How to solve a specific problem for a specific niche

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Jonathan Kite is the co-founder of Rent Ready, which was built to eliminate the frustration of getting an apartment home move-in ready.

It’s a very simple tool that is very powerful for the right customers. I’ll ask him how he discovered the idea and how he’s grown Rent Ready to over $4MM arr.

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Jonathan Kite

Jonathan Kite

Rent Ready

Jonathan Kite is the co-founder of Rent Ready, which was built to eliminate the frustration of getting an apartment home move-in ready.

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Full Interview Transcript

Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of mixer do where I, uh, do these interviews for an audience of entrepreneurs. And since I moved to Austin, one of the first things that my guests say, when I connect with them is, is that a back backdrop on zoom? Or is that a real thing?

And it’s a real thing. I’m now sitting outdoors beautiful, but I’ve never. Forget, never owned a house. I’ve always been moving around, but I’ve also never lived outside of the city. My experience for most of my life has been living in apartments in the middle of a city. And I chose them because I like that.

If there’s an issue, a guest comes over, breaks a toilet, I call downstairs and they send somebody right up within minutes. Literally they fix a thing and they go away. And I never thought too much about what it means for these buildings to have people like me move in and out of them often for me, it was ideally within a year and there are people who would move out even sooner.

And then I. Talked to Jonathan kite. And I did some research on his company and I realized, you know what, every time I move out, they need to get painters in. If there’s any kind of carpet, they need to clean the carpets. If there’s any kind of cleaning, they need to get it done. They need to the whole thing.

And it has to happen quickly because for every day that the apartment is sitting empty. After I leave out, they lose money. And so Jonathan kite and his two co-founders realized that’s a problem looked into how buildings were solving that problem already noticed that there were. Whiteboards involved and said, you know what?

I think we can revolutionize this by bringing a little bit of tech and maybe make this into a whole new way of doing business for them. And so that’s what they created at, uh, rent ready. And they do everything right now from the software that you use to manage the people in the process for turning around an apartment.

Um, To actually providing the service providers through their relationships. I invited ’em here to talk about how they came up with the idea, how they grew it, how well it’s doing, and we can do all that. Thanks to two phenomenal sponsors. The first, if you’re hiring developers, you should know goat lemon.io/mixer G especially today, cuz you can hire remote developers.

Part-time make it work for you. And be flexible. And the second, if you’re doing email marketing and so much more check out, send in blue.com/mixer G but first, Jonathan, good to have you here.

Jonathan: Yeah, thanks for having me, Andrew and, and jealous of your, uh, outdoor background there. That’s pretty cool.

Andrew: So good. Um, revenue wise, where are you right now?

Jonathan: Uh, I’m in Charlotte, North Carolina, um, where I both grew up and, uh, have the honor of kind of headquartering rent. Ready.

Andrew: What about revenue is what, I mean, how much money is coming in sales, uh, on an annual basis.

Jonathan: Yeah. So we usually do around four to four and a half million in revenue on an annual basis. Um, we’ve got some pretty aggressive goals to kind of double that this year, though.

Andrew: looked into this business, you literally saw a whiteboard. You walked into an office building. And what was on that whiteboard?

Jonathan: Yeah. Um, it’s, it’s crazy. Um, it’s such a critical process for apartments to kind of turn these units over and they literally use a dry erase board. With a marker, uh, to keep track of this project, almost like a kind of mini project management system. And it can be kind of in a maintenance shed behind like a box of tools, um, or spare materials where it, it could be in the front office, but, uh, apartment managers will draw matrix on a whiteboard and on the Y axis they’ll kind of list the unit numbers that they have, uh, that are not renewing their leases when they move out.

And when the move in date is, and then on the X axis, they’ll kind. Really kind of enumerate out the sequence of services that are required to get a unit ready. And, and typically that’s kind of between five to seven different unique steps with services that are provided by individual contractors. So repaint.

Deep clean carpet clean. Sometimes they’ll resurface the enamel on, uh, tubs or countertops. And then they’ll literally pick up a cell phone and call each individual contractor to validate that that date, uh, that they need that work done and that sequence is available. And then they’ll pencil it into that matrix that they’ve drawn.

Then as work’s completed, they’ll go in and cross it off. Um, so super antiquated process, um, which just kind of screams like, Hey, this needs to be disrupted with technology. Um, and so it, it seemed like a, a very simple idea. Um, but one that’s very powerful when you put it in the hands of apartment managers.

Andrew: What’s the. With that though, if it’s working for them clearly, it’s not great, but is there some specific thing that breaks or costs them more money that would make them want to look for a solution and be open to something that revolutionizes everything that they’re doing?

Jonathan: Yeah, absolutely. So it can go wrong every single time. So I think first and foremost, it’s just a really time consuming process. So. On average apartment managers are spending four to six hours just managing that process itself on a weekly basis. So that’s, you know, almost half a Workday gone, not even doing the work.

Going through that coordination effort. I think the other problem is just inherent in the fact that it’s an analog tool that they’re using. So you kind of have this Bermuda triangle created there’s teams of people on site that are all responsible for an apartment operating, uh, correctly. So leasing agents, uh, community managers, they’re responsible for getting leases fulfilled, getting people into those, uh, apartment homes, maintenance managers are usually responsible for.

Actually facilitating that turn process. And so if you’ve got a whiteboard, that’s stuck in a maintenance shed and only the maintenance manager is interacting with that and crossing things on and off. If he or she actually remembers to do that, um, Then the people in the front office, the leasing office, they’re not aware of, Hey, what is the status of this turn in this unit?

Is it actually on track? Am I actually gonna be able to move a resident in on time? And I think the other piece around this is everything I just described to you. That’s the happy path, right? That’s picking up the phone, calling five vendors, and everyone says yes on the date that you want, but things inherently go wrong.

