Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy, where I interview entrepreneurs about how they built their businesses. These businesses are changing the way that people live their lives. But here’s one part of our lives that hasn’t changed much, not since Craigslist was introduced years ago — renting apartments.
I’ve got to be honest with you. For most of my life until my wife and I moved here to San Francisco, for most of my life, the apartments I lived in looked pretty much the same — brand new enough furniture, brand new kitchen, brand new bathroom, same layout almost. Different amenities. Almost all of them would have an office that you could go in and work from. Some would have gyms.
But outside of those small little differences, they were pretty much the freaking same, and the process for getting them was the same too. I’d have to go on Craigslist. I’d have to go and schedule an appointment with the rental person. I’d have to take a walkthrough. I’d have to see what they were willing to show me and what they weren’t. When meanwhile, you want to buy a car, buy a car, own a car, you basically see it online. You do nothing but go in and inspect it. When I wanted to get our car, I saw everything I needed online. I had a full understanding of it. Then I took a drive into Oakland to pick up the one that I liked, super freaking simple.
But renting an apartment for $2,000 that is exactly the same from Washington, D.C. to Manhattan to Southern California, all exactly the same, frustrating. Well, today’s guest saw a similar experience and said, “I think I can improve it.” It’s a marketplace, which is tough. It’s dealing with landlords, which really are a breed to themselves, and they aren’t especially eager to try new software, new things. He found a way to do it and I invited him here to talk about how he did it and how the company is growing. His name is Anthemos Georgiades. How’d I do with the last name?
Anthemos: That was it. Perfect, Andrew.
Andrew: You know what, Anthemos? When I just looked at the spelling of the name, I was able to pronounce your name no problem. But as we were talking, I wrote it out phonetically, now I’m going through every — Anthemos Georgiades. He is the cofounder of Zumper. It’s a house and apartment rental platform.
We’re going to talk about how he built this business thanks to two sponsors. The first will help you get your site, your logo, your anything designed beautifully. I’ve got to tell you about my latest experience with them. It’s still ongoing. It’s called DesignCrowd. The second is a company that will help you hire your next great developer. For us, we’re going to, I think, hire a CFO through them, but I’ll tell you more about them later. For now, they’re called Toptal. But let’s get into the interview. Anthemos, good to have you here.
Anthemos: Yeah, good to be here. Thanks for having me.
Andrew: So you’re a guy who actually had this idea going back when you were in school. What was the issue that made you come up with this idea?
Anthemos: Yeah. It was the classic undergrad problem where you lived with your parents or in university accommodation for a long time, and then you hit 20, your college kicks you out and tells you to fend for yourself in your second year. It’s the first time you’re in the big, bad world and you have to actually go and find your own apartment to rent. I think the key insight for me was that search was a pain, as you said at the beginning. Search sucked. This was in the U.K. It’s no different in the U.S.
Actually, the core problem is what happened after search, which was for me getting a property manager could trade my offer against a bunch of other people. There was no transparency. They got the price to be bid up like another 20% and at the end of the process finding out the people we were bidding up against were our friends, but this property manager had all the information and was trading everyone off against each other. It’s been a key a problem.
The biggest expense of your life as a renter, how can it be that it’s, like you said, there’s no transparent mechanism like buying a car or ordering an Uber now, where you can just tap and actually transact in a very transparent way. This was a problem I saw 10 years ago, and 5 years ago I actually thought this was the time to solve it.
Andrew: Why didn’t you do anything . . . well, I guess you were an undergrad, so you couldn’t really devote the time to it. Is that what it was?
Anthemos: Yeah. I think the biggest thing for me was the advent of my native mobile applications.
Andrew: Why? Why does native change it?
Anthemos: Yeah. If you think about real estate, some of the big players in the space like Zillow on the for sale side, it’s great that they have mobile apps, but you’re still transacting on paper in an old-school way. I think with Zumper it was exciting because the transactions really happen in the field.
Renters are applying for apartments on refrigerators and on boards and open houses, and this is where mobile can really change the game and build a real transaction engine on the site in real time. So with the advent of mobile and 2011 when apps on Android and iOS were becoming very common, I think that’s where a no-brainer that this was the time to do it.
Andrew: You’re saying that if you had to go back in time, be older, have the time to do it, have the money, you couldn’t have really built this business if it was desktop, laptop-based because real estate brokers wouldn’t have carried laptops with them. People wouldn’t have been able to go back after looking at an apartment to their homes and apply. It just adds too much friction, is that right?
Anthemos: I think you’re right. I think we could have pulled it off. You could have prepared a decent response in mobile web app instead, but I think the advent of native, it’s proven across various verticals to be a high converter like any web product. I think now was the occasion. I had personal reasons why I wasn’t able to start a company back then.
Andrew: You went to the Boston Consulting Group, is that right? Why is a guy that has all this entrepreneurial spirit in him, why did you say, “I’m going to take a traditional job?”
