the threat soon disappeared, the 43-year-old says he took away a lesson from it. “I think as an entrepreneur you have to learn if you go big, someone will be jealous.”
Now offering more than 25 household services such as cleaning and gardening, Fantastic Services started after the pair were introduced at a party almost a decade ago.
Mr Sovndahl needed a cleaner and Mr Skarlatov said he could help as he was managing a friend’s cleaning business. “I looked at his website and I thought they could be big,” says Mr Sovndahl.
“No-one had taken the industry seriously. A lot of competitors didn’t seem organised – for example, they didn’t know how to take card payments. It was like the Wild West of services.”
Eager to conquer what they saw as a potentially huge market, the duo each put £30,000 of savings into the business and launched it a few months later. “It was chaos,” admits Mr Sovndahl, who was working as a group SEO (search engine optimisation) manager for Lastminute.com when he set up the business.
“Firstly we got too many cleaners who didn’t know what they were doing, then we had too many calls. Demand was so high we had to continually expand and outsource the call centre to Bulgaria – but then we bought that call centre and started running it ourselves.”
Unlike many of its competitors, Fantastic Services operates as a franchise model. “While everyone else was a marketplace, we changed the model,” says Mr Sovndahl.
“We have a number of franchisees in the platform and they’re all vetted, checked, and trained staff. We want to deliver the quality.”
Fantastic, which is available in UK cities including London, Liverpool and Oxford, has since expanded into other categories such as providing storage and helping with general home maintenance jobs.
The costs of services vary from anything from £12 for a cleaner to more than £150 for pest control. However, not everything has gone to plan – a move into babysitting was ditched six months in after Mr Sovndahl admits it “didn’t fit in”.
The London Bridge-based business says it carries out an average of 40,000-plus services a month in the UK. While total revenue for the most recent 12 months was almost £10m, profits were just £44,000.
“Profits are low when you reinvest in the company,” says Mr Sovndahl. “We have built a complete CRM [customer relations management] system from scratch – with two apps. This costs money.”
Ever the opportunist, he says the company has in recent years launched in new markets such as Australia and the US, where it runs carpet cleaning in Atlanta and Las Vegas. However, the business has also reduced its headcount from 600 to 350 as more customers book online.
Although expansion has come at the expense of profits, Fantastic is now in talks with potential investors. “We want to expand more with the same model and look at more locations and service expansion,” Mr Sovndahl says.
Thomas Slide, senior retail analyst at Mintel, says the on-demand market has taken off as more consumers find they have neither the time nor the ability to do DIY themselves.
“Companies like Fantastic Services make it really easy to find someone else to do the work instead while also adding a level of trust by guaranteeing the work,” he says.
“It is also the result of improvements in technology, as Fantastic Services and similar businesses use the internet and smartphone apps to make it easier than ever to find a tradesperson – something that can be an intimidating task for those who are not used to it.”
However, Mr Slide warns of rising competition as the likes of Amazon and John Lewis have moved into the market. “Fantastic Services has gained the advantage of being an early mover in this space, but with some of the biggest and most trusted brands in the UK now trying to get in on the action, future growth may prove more challenging.”
Before setting up Fantastic, Mr Sovndahl was a chef in one of Denmark’s best restaurants, L’Alsace, until a shellfish allergy forced him to quit in 2002.
The Dane, who lives in central London with his wife and infant son, went on to launch a string of companies including a fashion content business, a telecoms firm offering cheap phone calls, and dedicated music and dance teacher websites – all while working in managerial roles for the likes of BT and Lastminute.
Even on holiday Mr Sovndahl admits he is “no good at just sitting on the beach – I need to do something”. Visiting Mexico five years ago, he decided to learn to dive.
“Then I got my open water advance [certificate], then moved into cave diving, going deeper [in the ocean] and seeing some places very few people see. It’s an incredible space – I go back there a lot to dive.”
Ever the entrepreneur, it’s also led to a canny business idea: “I love it so much I invested in the dive shop because all the expenses were adding up. So I made a deal with the owner.”
But for now, with a big investment deal on the horizon, he may have bigger fish to fry.