Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview real entrepreneurs who are proven for an audience of real entrepreneurs who very often are proven too. They’re listening to these interviews to hear how other people did it because they want to learn from them and frankly, also because they are super fans of business, and this is how we choose to spend our free time. So, check this out.
Today’s guest was out looking to buy a house and ended up buying a house and then looked over at his broker and said, “What do I need this broker for? I think actually this broker is completely unnecessary.” He had an idea for a new business. He went to Y Combinator to try to raise money and get some guidance from them and everything else that comes with it. And they said, “No. Basically, go away kid.”
He did go away and he said, “I’m going to focus on the fundamentals.” And he did focus on the fundamentals. He came back. Actually this time Y Combinator said, “All right, come on in kid. We’d love to have you.” They funded him, he raised money after that and then he built a business that is changing the way that people buy homes and he says now within three years it’s done over $10 million in sales. His name is Judd Schoenholtz. Judd . . . I said this so many times and even got it right before. Judd . . .
Judd: No editing.
Andrew: Schoenholtz.
Judd: Oh, yeah. Hi. Happy to be here.
Andrew: Good to have you here. Judd Schoenholtz. He is the founder of Open Listings. It’s a self-service real estate service that returns agent costs back to buyers. This interview is sponsored by two companies whose names I could pronounce. The first is HostGator for hosting your website. And the second . . . Oh, you know what? I say this so fast. I shouldn’t even pat myself on the back here for pronouncing it right. But if you’re looking to hire developer later on, I’ll tell you why you should go to Toptal. Judd, good to have you here.
Judd: Good to be here, Andrew. Thank you.
Andrew: When we say $10 million in revenue, you’re not including the home purchase price, right?
Judd: No. We’ve almost sold a billion GMV, so that would be if you’re including the total cost of homes that we’ve helped. So, we count revenue as just all the money we earn minus the 50% commission refund that we give back to buyers. And then . . .
Andrew: Where’s all that money going? You guys are not profitable. Where’s the bulk of the expense in this business?
Judd: We have a 15-person product team, so engineers, products. We offer a lot of support through the process, so we have a support team that helps people answer questions as they’re shopping either about getting pre-approved or specific homes. And we offer free on-demand tours. So, if you want to get into a home and there’s not an open house, it’s required that a licensed agent is there, so we’ll send a licensed agent as a door unlocker, kind of an Uber for showing service, just the service you need and none of the hassle or commitment or awkwardness.
And then from offer submission to close we’re pairing each of our buyers with experienced local buying agent. So, they’re focused on helping people negotiate and hand-holding them through the process and obviously they’re compensated, but what they’re not doing is really interesting, which is 3 to 12 months of curating a buyer lead, marketing themselves, driving around to showings. So, they’re both more effective because they’re focused on this process and obviously it takes less hours, so the compensation is a little more commensurate with the service they’re providing.
Andrew: All right. And you guys get how much money back from each sale? What percentage?
Judd: Well, 50%. So, it depends on where the homes . . .
Andrew: No, sorry. How much of the sale price do you guys get? And then you . . .
Judd: Okay, yeah. So, typically, the buyer’s agent gets about a 3% commission. In California and some places, it’s 2.5 but let’s go with 3. So, we’ll earn 3% as a buyer’s agent representing them and then we give half of it back to the buyer. So, each buyer that purchases a home with us is essentially getting 1.5% back in cash at closing when they need it most to put into home repairs or help pay for their down payment. So, it’s incredibly valuable because you’re about to spend all the money you ever had in your life on this home and getting 1.5% back is pretty cool.
Andrew: When you were looking for a home, what kind of a home were you looking for?
Judd: Anything that was inhabitable, I guess would have been . . .
Andrew: Why? You’re in the San Francisco area?
Judd: We’re in Los Angeles. But even at the time, this was 2011, it was still a pretty heated market where I was looking. There wasn’t much inventory, stuff still sold pretty fast. So, I think it’s nowhere near in terms of like pricing competitiveness of where it is today, but I think some of the early problems around how to make your bid more competitive, how to go fast, how to make sure you’re not missing inventory, all those things were present when I was shopping for a home.
Andrew: You found one in how long?
Judd: Well, I think what’s interesting about the home-buying journey is you go through different phases of it. It’s so easy to go shop for homes online. We actually just released like a homebuyer survey and it’s like couples would rather be swiping homes together than using these other products and we compared it to all these different things. So, there’s definitely like a low barrier of entry to start shopping for homes, and so I think people do it online. But I think what you need to do to get serious is really pre-approved. So, probably, from the pre-approval process to actually putting in an offer and getting an offer accepted tends to be around three months and I think it was about that long for me.
Andrew: Okay. And you guys did all the work yourselves? Like, you found . . . You went online? Which websites did you use?
Judd: Well, at the time ours didn’t exist. But I think the other thing that we find is that if you’re serious, you’re using like every website. You’re scraping . . . You’re looking on Craigslist for homes for sale. You’re definitely looking on Zillow, Trulia, Redfin and checking all of them across each other.
Andrew: And you and your wife would just send these things back and forth using iMessages or something.
Judd: Yeah, totally. All the above, but also just stopping at every sign you see, hunting down stuff, you heard rumors. I mean, I think when you’re especially in a competitive market, you definitely resorting to whatever tactics it takes. So, I think the home we ended up getting an accepted offer on, I saw it listed night before, I was like the first person there, I tried to put an offer right away.
Actually, it’s funny that you said the broker didn’t provide any value. One of the things he provided evaluate is he told me that my wife needed to see the home before he would let me put an offer on it. So, I guess, you could quantify that as some sort of value, although we could write a blog post providing that advice.
So, yeah. I think it’s a crazy journey. Everybody is using every tool, but the problem is that there’s a lot of democratization of the information and a lot of help for the shopping process, but nobody has really improved on the buying process, and in that, you’re forced to use this traditional full-service agent who all charge the exact same fee and there’s really no options for buyers.
Andrew: Okay. And part of the reason . . . Like, part of the reason why you cared was you were looking for an idea for a startup. Like, I walked into this office building every day, I see sometimes that there’s three people manning the door and making sure that nobody comes in who is not supposed to, and sometimes none. They just go and do something else. That stinks. But as much as I’m bothered by it, I’m not going to go and create a new security system for buildings. And the reason is, I’m not looking for a new a new business idea. You and your buddy, your best friend Alex were looking for ideas, right?
Judd: Yeah, I mean, I think we had both been product designers, him an engineer and a CTO at different businesses and kind of always wanted to start our own thing, had lived together, had started a bunch of different products on the side, but . . .
Andrew: Like what? What did you start before?
Judd: Oh, we had a bunch of weird stuff that we always built. We had a website that was tracking every show that it existed in New York. So, we were trying to historical and future shows kind of this like upcoming.org for documenting experiences around music . . .
Andrew: You mean music?
Judd: Yeah, music shows.
Andrew: So, all the live shows you guys were going to document it. Okay.