Power’s not on. Resident didn’t turn the keys in on time. And so everything gets delayed. And so everything has to kind of be reconfigured as a result of that. You. Human error contractor doesn’t show up, uh, van breaks down. Everything’s gotta get moved in that sequence. So he or she has to kind of go through that process all over again, every single time, um, which is a really frequent occurrence.

And so, um, helping streamline that entire process and automate that, um, with technology gives everyone access so that they see that, uh, as our, you know, network of providers interacts with, uh, work orders for each one of those services. Uh, digital version of that, uh, dry erase board is kind of lighting up in real time.

So information transparency is key and we’re, we’re really helping provide a better process here.

Andrew: Basically project management software for the, for building owners.

Jonathan: Yeah, it’s it is very similar to a project management software. It’s a, a. A single workflow, every single time a unit turns over and to kind of, uh, contextualize, like why is this such a big problem? Why does this take so much time? On average, an apartment community will actually turn over 50% of their units on site every single year.

So if you just take like an average size apartment, community, call it 200 units. That means that they’re going through this process a hundred times every single year. So, you know, 10 to a dozen times each month. Coordinating with five to seven different service providers. It just starts to add up really quickly.

Andrew: But the way you did it, wasn’t to say, you know what, there’s project management software for the software business, what other industry can use it? And then start looking around for an industry that doesn’t have project management software built for it. You came at this because someone that you worked with, one of your co-founders Ryan McMillan was in real estate.

What did he do in real estate? And how did he come across this problem?

Jonathan: So he, he saw this problem firsthand, so right outta school, he started working on site and I think he was just kind of blown away that, Hey look, a lot of technology goes into multifamily, but it’s all focused on the resident, resident, leasing portals, um, kind of payment portals, but really no technology had been applied to kind of the back end operations of how do you actually maintain a property?

How do you turn a unit? And I think, you know, the other realization he had is you’re kind of on an island. When you’re at an apartment, it’s up to you as a manager to go out into your local marketplace and figure out, Hey, who’s the best painter. Who’s the best cleaner. Who’s the best carpet cleaner. Are they reliable?

Do they have quality? What do they cost? Is that cost consistent unit to unit? Um, and again, Most of these people are kind of sourcing these relationships with kind of the small mom and pop style provider, right. Where it’s just one person and maybe, you know, a brother, uh, or a business partner kind of servicing multiple communities.

And that kind of creates a huge reliability issue because if you’re single point of failure is one person. And that person isn’t available to perform that work on the date that you need. Then all of a sudden, you, you have risked your ability to release that unit when all of that work is completed. And so it’s really about, you know, how do you reduce that risk?

How do you create a marketplace that allows people to choose and have, you know, multiple options to ensure that these turns are happening consistently on time with quality and reliability?

Andrew: And so he saw this problem. Did he come to you and say, Hey Jonathan, we’ve gotta start a business here. I see the opportunity. You’re in tech. You’re working at Microsoft. You understand this? Can we do this? Is that the way that the company was founded?

Jonathan: Yeah, pretty much. Um, so our, our third co-founder will brew, uh, was working in sort of private equity investments. So the two of them started talking about this first. Uh, and my partner will obviously very analytical, just kind of looked at, Hey, this is a recurring revenue model. Um, that’s great. Uh, the market opportunity is huge.

There is no competition focused on doing this so great founding idea, uh, kind of immediately vetted from a business perspective. The missing gap was, Hey, this is a technology business, and neither of us know anything about technology. Um, so they both kind of, uh, approached me while I was, uh, at Microsoft in Seattle.

And I grew up with will, uh, we always wanted to start a business together ever since we were in middle school. Never thought it would be this. Um, but they just kind of approached me and just, you. Very in, in a very obscure way, said, you know, Hey, what do you know about scheduling and project management software?

Um, and I’m just like super inquisitive love problem solving. So I just fell for that hook line in syncer, um, and just started kind of pouring my energy, uh, in the evenings, into, you know, working on how would we solve this problem, uh, with technology.

Andrew: You know what I looked at, uh, Will’s LinkedIn profile and he had yes, um, private equity experience, but then he had this few month period where he was working on something called January partners. I think he said it was a private equity company. That’s different because it’s just looking to buy one company.

And this was just before he launched rent. Ready with you? Did, did that go anywhere? Was he just looking to buy a business to try to run it on his own?

Jonathan: Yeah. He, he comes from a super entre, entrepreneurial family. Um, so, uh, he is kind of a multi-generational, um, entrepreneur. So his family kind of started companies and he grew up around that mindset. And so he always wanted to operate a company in post kind of his PE uh, career stage just knew like, Hey, I want to get into helping either build or run a company and was just kind of doing that soul search.

Andrew: Got it. So just as he was trying to find a business to run, the three of you decided, you know, what, how about we just launch one? Okay.

Jonathan: Yeah.

Andrew: So you, by the way you say his family’s super entrepreneurial, I’m kind of intrigued. What kind of business is.

Jonathan: Um, so they kind of, uh, have always worked in, uh, furniture, cabinet manufacturing, um, for extended, uh, decades and, and generations. So, um, he always tells a story of kind of. Going to a plant with his grandfather every summer, that was kind of his summer activity. Uh, and really just kind of the core, like principles and values that his family instilled in him in terms of the lessons of understanding that, you know, every part of that company, whether you are sweeping floors, assembling cabinets, or running the company are all equally important.

Uh, and it’s important to value the contributions of all. And so, um, I. The bug bit him super early in terms of building a company and helping run and grow a company.

Andrew: All right. So when the three of you came up with the company, you were gonna launch and grow together, what’s the first step you took. Did you start talking to customers or did you sit down Jonathan and start coding a first version or what.

Jonathan: Yeah. We, we definitely spend a lot of time talking to customers and also honestly, just throwing spaghetti at the wall and that’s kind of what you have to do. Uh, when you’re starting a company, we were totally.

Andrew: mean by that?

