Why entrepreneur Justin Butterworth sold his house and took 16 months off to fix Australia’s “broken” rental market

Angel investor and tech entrepreneur Justin Butterworth has years of experience and multi-million dollar exits under his belt, but he says taking a sabbatical and making huge sacrifices were key to validating his latest venture.

That venture is Snug, a Sydney-based online rental marketplace that’s seeking to fundamentally change the Australian housing market by bringing property owners, renters and managers together in one portal.

When Butterworth founded his first startup Rentahome in 1999, the Australian startup ecosystem was a very different place. Butterworth describes the startup as the world’s first online bookable rental accommodation site, a concept he says was credited as an inspiration in Airbnb’s 2009 pitch deck.

Butterworth, who is also a committee member of Sydney Angels, says the growth of the Silicon Valley ecosystem around that time was a key factor in Airbnb’s success. But the same kind of ecosystem was present at that time in Australia.

“What they [Airbnb] got right was beautiful design, [plus] they were living in a world of social networks, living in a world of venture capital in the west coast that didn’t exist in 1999 [in Australia],” Butterworth tells StartupSmart.

Butterworth says Australia was far behind the technological curve when Rentahome was launched in 1999.

“We had slow 56k download speeds and no [startup] ecosystem,” he recalls. 

Despite Australia’s then-burgeoning startup scene, Butterworth went on to grow Rentahome from “a blank sheet of paper and $60,000 worth of capital” to merge the startup with Takeabreak in 2010. A year later, he sold both for $29 million in 2011 to then Fairfax-owned travel site Stayz, continuing on as an executive director and shareholder in the company. 

When Stayz was later sold in 2013 to US holiday rentals platform HomeAway, Butterworth stayed on and worked with the US company for another two years before deciding it was time for a change.

After a 16-year entrepreneurial journey, Butterworth says he “decided to hang up my keyboard and take some time out”. For years, he had been working six to seven days every week. 

“I had achieved my professional and personal goals and I needed to take a break,” he says. 

“A year of saying yes”

Butterworth took a 16-month sabbatical to “learn, connect and re-energise”, a move which led him to “a year of saying yes” to the startup ecosystem and any budding entrepreneurs seeking advice.

For Butterworth, taking that time out gave him important insights into how the startup ecosystem had changed since he first launched Rentahome, and it’s something he encourages other founders to consider.

“When I’ve connected with post-exist founders I can see that many have benefited from space, staring out at the big blue sky, not looking for their next venture but just connecting and seeing what other entrepreneurs are doing; [finding out] what’s the current state of the world compared to the world they kicked off their own businesses in,” he says.

To other entrepreneurs, Butterworth says he would “highly recommend a significant break which is completely unstructured but which indulges in time, learning and connecting” with the startup ecosystem.

“Starting a startup is such an intensive, emotional, financial journey that you almost need to recover, re-energise, and refocus,” he says. 

Founders should “live and breathe” the customer’s experience

It was during this time off that Butterworth realised that the property market was “much bigger than short-term rentals”, which was the focus of Rentahome. The realisation led him to sell his home to learn more about renting.

It was out of that experience that Snug emerged and the startup has a vision of delivering a ‘Housing-as-a-Service’ model to transform Australia’s long-term rental property market. 

Butterworth says making the sacrifice to sell his home and rent a one-bedroom apartment was crucial in building the “authenticity and customer insights” to launch Snug.

“I think founders that live and breathe their customer’s experience have an advantage. For me, authenticity in the vision and the values of the organisation are critical,” Butterworth says. 

Renting an apartment opened Butterworth’s eyes to the “broken” rental market in Australia, which he says “doesn’t give renters the opportunity to shine”

“Being a founder, I had no job, [and] filling in an application form where you have no job, and have owned a home so haven’t rented in a while, you’re not given the ability to shine … my capacity and character and intentions were not considered as part of my application,” Butterworth says.

Takeaways from a career in entrepreneurship

While Butterworth is still keeping many of the details about Snug under wraps, he has hired a small team and invested $1 million of his own capital in Snug. He hopes to officially launch the online rental community and marketplace in coming weeks.

The goal will be to bring property owners, renters and managers together on one platform to create a more transparent, fair, flexible and affordable rental system for Australians.

Drawing on his more than 16 years of startup experience to build Snug, Butterworth holds two pieces of advice at the front of his mind when starting out this new venture.

“My biggest lesson from my early stage is raising capital to hire the best people to grow the business,” Butterworth says, advocating for founders to build the right teams early on to oversee the growth of a startup. 

Butterworth also stresses the importance of building a strong company culture in early-stage startups, by “articulating the purpose and mission of the business and embedding that in the culture and in the product”.

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