Judd: We started just like putting up content and storing it and scraping all the different sites. We had this pretty cool, almost like a pre . . . What’s it? Songkick or one of these that kind of has an aggregation, all these sorts. We kind of built some system like that that we were messing around with.
Andrew: Tell me this. You’re smiling as you’re telling me this, like almost like I can’t believe I thought of that, right? The way that a fashionista might look back at her photos and say, “I can’t believe I wore that.” What is it about this idea that makes you laugh like this?
Judd: I just think it’s funny because we weren’t really thinking about it as a business. This is just like what we did in our spare time for fun and we’d build these little projects that we thought needed to exist or that were for friends, but . . .
Andrew: But there was no business idea behind it? You weren’t sitting and thinking maybe one of these are going to hit it? It was just kind of art projects that you two were doing together?
Judd: I mean, post-college . . . In college is a crazy time. I think you’re a little more motivated to make cool art projects for your friends than you are to build business.
Andrew: Got it. What’s the one that’s the closest to a real business and in retrospect with your experience, there’s no way that one would have worked?
Judd: Oh, well, I mean another one that comes to mind and actually we had applied to Y Combinator years before and actually built a pretty full featured site. We built . . . We were sitting in our jobs, instant-messaging each other kind of individually day trading are like Roth IRA as we . . . I was working at a design agency, he’s working as engineer and we’d be trading ideas back and forth. And we started reading these pretty interesting like kind of armchair analysis blogs, but there was no central location for them all, so we built an aggregator that . . .
Andrew: You built what? Sorry.
Judd: Like, an aggregator to aggregate all the new blog content by like scraping all the different RSS feeds, and then we’d read it for which stocks they were talking about and it was all analyzed and we’re looking for trends and you could search by stocks. So, we had this thing we called the Stock Blotter. And we actually applied to YC, but it had no business model. It fully worked. We were reading it every day, using it as almost our own RSS reader, but we didn’t really think about a business model. We didn’t really think about any distribution there. So, I can see why YC didn’t think it was a viable business.
Andrew: How far did you get with that with Y Combinator?
Judd: We applied once and didn’t get in, but this was early. This was like 2010 or something like that, maybe even earlier.
Andrew: Okay. And you were designer before, you were working at a company doing user experience at a company called Huge and you got to work on some interesting projects like one for the National Association of Realtors. What did you do for them?
Judd: Yeah. So, we worked on . . . I mean, I was there for 10 years, so I worked on a bunch of projects. We’d come in as sort of design consultants, building products, improving things, trying to almost like a McKinsey but from a product design perspective. So, the National Association realtors had a very interesting challenge where we face the inverse of which is that nobody likes to work with a realtor.
So, they were trying to improve the customer perception of realtors. So, they were building . . . They had this idea that they wanted to build like a content site that would provide the knowledge but would be from the realtor. So, it’d be like all the things you need to know about homes and maintenance, but it would come from this realtor’s voice and they could distribute it through all their members and everybody’s going to love realtors.
We actually had built this. We’re like, what users really want is they want to understand everything from the perspective of their home. They want to track their home’s value. They want to know what projects increase the value of their home. We’re going to build this tool like a Mint for homeowners. And we built this whole thing and they were really into it and then at the end of the day, what actually got built was the blog concept where they just like built this blog.
Andrew: And this is why, I think you told our producer that agency life was visionary shit. You come up with great ideas and then the client goes and does something else and you don’t even get to iterate to see it improve.
Judd: I think that’s definitely one of the frustrations. I mean, I think it’s cool to do visionary shit, but at the end of the day, I think what really makes successful products is the details, the feel of it, the iteration, looking at analytics, really getting into the details. And I think ultimately, especially after 9 or 10 years of doing that, I wanted something a little more fulfilling and building something over the long term that actually really solved user needs.
Andrew: Okay. And so you and Alex were working on these different side projects, Open Listings became one of the first side projects, the first version of it? Why? You were about to interrupt me. Interrupt me. Tell me what . . .
Judd: Well, no. It’s funny. We almost like dropped it for a few years. I think we both got married, I’d moved to Los Angeles, but I think what happened is we both went through the home buying process and had different terrible experiences with it. So, I think it was just a domain that we knew . . .
Andrew: And so even before you went to the home buying process, before the origin story there were some experiences. What was the analysis before you guys started it before you went through your own experience?
Judd: Well, no, no. I’m saying, like, we gave up making side projects. We moved on with our lives. I had moved to Los Angeles and only at that point when we had both gone through the home buying experience where we like, “Oh, this is definitely something we need to build the rest of our lives. This is definitely a problem that nobody’s working on that has tons of opportunity and then specifically there could be a real big business built around this.
Andrew: Once you found the problem, you realize it now there’s . . . Why is finding a problem such an important part of building the business?
Judd: Well, I think people tell you at the beginning you’re going to spend the next 10 years working on this thing, you better make sure that is something you care about. But I think if you’re going to motivate yourself day in and day out 24/7 to work on something, you have to really fundamentally believe that it’s a real problem. You have to fundamentally see that people are struggling with it. In our case, there’s real money involved, people’s life savings. So, I think to wake up every day and be motivated and keep building especially in the early days, there just needs to be a real acknowledgment and understanding of a real core problem, not just some ephemeral, “Hey, people want to document like live music.”
Andrew: But is it that helping people who have real problems is a big motivator versus something else?
Judd: I think it’s the fact that it is a big problem, not maybe a trivial one that’s easy to solve and the fact that, yeah, it’s a real pain point. For our business, it’s infrequent and not everybody gets that pain point until later in their life. But once you start talking to people and going through it, you realize there’s just so much opportunity and so much that needs to be fixed that it feels meaty enough to devote the rest of your career to it.
Andrew: Okay. So, kind of like I wouldn’t want . . . Or if I were a crossword puzzle guy, I wouldn’t want to sit with a simple crossword puzzle from the back of the TV Guide or whatever.
Judd: Yeah, if you’re on a desert island.
Andrew: I want something that would challenge me.
Judd: Yeah, you want the hardest possible crossword puzzle in the desert island for the rest of your life.
Andrew: That you could do. If you’re going to spend the rest of your life doing and got it. All right. So, you found it, you started building it. The first version looked like what?
Judd: Well, Instagram had come out or it had come out maybe a couple years before that and had been really popular. So, I think the original pitch was Instagram for real estate. What you’re doing . . . When I mentioned everybody who’s using all these different sites, what they’re doing is they’re looking on a map and they’re searching for pins that hadn’t been there before. You’re sorting through the map and you’re trying to see like, “In this area that I’m shopping in, what’s new and what’s different?”
So, this concept of a feed, Facebook newsfeed had been around for a couple years. Instagram did it with photos. This idea of show me the newest that matches my search criteria we thought was like really powerful and nobody was doing it at the time. So, the first version we built in terms of trying to attract users and get them into the product was this Instagram for real estate product that we built and still the core of kind of our core shopping product today.
Andrew: Why was that the first part considering that the problem you found was just getting rid of the broker?