Jonathan: Well, just. Testing different ideas. Um, so we always knew that the turn in and of itself was the core problem that we wanted to solve.

Um, but to build a recurring revenue model, like requires, you know, pretty expansive customer growth, um, and we’re kind of bootstrapping this company. So we just kind of tried all different types of services that we would provide to apartments, regardless of the fact that our true north was always gonna be the turn.

So we were doing everything from, uh, literally. Blowing out breezeways with, you know, leaf blows. And when I say we, I mean like us personally, uh, going out to apartments and using leaf blowers to blow Leafs out of, uh, every single doorway or pressure washing sidewalks at apartment communities, just to start to understand kind of what services would be an appropriate part of the platform that we wanted to build.

Um, as we kind. Started to focus more exclusively on the turnover process more specifically. Um, so it just took a lot of ideas. Um, and a lot of,

Andrew: Were you thinking. It a service company, like maybe your business would be to provide the full turnover, services, painting, et cetera. Is that what you thought?

Jonathan: yeah, initially, and I

Andrew: Wow. Okay.

Jonathan: You know, those ideas evolve over time. Um, but that was certainly the, the initial core focus, although we always

Andrew: Why Jonathan? You’re a software guy. You were, I don’t think you were project manager. What were you called? What was the title at, at, uh, Microsoft program manager?

Jonathan: program manager. Yep. Yep.

Andrew: manager. There you go. My memory is fairly good on it. Why would you go from being a program manager at a company that makes project management software and uses it?

The company that makes software go into services, instead of saying, you know what, I’m gonna solve this problem. Like we solve every problem with software. Software’s eating the world. There, there must be a logic. So I’m not putting it down. I’m trying to understand what you saw. What’s the value there.

Jonathan: I mean, I, I think for us, like when we did research in this industry around what was the core problem, I think. Three things kind of surfaced as the biggest problems that apartment communities faced. The management of the process in and of itself was a problem, but it was maybe the third, most important problem or pain point in this industry.

The two more important pain points were really. One finding those vendors to begin with that we’re actually performing these services and then the quality of work. And I’ve always look, we always wanted to build a technology platform to facilitate this, whether we are the core service provider or not, but I’ve always had, uh, an ethos that like at the end of the day, if the service that you are receiv.

By interacting with a piece of software is not good. And in this case, the product or the service that’s being received is the actual labor that’s going into turning these units over. If that’s not of high quality, it doesn’t matter how magical the software experience is, how convenient that software experience is.

That’s not a great customer experience. Um, and so that’s kind of why we took that path. Um, initially.

Andrew: You know, when you put it that way, logic makes sense. The customer’s not looking for best software. The company’s just looking to solve this problem, which is I need this turned around as fast as possible. And by giving them software, you’re almost giving them. The tools to get it done instead of just getting it done for them.

And I, I see the logic there. Why did you back away from that and shift to more of a software focus and then help match them with vendors?

Jonathan: Yeah. I mean, we, we view both parts as equally important. Um, and so what we have found is, you know, for us, it’s, it’s a big ask to. Reach out to an apartment community and say, Hey, trust all of our service providers. Like they may have a great relationship. And a lot of these, you know, I referenced earlier these like mom and pop relationships that people have in their local communities.

In some circumstances are decades long where, you know, apartment managers will move from one community to another, to another. And they have found a painter that they know that they trust. And so we really wanted to bridge those two worlds. Right. So if you have somebody you love, um, that you enjoy working with that you have a relationship with great, the software is still a very useful tool for you.

However, like the same problems. We were initially trying to solve around single points of failure. Like those are still issues, right? And so it’s not about one versus the other. It’s about choice and selection, which I think is key in a marketplace. So let’s say your mom and pop isn’t available, but you’ve got a tight timeline.

Most apartments have three to five days to get these units turned over. If they’re not available, you still gotta get that work done. We have a network of providers that can help kind of backfill that absence on your behalf.

Andrew: Okay. All right. So you started having conversations. You used the leaf blower, you started cleaning out personally, and then you, at what point did you say? I think we know what we need to code. We know what this business is.

Jonathan: It, it took some time. Um, I think, you know, for the first year or two, it was, I would say like a very bootstrapped, you know, shoestring and bubblegum system that I had built. That was really just a, a way of making sure that we were accounting for all work being done. But a lot of the challenge of what we were building is this is a multi-service highly sequenced.

Uh, Project management workflow. Right. And so a single change cascades downstream every time. And so we were very focused on doing things very manually for the first one or two years. Um, understanding, like what were the challenges of running that in a single market? And then as we expanded into new markets, okay.

What are the new challenges of now being in multiple markets? Um, and how does that impact things? Um, and so I would say it took us a good two years to really codify the, the business logic around what would ultimately build. There are so many kind of, uh, business process rules and exceptions that you.

Really take years to develop, to understand like, this is exactly what needs to be built in terms of like monitoring supply versus demand, um, or rules of engagement in terms of, uh, when to assign work, when to notify, uh, communities that, you know, work is either canceled or not canceled, or if there’s like a resource constraint issue. What are those rules of engagement? So it did take a good year or two for us to really codify that business logic before building like truly world class customer facing technology.

Andrew: You were doing it personally manually. What does that mean? Were you using you wouldn’t be using Excel. You’d do something a little bit more sophisticated than that. What did that mean? And then were you also concierge this thing where you took on the whole whiteboard internally for them,

Jonathan: Yeah, essentially.

Andrew: you did.

Jonathan: yeah, essentially, um, so will, and I spent a lot of time just kind of. Sort of running operations, uh, and being that concierge service. So that meant like setting up a call center style, uh, inbound, you know, order request system, um, where the two of us would pick up the phone early days, take an order.

