offshoring upside down (II): 1291 Cityhomes

A while ago I wrote about Tecnovate's amazing business model that builds on cheap European labour which they import to India. Tecnovate achieves this buy tapping into these youngster's dreams of discovering the world and a mystic India...

Similarly, Roland Solenthaler, a Swiss entrepreneur, built an little hotel empire by importing cheap but reliable Swiss tweens to New York to service his hostels and appartments in Manhatten. He simply tapps into the dreams of many young Swiss that crave to discover big apple in a cheap fashion. What better way to combine work and discovery? In fact, Mr. Solenthaler has so many applicants that he can choose only the best and still pays wages as low as 15 dollars with board and logding. What makes this so incredible is that the wages in Switzerland are among the highest in the world!

So what's the business model? On the value proposition side Mr. Siegenthaler offers low-cost accommodation and food in Manhatten. But what is really innovative is how he keeps the costs down on the infrastructure side. First, Mr. Siegenthaler struck several deals with appartment owners. They give him their empty rooms for his bed-and-breakfast business and he gives them 40% of the turnover. A win-win situation. The owner maintains the house but doesn't have to deal with renters that don't pay. On the other hand Siegenthaler needs no capital for expansion... But the most impressive is how he builds on the dreams of young Swiss tweens. He gives them New York and a little pocket money and receives their labour in exchange.

What do we learn from this: Like in Tecnovate's business model this is really offshoring upside-down. It shows that the biggest cost saving potential for low-cost business models can lie in the most unbelievable places. What better way is there to get cheap reliable workers than by fulfilling their dreams?