Judd: Yeah. Why did we . . . I mean, I think we ultimately knew that the purchase problem with the process was the problem, but I think we didn’t know what to build there and we didn’t know how to acquire users to figure it out, but we knew that this other problem existed which was kind of hard to shop and we could get people kind of addicted to this feed concept. We thought that that could really jumpstart it enough that to monetize that we would essentially build a buying service on top of it. But I mean, I think your question is totally relevant in retrospect, like, why not just start with the buying service, and I think that’s something that we still talk about balancing up ’till today.
Andrew: I went through Internet Archive and I could have sworn that the first version that I saw emphasized how much money you could save people by eliminating the broker. So, that was part of the offering right from the start or did I miss something?
Judd: Totally, no. The very first offering was almost entirely self-service. We thought we could give people tools and forms and the information to go through the entire transaction process themselves. So, that was definitely the early iteration. And even into Y Combinator we built a service for $5,000 flat fee, you can kind of just do it yourself.
Andrew: Why didn’t you in the first version as a . . . It’s so hard for me to find the earlier versions. There’s like a benefit. “We save homebuyers an average of $22,000.” Is that really the big pain point? Like, is the extra 22,000 that much that people were willing to say yes? Why not just show, “We get rid of that broker who’s not doing you any good, but taking money”? Why not emphasize the pain, is what I mean. Not that I’m disagreeing with the approach. I’m just trying to learn your thought process.
Judd: Yeah. I think it’s the totally right question. I think we always try to balance like kind of eye-grabbing dollar figure with the emotional, “You don’t want to work with this service professional who’s older, who doesn’t get you, who’s not the way that you want to shop.” So, I think at our marketing strategy, we’re always trying to balance those two concepts which is self-service on-demand mixed with an incredible amount of savings and we dial up each concepts depending on the context.
Andrew: $1 million home, you guys would save me $15,000 on, right?
Judd: Yep.
Andrew: That doesn’t seem like that much in return for, we’re finding now a lot of online businesses are switching to salespeople. How did you know that that mattered to people before they bought that they were . . . I get afterwards, you look at the guy next to you and you go, “I didn’t really need them.” Right? But frankly, after we had our first baby, I looked at that birthing class and go, “What the hell are we sitting in there once a week for? We didn’t need them. The baby was coming out anyway. There are professionals around to make sure of that.” But before we bring on all the experts. I’m scared to death.
Judd: Yeah, I think it’s experts in the place that you need them for and also with a service like a cost per service that’s commensurate with the actual value that they’re providing. So, when I went through my closing statement on the first home I bought, there’s this eye-popping figure where I paid this broker almost $20,000 to help me purchase this home. So, I think it wasn’t so much that I didn’t need any help. It was that on an hourly basis, I paid him $1,000 an hour, $2,000 an hour, which just feels incredibly unfair.
A lot of our buyers had gone through the process once and then once they approach it again, they’re like, “I really don’t need this person. They’re slowing me down. I kind of know more than them, at least about myself or my specific search.” So, it’s also just in the market, there’s no real options. So, there’s like a one-size fits all model. You have to hire a full-service real estate agent. They have to charge the same fee. Nobody competes on price. So, I think it’s just about giving people options. I don’t think . . .
Andrew: Well, what I mean is . . . Forgive me for interrupting. I ask you the question then I’m stopping you as you’re answering. But I mean, did you do any like . . . Did you talk to other customers? Did you do a sanity check to see if you and Alex were the only ones who cared about this or was it, “This is just got to go. There’s too much money in here”?
Judd: Well, no. I think what’s interesting is that there’s a lot of hacks that people try that are also kind of illuminating that there’s a bigger issue here that there’s a better problem or a better solution to the problem which is a lot of people try to represent themselves or they get their own real estate license which you can get online. You can go work with a lawyer. A lot of people there’s these flat fee lawyers that you can work with which they’ll help you with the contracts only for kind of a similar price than us. They don’t help you with any of the buying tools or showings or anything.
A lot of people try to just say they don’t want to work with an agent and kind of drop their own form. So, I think one way to find if a business idea is validated is just look for like what are the hacks that are people doing to get around it and say, “I think we’d seen that early on as real validation.”
Andrew: Okay. All right. So, that was good validation. All right. Let me take a moment here to talk about my first sponsor then come back in and continue with what that first version was and why it was that Y Combinator said no to you. And the first sponsor is a company called HostGator. Do you know HostGator?
Judd: Not personally.
Andrew: No. How involved were you in picking out a hosting company for your site?
Judd: I would say 0% involved.
Andrew: Was it Alex who did it?
Judd: Alex, we actually . . . We have a third co-founder, Peter, and I don’t want him to feel like he’s cut out here.
Andrew: Yeah. He’s the CPO.
Judd: Yeah. And so he’s another engineer and product person.
Andrew: Chief Product Officer. Well, here’s the thing. The reason that you probably didn’t spend enormous amount of time thinking about it is, frankly hosting is fairly solved as a problem. There was a period there where it was difficult. Who was going to host it? How are they going to work? Will they be around? It’s solved. The winners have already been, for the most part, declared. I’m sure someone else is going to come in and take these guys on, but right now it’s a mature market. There are winners. There are losers.
I’ve interviewed some of the people who’ve done well and sold out to some of the winners, and one of them is HostGator. HostGator knows exactly how to host a company, they’ve done it for years, they know exactly what you need which is like frankly, for most people it’s one click Install WordPress. But if you need to upgrade from there and you want to do more, they give you the option to do it. They do everything from get your own server, host whatever you want, to guess what? You only want to do WordPress and you want someone to manage it for you? We got that too.
If you want to get started with them, start with a simple plan. It’s called the Baby Plan. That’s one that I highly recommend. You’re going to get unlimited domains, get to create as many sites as you want. All you have to do is go to hostgator.com/mixergy. When you go to that link, frankly, you’ll be helping out your old buddy Andrew because they’re going to see that you signed up because of me and know that my ads here do well.
And you’re also going to get up to 62% off. You’re going to get a 45-day-money-back guarantee. So, if you decide I’m full of it or they’re full of it, you can cancel and get your money back. But if you’re happy with it, you’re going to get unmetered disk space, unmetered bandwidth. All this stuff guys. Go to hostgator.com/mixergy. HostGator.com/mixergy.
Why did Y Combinator say no to you with Open Listings?
Judd: I have to go back and reread the application, but I’m guessing . . . And they give a lot of very sometimes counterintuitive simple advice, but I’m guessing we like didn’t follow any of it. All our answers were convoluted and unclear and we didn’t really know what we were doing. And it was clear. I think, well, maybe the clear answer is that we had a very rough MVP that had no users, maybe you could see what it was supposed to be but it wasn’t demonstrating any traction whatsoever. So, maybe it’s probably zero traction and a lack of focus in our answers.
Andrew: And your answer is lack of focus. Was the first version in retrospect actually good?
Judd: I think it was going to be good, but it wasn’t yet good.
Andrew: Okay. All right. What did it have? What was it that they saw?