Um, we built some very kind of simple, um, we had a very simple database structure that we had developed to kind of track you. Customers contractors services, prices, things of that nature, very simple web forms that we would use to kind of take that in and visualize that, uh, in a, a very kind of bootstrapped web application and then had very bootstrapped kind of, uh, Contractor applications in the form of a web app, um, that we would then dispatch that workout.

Um, but totally manual process, uh, between the two of us for the first, you know, one to two years just to really get this thing off the ground and understand, okay, how do you automate all of these things that are popping up every day that kind of create headaches for us and headaches for customer.

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You code this up now, which of the co-founders Jonathan has to go out and get, um, clients. And how did you get the first clients?

Jonathan: Yeah. I mean, I, I think when you’re young, everybody is in sales, um, and we would certainly rotate, uh, who would do that. And it, it was not uncommon for me to, you know, kind of be coding the, the platform we were building. In the morning going out and doing sales in the afternoon. So Ryan and I really kind of took that initial lead and, you know, early days, like we don’t have sophisticated sales backgrounds.

We did it the old school way. I mean, we would pick, you know, a major road in Charlotte, uh, that had a high density of apartments and we would just go door to door, knock on the door. Ask ’em about how they managed that process, what frustrations they had kind of introduce what we were doing as a company, um, and really just built this brick by brick.

Um, and it’s, it’s interesting, you

Andrew: believe that. I can,

Jonathan: it takes a lot of time,

Andrew: I can’t. Yeah, but.

Jonathan: It takes a lot of time, but what I think is really interesting about it and maybe unique to our industry, um, is this is a very, uh, kind of relationship driven industry. And so like in most, uh, major metros, there are really kind of. 10 to 15 major, uh, apartment management companies, right?

Where, uh, this larger management company will oversee call it 10 to 15 individual apartment sites. And so if you do really well at one site, word of mouth starts to really kind of spread. Uh, and then it becomes very easy to kind of sell up and then out. Um, and so that was a really unique phenomenon that we identified early on where.

That word of mouth groundswell kind of helped us accelerate that growth, despite the fact that we were just literally knocking on doors and, and, uh, just going to site to site, to site,

Andrew: I imagine in those situations that it would’ve helped for you to say, I used to work at Microsoft, right?

Jonathan: it? It did. Yeah. And, you know, I think more than anything. Engaging in that sales process helped me and helps our business understand what customers really cared about and what needed to be built. Um, but I think it, it certainly was, you know, it did open a lot of doors in terms of, okay, maybe, maybe this company is on to something I can take this company seriously.

Um, they really are trying to do something unique, different, and innovative. Um, but I think again, that goes both ways, like, uh, I think for any founder, Doing what we did in terms of being the only three running every function is critical, right? Like you cannot learn unless you are talking to customers every day, both prospective customers, current customers, former customers, that’s critical to understand the mistakes.

You’re making the things you’re doing well, double down on the things you’re doing well and kind of fix the things that aren’t going so well for your customers.

Andrew: Like, what, what did you learn from those experiences? What did you learn from them that you didn’t know before?

Jonathan: Yeah. I mean, I think, uh, communication is key. Uh, and I think over communication is one of those, uh, key pieces that, uh, you know, we, we learn some hard lessons for, so like a prime example might be, you know, we show up to do work, uh, for a unit that we’re turning over and maybe the maintenance manager tells you, Hey, we didn’t get the keys for that unit yet.

I don’t think the resident moved out. So you don’t need to do the. That’s a prime example. So you go, okay, we’ll cancel that service. Let us know when you want it back. But again, there’s this Bermuda triangle of communication on site where maybe the maintenance manager said that, but maybe the front office, leasing agents, uh, and community managers, they don’t know that.

And so. If the maintenance manager doesn’t call to let you know that, Hey, they did move out, let’s get that back on the schedule, then it totally falls through the cracks. Um, and that’s a, a key example where you think, Hey, I’m doing exactly what the customer asked me to do. Uh, and then you’ve let you know another persona that interacts with your company down by not communicating, Hey, maintenance manager, let us know that this was, you know, canceled or rescheduled because the resident hasn’t moved out.

So that kind of informs like, Hey. You know, the technology needs to show that it needs to say, like this was, you know, canceled by, you know, this person for this reason on this date, we need to remind them that, Hey, you need to get this back on the schedule or you’re gonna miss it. We, we can’t, you know, we’re not mind readers.

We don’t know when that person is gonna move out. Um, and so we need to get that back on the schedule to keep you on track. So, you know, little examples like that I think are, are key to. What we’ve learned and therefore what we’ve built to kind of help that process and kind of, uh, reduce that Bermuda triangle.

Cause I think that’s one of the biggest problems on site.

Andrew: I saw that, you know what else I saw on the site for, um, screenshots of the app. You have an automated turn board. That not only looks like the whiteboard that I imagine you saw when you went into their offices, but on your site, you show it’s side by side with a slider that shows how you can slide from one to the other.

Like you are doing everything to tell them this thing that you’re familiar with. It’s okay. We recreated the same thing on our site. You have no new paradigms to understand it’s all the same.

Jonathan: Yeah, absolutely. And you know, I think one of the things that we have not done a great job of. That we sh we should absolutely improve on is really making sure that they also understand like what the application experience is for the service providers. Right. Cause that’s another key piece of this. Like instead of transacting everything over text message or email, like we’re codifying a, a communication stream between those two.

Right? So a classic example of that turn board is when a contractor is using their application. And they’ve received that work order. And they clock in that turn board is changing in real time for our customers through the software. So they see somebody clock in as a contractor is going through and doing work and they notice, Hey, there’s damage in this unit.

Um, you talked about kind of leaving apartments and rough shape that happens all the time. Maybe there’s, you know, a hole on the wall, uh, taking a picture of that, uh, and having that. Our customers through that turn board with a push notification, an example of, you know, the picture of that damage, having that documented for them on their turn board, uh, and perpetuity, like those are really valuable things that help those two sides communicate with one another.