Anthemos: You’re asking why I sold out.
Andrew: I actually don’t think it’s sold out. I believe that starting out in management consulting and related business gives you an overview of industries and allows you to think more maturely than if you jump right into entrepreneurship, which is what I did. I’m not putting it down at all. I do want to understand why, what drove you to that?
Anthemos: I agree. I was like a classics major. I studied like Latin and Greek. I was no shoe-in for an entrepreneur. I had the drive where I saw this problem I was desperate to fix, but I didn’t feel like I had the tools to actually go and do it at the beginning. BCG for me was like an ass kicking for three years in bottom-up in economics, like how do big companies run themselves, how do you build margins, how do you build teams, how do you build culture. I worked, as I’m sure you did and many of your viewers have worked in these industries where you work 20 hours a day for three years, you really get your ass kicked.
Andrew: You were working 20-hour days?
Anthemos: Pretty much, yeah.
Andrew: More so than you do now at Zumper.
Anthemos: Yeah. It’s funny. Zumper, I think there’s more stress and anxiety in terms of like you care so much. I think we’re more efficient at Zumper in how we build, and we don’t have a bazillion meetings, whereas at BCG, it’s client services, you’re consulting the CEOs of really big companies. Yet, you’re having meetings at 3:00 a.m. to edit the footnotes of PowerPoint. It’s an amazing training, but I think a lot of people that go through that, as I think you know too, take that and apply it to getting shit done elsewhere.
Andrew: Other than the fact that they really got you to work hard and push yourself to the limit, what’s one thing you learned about running a business that you didn’t know in school, that’s helping you now run your own company? Take me through one thing that you learned so I don’t have to go through 20-hour days to understand it.
Anthemos: Yeah. There’s a couple of things. I think from the downside of consulting, like what I learned by looking at some big clients was how crazy inefficient they were. There were some clients we had where you’d walk around and they’d have 20,000 people at an HQ. But really, if they had half the number of people and they were really focused, then they would have actually been more productive.
I think the lesson I learned at BCG is like focus in organizations. It’s such a boring term, but it is so critical because the bigger an organization will get, the more it can become unfocused because there’s so many different crazy ideas you can do. Actually, I think the best clients we had at BCG were the most focused. There were CEOs who opened meetings by saying, “Hey, guys, there are 16 things our competitors are doing, but there’s one or two things excellent they’re doing and that’s what we’re going to do.” I think they were the best CEOs, and I think they’re the best CEOs at tech as well.
Andrew: I see. The benefit of being at Boston Consulting Group is that you were taken into their business, you see their problems, they’re very open with you about it because that’s why they hired you, right? They trust you. They show you their numbers. They show you their people, you get to analyze them. They take your opinion seriously so you’re forced to think clearly about what you think this business should do, much more so than a business case study than they have in business classes.
You went through all that, you got it, at some point you said, “You know what? This idea I had year ago, I think it’s time for me to take it on now as a business.” What drove you? What was that motivating moment that made you say, “Let’s become an entrepreneur today?”
Anthemos: So I’d moved to the U.S. I went to business school on the East Coast, and I’d had the same experience through renting. I think there was just a moment where I realized it had been five or six years since I’d originally had the idea. I think I assumed at some point it would be sold. Someone’s going to see the world as I think I see it and this inevitable conclusion that if you built the apartment rental industry bottom up today, it would look a bit like a college application industry, where there’s like a common app and it applies to the vast majority of colleges.
In the same way, if you and I built the apartment rental industry today, there would be a common app. It would apply to every single apartment. Once you were pre-qualified, you knew that you could apply for these and if you didn’t quite have the income to apply for these, it’s so obvious and you could get towards the concept of a book button.
So the honest answer was during business school while my friends were taking hedge fund jobs, I just thought I’ll be so mad if someone else pulled this idea off because I have such a clear idea of how it should it look. That was it. It was basically this belief, delusional or not, that I could see where the industry would be in 10 years and I wanted to go and like achieve it in 5 to 6 years. So it just became impossible to continue any other job out of business school. So I kind of ignore—
Andrew: That’s kind of a big risk, though. You’ve paid for business school. One of the big things that you’re paying tens of thousands of dollars for is to get that diploma and then the job options that you get from that. You were just trashing all that and saying, “Screw it. I’m going to go start a business.”
Anthemos: Yeah. My parents and I had that discussion during business school. It was hard. My program was a two-year program at HBS and my peers—
Andrew: Harvard Business School.
Anthemos: Harvard Business School.
Andrew: I see. Wow. So you’re really giving up opportunities. Did you quit or pause your school?
Anthemos: I finished the job. In my second year, I stacked all of my classes to the first two days of the week and raised the first $1 million for Zumper during my second year.