Judd: Well, I think it wasn’t production ready yet. And it clearly had no users as a demo. So, I think fast forwarding to the next time we applied, we had an app in the App Store, we had hundreds of users, we had some metrics around it, so you could actually use it with real data as opposed to this kind of, like, demo thing. So, I think just getting it further along and also having a lot more clarity around what we wanted to build as a business is night and day from an application perspective.
Andrew: You told our producer, “Once we got turned down we said we’re just going to get really serious. We’re going to do a bunch of stuff that will get us in next time if we decide to get in.” What did you do? How did you go from what you described earlier which is kind of sort of idea to something that had real users, was in the App Store, actually worked?
Judd: Well, the first thing is we had just quit our jobs. We went full time. So, like going 110%, 24 hours a day into something as opposed to . . . But leading up to the first application, it was nights and weekends. It was fun. The stakes were relatively low. And I think that also comes across as people apply. If it seems like something you’re interested in doing and you haven’t fully committed to, I don’t know if that’s really a very compelling reason to accept into an incubator like that. So, I think actually spending six months earning no income working on this 100%, getting users, really living the problem both made the company better, but I think also came across in the application.
Andrew: The first user, speaking of getting users, you remember him. How did he find you and what did he want?
Judd: So, the first buyer of us . . . So, we had people using the app and giving feedback and I think a lot of the early feedback was really validating because it was like, “Okay, cool. You’ve helped me find these homes, but like, I want to actually hit the Buy button.” So, we knew like having a Buy button was really important just from like the earliest users.
But the first person who . . . this is during YC. We put up a Google Ad about buying a home. So, we’re trying to focus on our value proposition and get people who are ready to buy and see if we could acquire people who had already found the home that they want as opposed to helping them find homes. The first user was this guy named Jesse. He was an engineer at SpaceX and he had already found this home in Torrance that he wanted to buy. He was kind of thinking about it and I guess googling to do it himself which, again, is another one of these like validating moments that he was trying to find this real estate agent alternative or whatever naive keywords we had at the time.
And, of course, the AdWords or maybe he went to our website just comes right to me. It’s like, it pretends like it’s this complicated form with all these people, but of course, it’s like ringing the CEO cell phone at night like nine o’clock on a Tuesday. And so he . . . It was cool. We talked. We talked about the service and how we were working. And at some point, he kind of piece it together. At least he asked straight up. He was like, “How many homes have you guys sold?” So, I had to be honest and say, “Zero. But I promised we’re going to do a good job.” And you know, tried to talk around it.
And he was just like, “Fuck it. All right, let’s just try it.” And that was really cool. So, yeah. I mean, from that moment on I think it was both validating. You could be honest about your lack of experience and offer pretty bare-bones product, but if it met what he wanted, it was this thing he was looking for, showed a lot of promise from there.
Andrew: You thought that it actually didn’t work out for him, right? Why do you think it didn’t work out for him?
Judd: Well, no. His offer actually was rejected. So, I think this was also then the crash course and the realities of the real estate industry, which is nothing is . . . It’s not an API for offers. We don’t just submit it and they come back yes or no. So, we had submitted an offer, I think it was like just under the asking price and they basically said, “I’m sorry, no.” I just pass the information along. I was kind of this fake API to pass his offer in, kind of an intermediary, but I wasn’t trying to become a realtor. I was just trying to understand how the process worked and kind of makeup for the lack of software that we had.
And yeah, they said no and I was really sorry and seemed like he had a pretty good experience, but no revenue for us, 100% churn. And then a week later, the listing agent for that property called me back and he’s like, “Oh, I talked to the seller and they actually will accept this offer.” So, that was pretty awesome just in terms of completing the validation loop and getting Jesse the home. And then there was like a crash course, and, “Oh, wait. There’s all these things that need to happen during the closing process and there’s these problems that can arise. There’s a ton of content that’s necessary to help people really be self-service through this process.” So, [inaudible 00:26:45]
Andrew: And you had figured it out by doing it and then documenting it so that you could get it again?
Judd: Yeah. So, I got my real estate license. So, I was the light primary agent on the transaction, which is crazy because we’re going through YC and building software during the day and trying to figure out all these other things. I think I was looking at everything that I was doing manually and trying to just be very clear about what needed to be built versus what had to be done. And I think just that framework of what needed to be automated away from me that was taking all my time or especially in our industry, mistake ridden, a lot of mistakes by transferring docs from place to place or moving it to different systems or working with lenders or outside vendors. So, really just looking at, yeah, “What am I spending my time on and what am I making mistakes on?” and building software to fix all that.
Andrew: How did you decide what to automate and whatnot?
Judd: Well, like the first thing that . . . Okay. This is a great example. It is like every time you fill out an offer you’re filling out this very manual form and there’s some tools and agencies to help fill it out, but you’re basically going form by form and filling out this PDF, then you have to drag it into DocuSign and have it signed and then you email and submit it. So, very common the offer terms are fluid up into the last moment. So, they’re changing, people are changing their minds, you’re learning more information.
And so every single time a buyer or an agent triggered a change to one of these things, I’d have to go back to a desktop computer. I’d be spending an hour. I didn’t want to make any mistakes, so I’m like going through it 100 times. And it was horrible. It’s like what I was spending my whole day on. So, one of the first things we built in terms of the offer automation was just programmatically filling out all the forms. If you need to make a change, make a change . . . fills it out again. DocuSign API integration, so you don’t have to drag any signatures there. And still, to this day, I think it’s one of the most effective things that we have for agents, which is, “Oh, you want to raise your offer $10,000. No problem.” Click, click, click. “Oh, hey, I set a signature.” That’s like magic and not anything that another agent could do.
Andrew: And there’s nobody who created that tool for agents as a standalone tool?
Judd: Well, I could tell you there’s a tool called zipForms that’s controlled by the California Association of Realtors, and I think they’re the only licensed user of the forms and I think it’s a heavily regulated high barrier of entry industry, and so there are tools. There’s a company called LoopNet that used to do something pretty similar that Zillow bought maybe five or six years ago. But, yeah. I mean, you have to also imagine like the audience of agents, the median agents doing two transactions per year, so this idea of efficiency and speed and accuracy is not their biggest problem. Their biggest problem is, “How do I find more clients?” or “What cocktail party am I going to this evening?” So, we’re solving problems for our internal team to try to be more efficient and effective, but the status quo is pretty bleak.
Andrew: They have the time to do all this because they don’t have that many clients. I guess I always assume they call so much more.
Judd: The top-performing agent is close, but there’s a super long tail of people doing literally one to two transactions a year.
Andrew: So, you were originally the broker.
Judd: I did about 20 transactions then I hung up my spurs.
Andrew: And then did you need to bring in another realtor in order to comply with their rules?
Judd: Yeah. Well, I think I needed to bring in another realtor for my own sanity, but . . . So yeah, our first hire was an engineer, but our second hire was actually an agent who’s still here. I had a long conversation with her this morning over coffee. And yeah, she started, she did all of our customer support and I was still the agent for the first transactions, and then she took it over and did all the agent work, and we hired somebody else to do support and that’s how we grew the operations team for the first year. Everybody is cycling through the support role.