So we’ve really built this system that allows like full transparency and communication workflows between both the supply side and the demand side of our business.

Andrew: Jonathan earlier, I was interrupting you. And you talked about how you got your first customers, because I was surprised. I thought your answer was going to be, Ryan is how we got our first customers. He was in the business. He. Sold, right. Didn’t he buy and sell BU buildings and research them? I think he was doing a lot of research also on, on buildings.

I thought it was gonna be a natural. Ryan went back to the people that he met and said, Hey, you trust me. I know the problem I’m in this space. Can I show you this thing? And let me introduce you to this whiz kid, Jonathan, who can put the whole thing together for us because he worked on Microsoft. Boom deal closed pat on the back.

Let’s go out for a drink. Why wasn’t, why wasn’t that the approach.

Jonathan: I, you know, I think his reputation certainly helped . Uh, and I, I certainly don’t wanna underplay that. I think Y you know, Early days. The, the biggest, uh, the biggest concern a customer would have when we kind of pitched what we were doing was how can you be great at all of these things that makes sense?

Like it’s hard enough to find a great apartment painter, how can you be great at painting, cleaning carpet, cleaning, resurfacing, and maintenance. And it was a difficult question to answer initially, because we didn’t have all of the components in place to really validate and say like, Hey, we’ve got all of this data.

Like we are because a lot of this is data driven, right? Like we understand, you know, what the capacity of a contractor is because we have them interact with software where they display what their availability is through a calendaring system. So they say, Hey, I’m available to take a job on this day. This day, this day, we keep track of.

Like what the quality of that service delivery is where we will actually evaluate post service being delivered. Was that a good job? Was that a bad job? Was that a mediocre job? We keep track of customer complaints. So if there is an issue and we are required to go back and fix that particular issue, we keep track of that.

All of that data starts to add up over time where the answer to that question of how are you good at everything? Is. Really the size of the network of providers that we’ve built, the data that we have captured around those providers makes it super powerful. So to answer the question like initially, like Ryan comes with this idea and everybody goes, yeah, great idea makes total sense.

Prove it. Uh, and it was that proving it part. I think that

Andrew: even the bus, even the buildings that he worked with, even them.

Jonathan: even, even the buildings he worked with. Yeah. Um, because again, like I, and I think the reason for that is nobody’s doing it and there’s a reason nobody’s doing it because it’s hard as hell to, to do this. Um, which is why there really isn’t a

Andrew: Because you were promising, you were promising software to a business that wasn’t necessarily looking for software for this. And you were promising services to someone who was skeptical about services anyway. And can you make the two of them work? Do you think that it would’ve been better to come in and say, we’re offering just software.

Look, we’re not changing any things you do. We’re just gonna make it more efficient by putting your whiteboard on. Computer will char maybe we’ll make the first couple of seats for free so that you can manage it. And then every time you add new people on it, it’ll be, I don’t know, price per seat. Why not go that approach to make it easier to just say the thing that you are familiar with is now digitized and better.

Jonathan: Yeah. I mean, hindsight’s always 20, 20.

Andrew: Do you think that would’ve been better? Like in hindsight, would it have been better to just stick with software?

Jonathan: like, I think part of maybe, I, I mean, I do think. Again, the lessons learned of actually running those business lines and providing that service, I think informed the creation of a better software solution for our customers and for the contractors that interact with those customers. I think the other, you know, thing that you’re kind of hinting at, and to me is like really more of a business model decision is like, how do you monetize this business?

Right. And so. You know, it’s an, it’s an interesting dynamic. So the buyer persona that we typically sell to is on site. So maintenance manager, community manager, this is actually one of the only expenses that is really within their purview to make the decision and approve. So. They are hypersensitive that anything that is cost additive.

And so if we had approached this as a software, as a service model, charge a, a monthly subscription per seat, per community, whatever it might be, I think we would’ve met a lot of friction in terms of who we were selling to. Like that is a buying decision that is further up the chain. And so for us, like, Our thought process was let’s let’s bake the economics into the transaction, right.

That’s where you can pull margin from is in that transaction because a fraction of a point or two on either side of that equation in a transaction, uh, Is something that onsite teams can approve and something that, you know, again, as long as you are price competitive, like most communities don’t see that as cost additive.

And so we were very sensitive about trying not to add cost into this equation. Um, I think over time as we have built our reputation, uh, as we now have actual sales teams, um, being able to sell at a level. This could be monetized through subscription suddenly becomes a possibility that just didn’t exist for us in the early days.

Andrew: So maybe going forward, that’s the way you might be operating in some cities as you expand.

Jonathan: Yeah. Potentially. And again, I think there’s really room for both models. Like it’s the software’s great. You can put your contractors on it. Like. If you’re struggling to find that look, we’ve got a marketplace, we’ve got the data around, who is a good provider, who is not within your local community. Let us help connect you to that person.

Andrew: Like an Angie’s list for the business Z that work with you in addition to an Asana that works customized to them and a team of people who help bridge the gap. And so, by the way, I’m on your site. And I see that the service providers on the site, like the cleaning woman and the maintenance guy, they have rent ready.

T-shirts on, they’re not employees of rent ready. Right. They’re just, that’s just a way for you to show that we have people. But it’s indivi, it’s different companies that you partner up with, right.

Jonathan: Yeah, absolutely. Um, so it could be a 10 99 individual, um, or it could be a

Andrew: That work that are contractors of yours, or, I mean, these aren’t people who come in with your name on their backs, is it?

Jonathan: No, no, that, I mean, that’s promotional material obviously. And

Andrew: I thought so.

Jonathan: let, let folks buy those. It’s interesting. Like a lot of them want to buy that type of merchandise. So we make that an option for them if they wanna purchase that. Um, but we work with. Some 10 99 individual contractors. Uh, and we work with some established companies and some of those companies can be large.

