Idealista is a company that is a daughter of its time, and its time is that of a city, San Francisco, that at the beginning of the century radiated enough energy to transfer any physical activity to the internet. The world was about to turn to a language of ones and zeros, and that is what two entrepreneurs from Ávila and a friend did when they took advertisements for the sale of apartments from Madrid’s streetlights to create an online directory. They were the brothers Jesús and Fernando Encinar and their friend César Otieza and that directory project has ended in a company that is the Spanish, Italian and Portuguese leader in online real estate.
Now, while rumors of a change of ownership are reverberating, a senior manager at Idealista who knows the company’s history very well, explains that this type of movement does not affect the management of a group with 1.4 million ads and a monthly transfer of 5.5 million unique users. “It doesn’t come as new to us,” he says.
The most widespread trend is that the company had three founders, but was actually created by one person, Jesús Encinar. After studying an MBA at Harvard in the 1990s, he went to Silicon Valley, where he worked for Amazon on a new tab to sell music. When he returned to Spain he saw how difficult it was to find an apartment and remembered that in San Francisco he did it without problems thanks to a website. It was the idea that Idealista gave birth to.
From the first moment he brought his friend César Oteiza and his brother Fernando Encinar, who had just returned from Latin America, into the project. The name came later, when his mother said a phrase like “The idealist is here.” She feared that Jesus would drag his brother into his business dreams. Too much risk for a family from Ávila with a conservative tradition.
The three partners found financing, first from friends and family, and then from the Basque savings bank BBK. With it they dedicated themselves to collecting 4,500 advertisements from individuals selling homes on the streets of Madrid. “Each owner was called one by one to offer their publication for free on the internet,” says the source. It was with this database that the Idealista portal was born on October 4, 2000.
At the beginning of 2001, Caixa Catalunya joined in to repeat the operation in Barcelona, ??telephone by telephone. Through six million euros, in 2003 the company managed to become profitable in operational terms and since then “it has not stopped being profitable for a single month.” Here is an obvious key, but one that differentiates it from other digital adventures and that explains its success: “Always remain on two legs, in which income is higher than expenses,” says this manager.
Another key was to stand out from the competition by discovering the talent of Spaniards to sell apartments. At that time, there were 45 online portals competing in the market. Idealista opted to offer the payment option to advertisers, who responded by publishing better quality ads, in photos and in presentation. “The customers themselves began to take care of the product.”
Other shareholders arrived, such as the Spanish fund Bonsai and the North American Tiger Global Management, but the big movement occurred in 2015, when the venture capital firm Apax acquired one hundred percent of the capital and the three initial partners reinvested to participate in the shareholders and, above all, to continue leading the management.
Here is the third and perhaps the most important key to Idealista’s success, the company believes. It is the only one of the large online real estate portals in the world that has had the same management team at the helm since its founding. A formula that has allowed them to survive financial crises and anticipate changes in the market.
In 2020, the Swedish fund EQT took over and took more than 50% of the capital, compared to 11% from the Oakley firm and 17% from the Idealista management team. According to Reuters, EQT has hired Morgan Stanley to search among venture capital funds for a new first shareholder in an operation in which Idealista would be valued at around 2.5 billion euros, debt included.
The shareholders change, but not the managers, who entered the Italian market “at will”, without acquisitions, and who have made several company purchases with the help of the shareholders to enhance the software and tools. Success also responds to a particular culture. The company does not have an organizational chart or a multi-year strategic plan. It is governed by annual budgets and according to a “very flat structure” in which a successful innovation, such as the option of drawing search areas on a map, is replicated in other countries and tools.