Andrew: And this was a very stressful period, you told our producer. Actually, tell me why you’re smiling as I say that word, stressful. What was going on internally for you?
Judd: I think our industry is like a 24/7 industry. I think it’s not enterprise sales where people are gone from 5:00 o’clock on Friday till 9:00 a.m. on Monday or whatever it is. So, I think it’s stressful because if you’re going to act as an agent, you’re really available 24/7 to clients and especially if you add tools and teams and support. A lot of that fell on me trying to string things together. So, I was both acting as early stage CEO and also real estate agent and I had very little experience as a real estate agent, so that added up to a lot of stress for about six months to a year.
Andrew: Did you know the business was still working out at that point or were you still trying to figure it out?
Judd: We knew it was working because our metrics was still good, we were signing up more people. I mean, you’re talking about low numbers to where you’re selling four to five homes a month. It’s hard to tell. If you squint one way the numbers are looking great. If squint another way, it’s not. I think that the . . . Like, from the beginning, our MPS was really high, like, the people who had gone through the experience loved it. They were super happy with the cost savings. I think we always knew that there was this very large audience of people who just didn’t want to buy through traditional agents and if we could really crack the code on that, we’d be able to build a big business. So, I think our confidence in our path never wavered, but the manualness of the way we had to get there for the first year was pretty trying.
Andrew: Okay. What did you learn at Y Combinator? Beyond getting money from them, what did you get that helped shape the business?
Judd: I mean, just like relentless focus on the one metric that matters. So, choose like the one to two metrics that really matter for your business and look at them week to week and be forced to sit with your peers and talk about what happened last week and what you did to try to make that happen. I think that’s still just like the cadence that we operate under. Now we’re 50 people operating pretty much on that one to two-week cadence as well trying to be very . . .
Andrew: What was the metric?
Judd: From the beginning, it’s always been kind of two things for business. So, the number of people shopping with our tools, so we call them shoppers, but they’re really active registered users. And then buyers . . .
Andrew: Meaning that in order for me to see some properties in San Francisco, I had to connect it to Facebook or add my name and email address, that would make me a shopper.
Judd: Exactly.
Andrew: And if I don’t check the site for another two months, do you still count me as a shopper?
Judd: Not on a weekly basis and not on a monthly basis. No.
Andrew: Okay. So, active shoppers, that’s a big metric for you. And then what was the other one?
Judd: The other one is number of buyers. So, we say how many people are submitting offers week to week. And obviously, the conversion rate between buyers and shoppers is relatively low. So, you’re talking about maybe 100X more shoppers to everybody who’s submitting an offer week to week. But those are kind of the general metrics. And then we added a third one in the last couple years which is just where we measure it now by NPS, but it’s how happy are people once they go through the buying process. So, how many people are using our tools, how many people are buying with them, which is like the key way that we drive our business, and then how happy are those people who are buying, and then hopefully it cycles back up.
Andrew: Why is making an offer considered a buyer? Why not the people who close it?
Judd: Even if there was a closing? Oh, that’s a good question. Because as an early stage business, you don’t want to be reporting zero, zero, so you got to find some metric that’s highly correlated to close . . . So, to close on a home you have to submit an offer.
I think the other thing I was careful about setting a tone around was, it’s not really revenue or offer acceptance rate because, I mean, obviously we do a lot to drive like acceptance rate and make sure all the clients are successful, but we didn’t want people to discriminate, “Hey, this is a really expensive home. We’re going to give them a different type of service.” There’s also a lot . . . We don’t want to pressure people into getting offers accepted either. So, it’s, “Hey, you could only pay $100,000 more, you’ll definitely get this.” So, I think by making it how many people actually get to submit an offer and not just start it, but actually get it submitted, that was kind of the true metric of how our conversion was working from shoppers into people who could be buying a home with us.
Andrew: You know what? I know you made some major changes to your business, but I’m kind of curious right now about the minor decisions because your listing pages look really sparse almost to the point where it feels like there’s nothing there. But there are a lot of details there like, here’s one that stood out for me, “How much I would make if I put this place up on Airbnb?” So, I happen to be looking at a $1.3 million home in San Francisco. So, pretty crappy place. But still, $16,000 a month if I put it on Airbnb. How did you know which features to add and which ones would take away from the clean, sparse look at the pages?
Judd: So, we started at zero both because our strategy was to be very clean and sparse especially in contrast to the other sites we were competing against, but also because we had no features built. So, it’s easy to start as clean and sparse and add from there if you’re starting from scratch. Again, I think just listening to users, seeing what people needed to make decisions, seeing what they needed real estate agents to tell them that could be replaced with software.
Andrew: But how did you know? How did you know what they needed so much that you should spend some development resources on it and lose some of the sparseness of the site?
Judd: Well, we were talking to buyers and especially when we were building that feature, this was a couple years ago, we were trying to go after repeat buyers, so people who were buying more frequently than every seven years. So, investors specifically in like San Francisco and LA who are looking to buy multifamily either rent at long-term or short-term, and the key thing they were looking at was cap rate. So, what’s my rate of return?
But the world was changing, it wasn’t just long-term rentals through a broker. It was short-term rentals, these other things that you can do with mixed-use spaces. So, because that data was available and there were some companies that grew up kind of augmenting Airbnb telling people what to price and they had really accurate data around what the estimations could be. And we partnered with a company called Everbooked and they provided that for a couple of years to us.
Andrew: You said, “We want someone who’s going to keep coming back. We work so hard to get this guy in here.” What is the characteristic that people who return often have? And you realize it’s that they’re buying it to rent it and that’s why the other data that I saw on some listings, but not all was what you estimate the place would rent for, and so those are the two things that will help people who are wanting to rent it out use. Why are you smiling? What else am I missing? You know what? I love that we’re doing this by video because I could tell when I’m off base with you and when there’s more to the story.
Judd: I wasn’t expecting video. But yeah.
Andrew: Good.
Judd: I was thinking we also build something called Shitty Listings for the same audience which we just took down this week. So, shittylisting.com was the worst listings that you could find on our sites for the same investor audience just trying to get people who are buying more frequently. They were looking for deals, they were looking for fixers, they were fix and flip people who weren’t institutional buyers yet. So, we built the whole site called Shitty Listings that just filtered out the worst possible listings. So, same with the . . .
Andrew: Worst, meaning they’re not good for conversion. The cap rate was terrible.
Judd: No, no, no. They were just like destroyed. Like needed a lot of work to be inhabitable, burnt down, just like the shittiest possible. So, we looked for certain keywords, we looked for the price per square foot, and we’re trying to identify the deals on the market essentially.
Andrew: Okay. It’s kind of weird that now it takes me directly back to my own personal feed on Open Listing. So, I went to Shitty Listing, I go, “Wait, I picked the two worst ones?”
Judd: Yeah, we actually just had to take it down. We had gotten . . .
Andrew: Why?
Judd: It was funny it was up for four years. We had gotten some MLS complaints that we were denoting properties that we were allowed to display licensed as shitty. But it was funny. We got the same number . . . We probably got more realtors who wanted to add their listings to Shitty Listing, so it goes it goes both ways.