Um, they can be kind of the dominant player in a particular market. You know, run 10 to 20 different crews of that particular service line. And for them, this is really about business expansion, right? Like we have tools for them that makes managing their business operations easier. We help them with client acquisition.

So we have a bigger sales team. We have a marketing engine. We can help with that. We can help accelerate payment timing for them. Um, so we pay, you know, the supply side of our business on a weekly basis. Customers are paying their vendors normally on kind of, you know, traditional net 30, 60 day terms. If we can condense that payment timeframe, that’s a huge value add, um, to a business, to help cash flow, to help them grow.

Um, and so we view it as kind of being able to help individuals both, uh, if they just want to be an individual or if they want to actually start a business on the platform or existing companies as well.

Andrew: Got it. So if somebody wants to be a handyman or a painter, they’ve got some experience. They need clients, they want software to manage the whole experience. You’ve got it. And you also pay them quickly and you introduce ’em to businesses. They wouldn’t have had access to before. All right. I’m with you.

Jonathan: it’s a super cool thing to watch too. Like, I mean, we’ve had a number of examples where we bring somebody on who is a painter as an example, and they realize that over time, like, Hey, if I hire a helper, I can do twice as much work. And then it’s, if I hire three helpers, suddenly I can manage those three helpers and start my business.

And we’ve taken people from, you know, just being an individual painter to, you know, small size companies that are making, you know, a million of revenue for themselves in a single year, uh, and like totally changing their economic outlook, um, which is, I think just a really powerful story.

Andrew: You know, I’m constantly looking for what are my takeaways from this? One of them I thought was that you, you thought let’s bring project management software to another business. It’s not the. Landed on it, but I feel like there’s a lot to be said there. What other businesses, especially offline businesses are there that can use project management software that is specialized to them.

Like we’re in the tech space and it’s not unusual to see somebody say, I just launched a whole new project management software on notion and they could expect people to buy their project manage. You know, widget thing off of gum road and then figure out how to install it on notion for their cert, for their customers.

That’s not the way that most people work. They want something that’s just customized to them. So that truthfully, that’s still a takeaway of mine. The other one though, is what can you do? That’s a combination. I keep thinking about how Patrick from profit. Well, uh, when he sold his company came back on here and he said, look, the future for this business is profit.

Well helps, uh, companies that sell subscriptions. Reduce their churn because they come back to clients and they say your credit card expired. Do you wanna update it? And so on. So they reduce churn, but he goes, look, businesses don’t want software that teaches them stuff. They. Software that just does the whole thing for them.

And that’s what your business does. And I think what other businesses are there, where yes, you’re offering the software, but in reality, it’s the software plus services and the services are done by other companies and 10 90 nines. And we’ll get the thing done for you. Um, that’s such an interesting model to, to learn from, and then bring into other industries, right.

Jonathan: Yeah, I mean, in, in our world, like we view this, uh, in terms of like verticals and this problem exists in every real estate vertical, interestingly enough, like. Not tailor made like exactly. Like we can just take what we’ve built and plop it on another vertical. But if you think about commercial real estate, right?

Commercial real estate flips too, they go through the same turnover process. Those projects are obviously way more extensive cuz they usually require rebranding, uh, and is usually a higher quality product

Andrew: do full build

Jonathan: full build outs. That is a prime example of the application of this style of business in terms of software plus services, uh, into that vertical, uh, short term rentals, right?

Like Airbnb, you see a lot of smaller companies kind of popping up that are servicing really just kind of the clean component of that. But there are often times where there’s more than just a clean, that is part of a short term turnover. Uh, student housing is another great example. Uh, a crazy example where that same process happens, but in a mass Exodus, right?

Think like 4,000 students leaving all at one time, they’ve got two weeks to get ready before summer classes start. Um, so that’s another great example as well. Like single family rentals, um, is another great example. Um, so like, I, I agree with you. I think this is applicable across multiple verticals and those are just kind of some of the verticals that we have thought about how can we take this business model and apply it there?

Andrew: Interesting approach. All right, I’ll talk about my second sponsor. It’s sendin blue. Jonathan. I used to tell people that sendin blue is email marketing software that starts out inexpensive, and then it stays inexpensive. Unlike others that really Jack up the price. I feel like that message resonates now.

Like never. I was gonna say never before, but. Let’s not exaggerate. It resonates now more than it did a year ago when send blue signed up right now that the economy’s taking a hit, people are starting to worry. They think, you know what? I’m not just gonna sign up for the first flashy email provider that comes around.

I’m gonna think it through what is it gonna cost me? The least amount today and also keep my business running lean. So I don’t have a big fixed cost in the future and send, and blue does that. And if you’re considering it, you should know I’ve been calling them an email marketing company. They do so much more.

Yes, they will target your email for you. And they’ll even allow you to target ads on Facebook based on what people have done. Uh, if they open their email, But they also do SMS marketing. They do chat for you. They’ll create landing pages. They have the email sign up forms. The whole suite starts off inexpensive, stays inexpensive.

And if you use my URL, it’ll be even less expensive than it is for others, but super powerful. They raised a ton of money so that they could do this for you. And they’ve got. Customers, uh, who are loving this service, including many who have signed up because of my interviews here, here we go. That’s 300,000 users right now.

If you wanna get started with them, go to send in blue.com/mixergy that send in blue.com/mixergy. I feel like that’s a company that’s gonna do really well in a downturn. Right. All right. Do you think your, do you think your company will do well in a downturn? Like, what do you think happens with rent ready?

When the economy goes down?

Jonathan: Yeah, it’s, it’s an interesting question. Um, for us, like we think our company actually. Improves performance in a recessionary environment. And the reason for that is, and as particularly like with this housing crunch that we see right starts with, uh, you know, the housing market in and of itself, but that trickles down into multi-family whereas housing prices increase a lot of times you see people down.