Andrew: All right. Let me talk about my second sponsor and then come back in and talk about the big change that you said that you made. Actually, let me do a search ad. If got to Shitty Listing . . . Shitty Listings is plural, right? Let’s see. Where did you get traffic for that? How did people even discover it? Do you remember?
Judd: Well, we had done a bunch of traffic for it through . . . There’s all these communities that are built up around fixing and flipping. So, we had done some stuff there. We used to drive ads to it, but we were driving . . .
Andrew: When you saying you went to those communities, you’d have someone internally going just post on them?
Judd: Oh, everything. Guest posting, friending, buying ads there, literally trying everything. I think that . . . The other thing is we’d signed you up for a Shitty Listings account. So, as soon as you registered on Shitty Listings, we would send you on daily digest of all the shittiest listings that match your search. So, that was how retention was working.
Andrew: All right. Second sponsor is a company called Toptal. Let me ask you this instead of me just talking about Toptal. You hire developers yourself?
Judd: Yeah, my team hires them, myself and my co-founders.
Andrew: What’s one example of how a great developer has impacted your business versus just an okay one or a good one?
Judd: Impacted the business? Gosh.
Andrew: Yeah. Well, think about, like, one of your best developers, what did she do that a regular person wouldn’t do, a regular human?
Judd: Well, I think what’s cool is a lot of them do what we call engineering on-call [inaudible 00:39:33] hours a day almost as a support person escalating anything engineering wise and documenting issues and creating follow-ups or even just fixing stuff. So, I think there’s like not just completing issues that we have defined, but making new issues and even solving stuff on the fly.
Andrew: By talking to customers.
Judd: Talking to customers.
Andrew: Okay. So, I’ve said in the past with Toptal that one of the things they want to do is talk to everyone. There’s a website. There’s a big button you can press when you want to hire a developer, but what they want to do after that button is talk to you. And this is why. This is kind of a quirk. It’s a quirk that makes you guys special, it makes you guys a little more connected to the customer including the developers, but most companies don’t do that.
And so when you get on a call with Toptal, one of the things they want to know is, what are your quirks, how do you work. Some developers are going to feel great about this. They’ve been looking for a little more customer contact and they’re going to be a good fit for you guys. And there are other developers who are just not, that’s not them, that’s not what they signed up for, and they wouldn’t at Toptal steer those developers towards you. Fair?
Judd: Yeah, it sounds awesome.
Andrew: And so that’s the idea behind Toptal. As soon as you go to this website that I’m about to give you, you’re going to see that you get something that they don’t give anyone else. I know because they’re asking me basically not to tell you guys to spread the word. Top as in top of your head, tal as in talent. So, Toptal is going to give Mixergy listeners 80 hours of Toptal developer credit when they pay for their first 80 hours in addition to a no-risk-trial period of up to two weeks.
Let me be clear about this. If at the end of the trial period, you’re not 100% satisfied, you will not be billed and you’re going to see a big green button there that says Start Your Trial Now and they are emphasizing that it’s a trial. As soon as you press it, you will have an opportunity to talk to someone at Toptal and tell them exactly what you’re looking for. And if you’re . . . And what they’ll do is they’ll bring two or three people to you. If you’re happy, you pay them, you continue. Actually, you don’t even pay them. If you’re happy, you get started, if you’re not, nothing lost.
Go to toptal.com/mixergy, T-O-P-T-A-L.com/mixergy. And it looks like they’re asking me not to spread the word about it. In the past I used to say, “Tell all your friends so that I can get more of my numbers up.” They said they don’t want this offer spreading. All right.
Judd: Can I tell my CTO?
Andrew: Sorry?
Judd: Tell my CTO is okay?
Andrew: Say it again.
Judd: I can tell my CTO?
Andrew: You can tell your CTO, yes. Definitely tell your CTO. But I think when I was saying look go tell your friends anyone is looking to hire that they should go to Toptal and get this offer, Toptal basically said, “Look, Andrew, we’re helping out because we believe in Mixergy. We’re longtime Mixergy fans. We’re not looking for this to become the established way that we do business with people where they don’t pay unless they’re happy and where they get this 80 hours of credit, blah, blah, blah.”
Judd: Yeah. Very cool.
Andrew: Okay. I described before we started, I said the way you guys are working is you’re getting rid of the broker, people can just go to your website and buy. There’s no broker. You said, “Actually, we changed it.” Talk about that change, because what you’re doing now doesn’t seem that far off of what you had in mind when you got started.
Judd: Totally. I don’t think it’s totally changed, but I think there are points of the customer journey in which agents are essential, and specifically, I think we’ve defined from the offer submission to closing process. So, you need somebody to help you make sure your offer is going to be competitive and negotiated on your behalf, so you’re not just emailing something over to an agent and if they’re getting multiple offers deprioritizing yours.
What we do is we pair you with a local agent. That agents submits your offer. The seller doesn’t know that it’s coming through an online service, they don’t know that you’re getting a refund, so it looks . . . And then the agents are amazing. All they’re doing is focused on getting this offer accepted, your lender is now calling to get it accepted, so the experience from the seller’s perspective is really important and we need an agent to be there to make sure that works.
And then the second component is we call it on-demand hand-holding throughout the closing process. So, when you’re up late at night and you’ve gotten a document or you got your inspection report back and you need help, you need somebody to be available to you on demand, and so we built a way to connect our customers with their . . . They have a designated buying agent throughout the entire process and we make sure that that person has the bandwidth to give a great customer experience through the closing process which we know now that we’ve gone through it 1,000 times is incredibly important.
So, we’ve inserted agents back into that process, and so I think it’s the perfect kind of mix of the agent for the parts you need and for the hours that you need, but then not for the parts around the shopping process and helping you get prepared to buy a home or going on a showing where you want to do . . .
Andrew: Do you guys charge for that by the hour?
Judd: No, the showings are free.
Andrew: And then all the work afterwards and the hand-holding, is that free too?
Judd: Yeah, it’s built into the 50% that’s not refunded.
Andrew: So, how did you know that someone would need an agent to be there after the offer? How did you know that there was on-demand hand-holding? And how did you know that’s where you should invest your time?
Judd: Because everybody who is going through the earliest version of the product said that they didn’t need help, but at some point, they would need help. So, something would come up during the closing process and me as the agent during the first 20 and maybe over the first year when we had a few agents here, the expectation that you weren’t going to get any help was either scary to somebody or they said it was okay and then once they got into it, it became scary. So, I think it was just, again, going through that process with the earliest version of the product and iterating from there. And so finding the places where you really need to make sure somebody was available on demand.
Andrew: It was people calling . . . Because I think right from the start, there was a phone number on the website, right?
Judd: Yeah, totally. I mean, people would call. It’s just like there’s a service . . .
Andrew: And you were starting to pay attention and see there were periods there where they call all the time, there were periods where they have to be there, there’s no way around that, and that’s when you said those are the spots and we’re going to come in.
Judd: Totally.
Andrew: Was it that obvious or were there questions internally?
Judd: Well, I think we constantly struggle with not wanting to just replicate a human traditional real estate agent. So, I think always we’re challenging ourselves to think, “What can we do with software? What could be automated? What can be self-service? What can we drive . . . What can we build content around?” So, I think our team every day is spending time reducing the amount of manual effort that agents need do, but I think having the backstop of a person, giving people the control that they need without the ability to fuck it up, it’s something that we say a lot. So, I think it’s always a balancing act and always our product is evolving.
Andrew: I’m looking at . . . One of the things that I like about your site is, if I go to a 404 page I see something weird like, “Not found”. Maybe you’re looking for . . .
Judd: Where are you getting a 404 though? We’re going to fix that.
Andrew: Oh, I’m looking at archives.
Judd: Oh, okay. Oh, yeah.
Andrew: It says, “Maybe you’re looking for panic rooms,” so I clicked that link to see home to panic rooms.
Judd: Yeah, we built something that you can’t get in any other site, which is you can just search for any keyword in our search term and find a result set which is kind of cool.
Andrew: So, there should not be any 404 pages?
Judd: No, no, no. You should, but I just mean if you use search, you could search for the weirdest thing possible.
Andrew: Like bowling alleys. That’s pretty weird.
Judd: Yeah, something specific if you need a bowling alley.
Andrew: Let’s see. What’s weirder than a bowling alley?
Judd: A safe room is pretty weird.
Andrew: Mini golf.
Judd: A beautiful view of the mini-golf course.
Andrew: I’m only typing in mini golf because I have a hard time spelling, so miniature golf would have taken me too long. Okay.
Judd: Anything?
Andrew: You know what? Golf course . . . Oh, there we go. Miniatures to golf . . . There are golf courses coming up a lot.
Judd: I don’t know how common that is in listings but if it’s there we’ve got it.
Andrew: Because you have access to, what is it called? The MLB.
Judd: The MLS. MLS.
Andrew: MLB is Major League Baseball. All right, MLS, Multi-Listing Service.
Judd: Yes. And we let people search it which is pretty cool, like, just with natural language search.
Andrew: And that’s unusual?
Judd: Yeah. Most places, I think you can only search by like location or address, maybe school zone, but just to be able to do keywords was kind of cool and just a cool feature we built.
Andrew: Was there some kind of help that you added that you regretted later on that you had to find a way to take away?
Judd: Oh, yeah. Probably many things. I’m trying to think of something that comes to mind. I mean, we’ve kind of started with nothing and kind of tried to layer it on, but there’s definitely been tests that we’ve done, like, in terms of, should we send an agent to your first showing kind of test, or if you don’t want to buy a new construction when do we pair people. So, there are definitely been tests that we’ve run that either haven’t moved the needle or didn’t work out in terms of unit and economic basis that we . . .
But I think by starting with total self-service and then layering up there, I mean, I think TurboTax is a product we look at a lot. That used to be just like fill out taxes on your own, now you can video chat or set up an appointment with like a tax help. They have tons of content. They message boards. So, I think taking a similar tack which is like, “What’s the bare bones experience that you need and then how do you enhance from there?” but our price point has always remained the same. It’s always the same 50% commission refund.
Andrew: And for every million dollar home that you sell, you’ve got about $15,000 worth of revenue to play with to give people service with.
Judd: Exactly. So, we used to not offer any showings, but as we change . . . We used to charge a flat fee actually, so I say 50% forever, but that’s actually wrong. So, we charged $5,000. We actually raised our prices to 50% and not only were we charging an average fee of $8,000 to $9,000 all of a sudden in California where we were operating, but our conversion rates went up, and so everybody understood the value prop a lot clearer than the flat fee before. They used to think that people had to pay and they didn’t understand how the money would come back.
So, we switched to that. We ended up charging more which was our first plan, but it actually raised conversion and ended up really fueling growth. So, not only did it help with growth, but it also gave us 40% more margin to give back into the customer experience to provide showings and more support and hire better agents.
Andrew: And the people who were doing showings, those agents are willing to work on a per hour basis to just go to a house and show it?
Judd: Yeah. And a lot of the best showing agents we have are actually full-time now, so they’re almost . . . I mean, they’re still doing it on demand on their schedule, but they’re able to do it seven days a week from I think we offer showings now from 9:00 a.m. to 10:00 p.m. So, yeah, they’re picking it up when they need and they’re paid hourly and . . . Yeah, again, I think there’s a million and a half licensed real estate agents and many of them are just starting out in the industry or looking for ways to get back into it or find more clients and I think we give a cool, predictable, fun way to service clients.
Andrew: You know what? I have to be honest with you. I never heard of you and I watch what’s coming out of Y Combinator and Hacker News and all that. I’m wondering how you got so many clients. How do people know about you?
Judd: That’s a good question. A bunch of stuff. I mean, we try to do as much advertising sort of organic growth stuff, guest posting, stuff like this to sort of get in front of our . . . I mean, you’re really our target audience. I’m disappointed that we didn’t get you.
Andrew: Yeah, I’m looking constantly to find a place in San Francisco and then my wife, we’ve been looking in East Bay then my wife got a job in San Francisco, so we have to find a place here. So, I’m on a bunch of these sites.
Judd: Also Facebook and Instagram, Google AdWords, we do a lot of . . .
Andrew: Really?
Judd: Yeah.
Andrew: I bet I’m going to see you now because you’re probably going to retargeting me.
Judd: Yeah, we probably are going to retarget you now.
Andrew: Okay. So then what do you do that’s working?
Judd: Well, we found . . . Well, it’s interesting. We just did a study that looked back at not just like what’s driving sign ups but actually of the people who have been converting, what are their paths. I thought what was really interesting from this was every single . . . Well, not every single, but a vast majority of people who had come through the conversion funnel, they had looked for third-party validation, so left for reviews and other content, Reddit threads, kind of places outside of our marketing that they could use to get like the true idea of what the experience is going to be like.
So, I think that was a real wakeup call because a lot of that stuff has just grown up organically and we haven’t really been paying attention to, unfortunately, is good. So, people are looking for . . . It’s not just this linear path like click a Facebook ad, buy a home. It’s this, click a Facebook ad, get attracted to the listing, see how clean and be in somebody’s inbox every day and then some way to build trust that this is a better way to buy a home, and that usually is coming from a third party or content that we’re giving you or some kind of feature that’s really magical that’s replacing your agent. And so thinking about it instead of this, just like what channel is working, it’s really just like what journeys are working.
Andrew: I feel like one of the reasons why I never heard of you guys is that you don’t offer something other than the payment, that you don’t offer something that I can’t get somewhere else that I would need even when I’m not looking. Like, the thing that Zillow has is, it’s pretty common now. You go to somebody’s house, you go to the bathroom, and then you Zillow them and see how much they paid for it.
Judd: You got to wait ’till you leave, but yeah, in the bathrooms.