And apartment tiers, um, throughout time, or are forced to move as a result of the cost of rent increase. And obviously like on a personal level, you hate that. Um, for our business, that’s a positive where in recessionary environments, that that number I quoted of kind of 50% turnover on an annual basis can go upwards of 60, 65%.

Um, and we kind of started this business. Uh, you. Not at the height of the, you know, recovery from the 2008 recession, but somewhere in between. And we’ve actually seen that turnover rate decrease over time. And so our, you know, estimation and kind of projections or that as we enter a recessionary environment, again, we will see turnover increase over time.

Andrew: Okay. I, I can see that. I also notice, um, That you have big opportunities in expanding to other cities. I thought rent ready would just be a natural for nationwide service. Assume as I assume that you were just working the phones and allowing people to add service providers to add themselves to your, to your platform, but that’s not how you work it.

You’re still on your website. I think just announcing that. What was it? Jacksonville, Florida is now the latest edition. Why do you do it that way? And do you plan in a, in the future to just go nationwide?

Jonathan: Yeah. I mean, our, our ultimate goal is to be nationwide a hundred percent. Um, we have taken a, a more conservative approach because again, we feel the value that we provide to customers is. Again, not just the software, but access to a network of providers. And so for us, it takes time to really establish what that network of providers in a market will be.

So that’s an extensive like month plus long research process, like vetting, uh, establishing that group into the platform so that they can become schedulable in our software. So that’s why we’ve taken a market by market approach. Now, obviously to your point, if you remove that kind of plus services component to the business, the software is immediately applicable nationwide.

Um, and so kind of understanding as our business changes and evolves, like what the right formula between those two is because. In our history, clients have loved that plus services model where we do have that network of providers available to them, um, kind of changes the equation. So it’s something that we’re, we’re constantly evaluating.

Andrew: Before we got started. I asked you a little bit about how you work when you’re not working. And you told me about how your serial hobbyist and the latest is making pizza. Talk a little bit about how you. I feel like that’s very revealing about the way you work and think.

Jonathan: Yeah. Yeah. Uh, I mean, I’m a data guy, uh, and I, I love building data models and tools obviously. And, you know, I started with a super simple pizza recipe, you know, like three, four steps. Wasn’t super happy with the results started to kind of find like, oh, there are all these different apps, uh, pizza calculator, apps that help you build dough some on websites, some in apps, but none of them had everything that I wanted or needed.

And I started to do like very extensive research around just the simplest things. Like what happens to yeast over time. How does room temperature, refrigerator, temperature, humidity, timing, impact what yeast does to the science of dough. And before, you know, it I’ve spent like, you know, the last six weekends building this super complicated, uh, Excel model that allows you to kind of just put in exactly what you want.

Like, I want four pizzas. I want ’em 12 inches. It’s this style dough, this type of yeast. Uh I’m. I need it by this time, gimme the perfect recipe. And then it just spits out this perfect recipe. Um, and I just kind of iterated on that until I kind of built what I thought as maybe the best pizza calculator you can find in the world.

So

Andrew: That’s amazing. And you put that into Excel, just, just to feed yourself, family and friends.

Jonathan: that’s right. Yeah. And it gets abused frequently, but I, I would not be surprised if over the, the course of 2021, I made over 400 pizzas.

Andrew: Wow. You know what I thought it would be so much easier. I was thinking of getting an outdoor pizza oven, look at how beautiful it is out here. I don’t wanna make big food for people who come over, but I wanna have them come over on a regular basis and give them something special. A friend of mine is a chef.

We went over to his house and he got one of these outdoor fire pizza ovens. And I was watching him. The dude did not get to sit down for a minute. He just kept monitoring this pizza. And I said, there’s no way I’m doing that. I need something that allows me to enjoy time with my friends. Are you doing that too?

Yeah.

Jonathan: Oh, yeah. It’s, it’s not relaxing. So I always love when my wife invites friends over and suggests we make pizza, cuz it’s, it just ends up being like a constant back and forth between stretch the dough top the pizza, run out, cook it, bring it back in, knock it to eat a piece. Um, It’s, uh, it’s chaotic, but I, I love that.

I, I thrive in that chaos and, uh, love just the iterative improvements, uh, that you can make over time, um, that nobody but you notices, but that’s all that matters. Right.

Andrew: You know, I never liked hobbies. I never wanted hobbies. And then I discovered I need a place to get away from work, to get away from life and to just learn something brand new that I could then bring back. And one of the things that I learned recently is. That I work really well with remote tutors. So I’ve talked about it before for chess.

I have a remote tutor. I just get up at six o’clock. We go over the games that I played for chess, or we go over openings in every variation possible and I practice it there with them. And there’s something about knowing that at the end of the week, actually at this case, it’s Wednesday. So midweek, I have a session with my tutor.

I better prepare properly and show up fully. Willing to take advantage of the fact that I woke up at six o’clock so that I can be there with them. That’s really helpful. You ever do anything like that? Have you discovered other unlocks like that, that help you take, take your hobbies to the next level?

And frankly, I should have been doing this all along for work too. I should have just paid somebody to help improve the way that I do these interviews. I did that for a while, but I should have. Thought about like, is there someone who’s a technician, I pay them and we just go over how I do the remote setup, go over how I do my research.

Like all that stuff. Just a little bit of money for tutors is phenomenal. Anyway, do you have any unlocks like that,

Jonathan: I, I think that, yeah, building a routine key, uh, for me, it’s like routines plus iteration and like always having a control iterating on that control. So I talked about pizza. I actually applied that same level of rigor to learning how to master at home espresso, uh, and same kind of concepts. Right?

Like what type of water are you using? Like the weight of the water, the. Pressure of tamping, uh, like in the porta filter, like timing versus weight on the way out. And so like to me, like same thing, like I look forward every morning to spending 15 minutes making two or three, and then. Taking notes and like always documenting what did I do?

What did I change? How do I compare it to like what I did versus what I changed and just constantly doing that every single day. So like, I fully agree, like dedicating the time striving for like continual improvement, but I think documenting it is the other big piece and like versioning that so that you always know like, Hey, did I make progress?

Here’s where I was benchmarks yesterday. You know, here are my tasting notes. Here’s what my wife thought. Uh, those kind of things I think are, are crucial to me in terms of like building skills and new things.

Andrew: So if I were to, for example, start, I don’t know, running. I, well, I have been running, but if I want to take it up a notch, I might now say, is there someone who could do tutoring remotely or frankly in person? I like remote because it means it’s on my schedule and I get consistency. You might also say, Andrew, can you version that and document try different shoes and then see, how did it impact you try a different food each night before your morning run and see how that impacts things.

Try different running pants, see how that right. And you wouldn’t just go for the same run two days in a row without at least tweaking one thing, and then documenting the result.

Jonathan: Yeah, absolutely. And just choose choosing a baseline metric. Right? What’s what’s the metric like easy with espresso, pizzas, taste flavor. What, what do people like, like for running, it could

Andrew: It’s harder, actually in many ways, it is easier with, with pizza and espresso, but it’s much harder to put towards the differences between version one and version two. Right.

Jonathan: Yeah. That’s that’s

Andrew: with work, it is a lot easier. With work. I can tell, I, I used to go with a tutor every week and go over my, uh, my interview transcripts.

And we could tell what the difference was. Did the person open up if I tried it, this question that way, did the person close up? If I tried a different way, were they angry at the end of the inter anyway, all that stuff was incredibly, incredibly helpful. All right. I dig this stuff. What’s the next hobby do you think?

Jonathan: Oh, I, yeah, I don’t know. Um, I think pasta making is probably probably the next, uh, so, you know, tangentially related to pizza, you least thematically. So, um, I could see myself getting really into that. So I, I like hobbies that, that give

Andrew: tutoring company. Yes. And it seems like some hobbies that give you something that you could share with other people I’ve noticed about you. Like. There’s something about an espresso that other people really want to come in on. If it’s a good espresso, there’s obviously something about pizza.

You’re not making pizza just for yourself, ditto and pasta. I’d love it. I wonder if there’s a good, a good platform out there that someone could introduce me to for finding tutors. Like if I were going to get myself an espresso maker, I might try it a little bit on my own, but imagine if I could find that Konoe, who would work with.

Every week to go over what I’ve learned. Oh, that’d be good. Or if I did get a pizza oven, I wanna find that person, ideally, just like my buddy Alexander, over at lemon, he finds someone in a part of the world where prices are lower. Ideally someone may be in a part of Italy or part of the world where prices are less expensive.

Imagine if you could get a tutor that comes in with you every time you cook and says, Jonathan, I think the change you should be making is this. I’d love to find a platform for tutors. I still haven’t found it. Maybe I should be creating it. I just don’t know where the audience would be for that.

Jonathan: you go. It sounds like a marketplace business in the making.

Andrew: Oh, it is. Oh, by the way. All right. This is kind of the toughest question. I should have sprinkled it in because I’ve learned that if I ask the toughest one, it’s not even like that tough. It, it could rub you the wrong way, dude. There’s another company that also is called rent. Ready? That also has a co-founder named named Ryan and they popped up like a couple years after you and they’re servicing the same market.

How could that be? Yeah.

Jonathan: Yeah, I, I don’t know, uh, to us it’s a distraction. Like obviously we could, we could pursue something there. Um, I think that the coincidence of the naming. Uh, is not lost on us, but the, uh, coincidence of the, uh, same co-founder name is, is certainly bizarre. Um, I, you know, I think it’s interesting, like when we think about competition in general, like one of the things we always ask ourselves is why, why aren’t there nationally focused competitors, right?

Like some, you could probably try this in a single city. I think the conclusion, although not like the most sophisticated conclusion is just, Hey, what we’re doing is just hard as shit. Like this has not been an easy business to build. Uh, and so the years of like, you know, development and research and process that we’ve established and the lessons that we’ve learned can’t be replicated overnight.

Um, and so that helps us sleep easy at.

Andrew: I do feel like. Cease and desist should have been issued at some point in the past. It might be harder now, but they’re even misspelling the, the name ready. They clearly, would’ve tried to get rent ready as a domain and Googled and discovered that there was someone out there I imagine. I don’t know. Um, alright.

But I could understand that the duplication of the business is a lot harder than it seemed when I first found out about your company and the biggest challenge it seems to me is. Yes, it’s a client, but it seems like the biggest challenge is to get the service professionals in there in a way that’s, that’s dependable for your clients, right?

You want to go into a restaurant and know the meal that you’re expecting and know that next time it’s gonna be as good as it was last time they wanna hire a maintenance technician from your platform and know that the person’s gonna do a good job and not just have some random person off the street, come in and hope that it does well.

And just be happy that the software is nice.

Jonathan: Yeah, it it’s a key distinction in our business. We have two customers. It’s not just the apartments that matter. If the experience isn’t fantastic for the service provider, this doesn’t work, right. It’s a chicken egg problem. And that’s why we focus our attention to both sides equally. Like, you know, we don’t just have, you know, one. We have two, like, and we prioritize development of features in both of those equally because you, you make one small change, like in, in the contractor or service provider. That will have an impact on the client app and vice versa. Um, and so it is paramount. Like, I mean, I think if you evaluate most marketplace companies, like the two key lessons or takeaways are like, you have to choose and prioritize one of those two audiences as your primary focus.

And for us, it’s always been the service provider. And two, you have to make that, you know, you have to make the platform a great platform to work on. Um, because otherwise you’ll never have customers.

Andrew: right. The website is rentre.com. Jonathan, thanks so much for being on.

Jonathan: Absolutely. It was a pleasure. Thank you, Andrew.

Andrew: You bet. Thanks. Bye everyone.

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