Andrew: Then you want to talk to the other guest when they’re not there. I don’t do it anymore only because people are a little too proud of how much they spent for houses around here and I don’t want to get into patting them on the back endlessly for spending a lot on their place. But there isn’t that.
Judd: Yeah. So, because we don’t that’s really a seller feature. So, Zillow is a brilliant feature that they built back in the day, which was every single person had to check their own home value and then now you’re a Zillow customer. And if you’re thinking of selling your home, agents who will help you get this price for your home. So, that was definitely, I mean, the key thing that they did to drive their growth.
Because we target buyers, we’re much more interested in helping provide inventory, content to help you house hunt, cool tools like Shitty Listings to help you kind of segment the market in different ways. Still, this feed concept that shows you everything that’s new. So, I would sign up for a feed, put in where you’re shopping, and we’re going to give you every new listing that comes on the market the moment it comes on the market and you’ll be addicted to the app. You’ll just check it every day and see everything that’s new for you.
Andrew: I see. So, instead of going in and seeing a map and trying to figure out what’s new, that’s the part that’s the killer feature you found.
Judd: Well, and it’s this great delivery mechanism not just for the listings which you can find everywhere but for our marketing and our services and kind of the next step that you can take with us.
Andrew: I’m looking to see where you guys get your traffic because you do have a good amount of traffic. A lot of it, it’s search. It’s direct. I’m not seeing . . . Is blogging on other sites really working? What’s the number one way that you’re getting customers? Is it paid?
Judd: A lot of the traffic is SEO. We’ve been working on SEO since the beginning. It’s competitive but I think there’s tactics that work. We focus on for sale homes or we focus on certain type of landing pages that are really specific to people who are home buying. So, yeah, I think a lot of it . . . The main traffic source is organic, but, again, yeah, I think it’s still people who are . . .
Andrew: Oh, here’s one. So, for example, 2525 Ocean Boulevard, Corona Del Mar. That is just an SEO search. Oh no, that’s an ad. You guys bought that ad. I’m constantly looking to see what you’re doing. SimilarWeb is one of the tools that I use.
Judd: Okay. Well, I could put you in touch. We have a paid marketing person, an organic person, and then a kind of head of growth and [inaudible 00:54:02]
Andrew: Let’s run an overview. Like, how’d you guys get so big? How did you do it? And it seems like SEO has been big for you.
Judd: Well, one user at a time and then retention. I’d say the product that once you sign up that you get every day that’s every new home and then you tweak it to be your perfect search, that’s an incredibly retentive product. If we can get you to click on that email in your inbox once, I think 50% of people will come back almost forever. So, as long as we get in your inbox with a valuable email, which has all the new properties that came on the market over the last 24 hours, you’re one of our customers for life and you’re coming back to our site.
Andrew: All right. I’m going to check that. How do you know? What software do you use to tell you that?
Judd: We’re a big Amplitude fan, so we’re setting up custom triggers like event-based and . . .
Andrew: Amplitude?
Judd: Amplitude. So, for that, I mean, that’s a funnel we look at a lot which is just email activation rate. So, then we have people who come in, sign up, get an email and then click on it within like a seven-day period and that really correlates with retention for us especially shopper retention.
Andrew: And this is amplitude.com?
Judd: Mm-hmm. It’s cool. You have to integrate it with your development process because you’re dropping in custom tags for anything that you want. So, it’s not just, “Did they visit this page?” but, “Did they do this action?” So, it works really well with modals or weird dynamic pages or AB tests, but we’ve been huge fans of Amplitude, not a sponsor yet.
Andrew: But it helps you understand what people have done to get to the sale, and even though they go through all this analysis, they give you something that’s actionable? It’s not overwhelming?
Judd: Well, we have to do . . . We have to sort of have our hypothesis of what we’re trying to figure out. Like another example is, we have a lot of features around co-buyers, so you can sign up your co-buyer and you can shop together and if you favorite, shares, and you can double favorite it, and all these kind of fun things. But we found that co-buyers were something like 10X more likely to buy a home and go on a tour and do all these actions, and so you set up special triggers. And that’s not a page you visit, that’s like a thing you do within all these different contexts. So, you set up all these different triggers around adding a co-buyer and interacting with them, and then we see correlation continue to be able to drive those actions to drive more engagement.
Andrew: And you start to find people who are co-buyers are more likely to . . .
Judd: Totally. But you have to have the thesis that co-buyers are important to be able to like validate it or drive it up with a tool like . . .
Andrew: They’re not seeing a bunch of random data and then telling you, “Here’s the answer.”
Judd: Not yet.
Andrew: All right. Thanks so much for doing this interview. What? You said you guys still work in two-week sprints? What do you guys working on now? What’s the two-week sprint?
Judd: Well, it’s probably like 50 things because . . . So, our buyer journey is very long, right? You have shopping to touring to closing. We’re really just trying to . . . We’re working on conversion, so not so much top of the funnel but really trying to get our high intent people to go move down the funnel. So, we’re building an entirely new way to create offers which is really exciting. We’re building a bunch of follow-ups. Right now if you have like an offer rejected or do something, it’s very on-demand self-service, we don’t bother you. So, we’re trying to figure out what are the high leverage things to kind of get you back into the experience or . . .
Andrew: You mean, if I make an offer and it doesn’t come through, how do you get me to come back?
Judd: How do we get you to come back? We built this really cool feature that lets you switch agents in our platform. So, if you didn’t like the agent you worked with, with Open Listings, you switch to a different Open Listings agent, but nobody knows about it. So, the feature exists, but we don’t tell people about it after their offer. So, we’re building some stuff related to retention there. I don’t know a bunch of stuff. We’re just pushing stuff every day. From the beginning, it’s just been building, building, building.
Andrew: All right. It’s openlistings.com, but it sounds like the app is the better way to go, so I can get that feed.
Judd: Both are great.
Andrew: Okay. Both are great, of course. Go figure. The founder likes both. I’m going to get the app. Hang on a second. Open Listings. I’ll do it afterwards. And I love to spy on other people’s . . . I don’t care about people’s Zillow, but I do love to use BuiltWith to see what tools people are using. I do love to see SimilarWeb to see where they’re getting traffic. If I have anyone’s email address I always, especially, like other parents at my kid’s school, I put it into pipl.com. It’s spelled like P-I-P-L.com to get a sense of who they are. So, I love doing that.
I’m looking forward to checking out Open Listings. And I want to thank my two sponsors who made this interview work. The first is the company that will host your website right. It’s called HostGator. And the second is a company that will help you hire your next phenomenal developer. It’s called Toptal.
And again, if you guys, I know I’ve been saying this a bit, but if you haven’t tried it, you should. If you have an Amazon Echo, go say the “A” word and get them . . . Well, if you have an Amazon Echo, if you have a Siri speaker from Apple, if you have a Google Home, if you have any of these devices, just shout at them and say “Play Mixergy podcast,” and you’ll get to listen to the latest episode to make that a part of your day to learn from these great entrepreneurs. Judd, thanks so much for being on here.
Judd: Cool. Thanks so much. I had a blast.
Andrew: Me too. Bye, everyone.
Judd: Bye.