Andrew: Did it help you to be a BCG, Boston Consulting Group grad or alumni I guess it what they call them and at the same time be a Harvard Business School student? Did that help you raise money, or was that insignificant?
Anthemos: I think it was mostly insignificant to being a successful entrepreneur.
Andrew: How did you raise $1 million with nothing but an idea?
Anthemos: I think that’s where it comes in. I think it’s insignificant to be like a great CEO. I think you can have the DNA to be a resilient, great CEO. I think where business school did help, where BCG did help is when you go in to these VCs for the first time, we’ve now raised $39 million in total. To begin with, we raised one. We raised one on like six months on really basic data from some tests we’d done in San Francisco.
That’s where having a network really helped, because some of the MBAs had gone into the Valley were working at Kleiner or Andreessen, two of the first investors we had in the company. So the MBA really helped me get warm intros to these funds, which is the best way in. But actually in the five years since, I learned a ton of at BCG and HBS, which really a lot of the best entrepreneurs didn’t have either of those brands or any formal training. They just had the resilience and the grind—
Andrew: Who did you raise money from? I’m looking right now on AngelList—CrunchFund, that’s the TechCrunch guy who I don’t think is running it anymore, Andreessen Horowitz, Kleiner Perkins, Greylock Partners, just some of the people who are investing in the business. So you raised you said $1.7 million, at least that’s what they’re saying here on the site?
Andrew: It’s just you going door to door.
Andrew: Did you have any connections to them other than the ones you made through school?
Anthemos: Just kind of alums. We started pitching on the East Coast because I was based in Boston to begin with. We’re now in San Francisco. We were alone out on the East Coast. We had no success in the early days on the East Coast with venture funds there because I think there’s a higher bar. You need a little more revenue and traction, whereas on the West Coast, we took like a six-month product trial for could renters book apartments from their phones and the overwhelming share of the renters loved to do that.
The West Coast funds, I think, were much more willing to bet on the product. So it was a bunch of noes and then when you get the first yes, the other five or six yeses came very quickly. If you get an Andreessen or Kleiner in, the other yes’s are much—
Andrew: Who’s the first person who gave you the yes that brought everyone else in?
Andrew: How’d you get Kleiner to come in and say yes?
Anthemos: Yeah. We painted a vision of where the industry should be in five years and showed them a tiny amount of data we generated from a tiny beta test in San Francisco that kind of showed consumers were down for this. So we said if we have the consumers and have the product, the industry has to move with us. It’s real estate, it will take time. They backed the vision and backed some really early data that showed 35 leases we closed in San Francisco—
Andrew: You already had that?
Anthemos: We had that, but it was really like framed together over a summer.
Andrew: It wasn’t that you’re walking in with just an idea on paper, you also had gone in and I’m looking at my notes here, you had a crappy site, as you told our producers, where renters could book a lease right on their phone and you had 30 apartments in San Francisco that were willing to list with you. So it was like an MVP and—how did you get the renters. I understand getting the apartments. You’re telling them, “I’ll bring you highly qualified people. They’re going to be in the door ready to buy, and you were going after these more professional operations, not the mom and pop. How did you get the renters to pay attention to you?
Anthemos: Totally. In this MVP, you basically chicken and egg have no landlords to start and no renters. So, obviously, you must supply the market. Start on supply—how can you get the landlords on? We would get the landlords on, syndicate their listings. So we were syndicating at the time to Zillow, Trulia, HotPads. You couldn’t fake your own demise by creating partnerships with other people. They think Zumper but actually in the short term, a lot of the leads were coming from other sites that we’d syndicated to.
The other sites were cool because they wanted the listings and then Zumper would run the second part of the process, which was actually the booking mechanism. The strategy of kind of faking the market until you have it is something we used for the first two years of Zumper. The first two years, we syndicated all of our landlords’ listings out to other sites where all the demand [inaudible 00:15:37].
There was a tiny extra point that they also went on to this new site called Zumper. After two years, Zumper started being a large lead generator, and that’s when you can move away from the other sites. But my goodness, it took a long time.
Andrew: I kind of did that with my interviews. No one wanted to do interviews on Mixergy, they never heard of it. I would say, “I’m going to do this interview and post it on this bigger site and by the way, it will also be on Mixergy.” They said, “I don’t care about the bite away, I heard the bigger site.” I get how you’re doing that, but for you, these landlords would have been listed on Zillow already. They would have been listed wouldn’t they on all these other places, so aren’t you doubling up on what they already were able to do?
Anthemos: So there’s a couple of things we did in the early days that was different. There was no one-stop shop tool that would send you out with one tap from your mobile phone to all of these sites, so we built that. Also, in the very early days, which we’ve finally come back to now, we were testing the concept of book.
For the first six months, all we did was say to landlords, “Hey, the leads will come in from whatever sites you get them from, but we’re trying to build an orderly process for the application system. So a renter could pull their iPhone [inaudible 00:16:40], hit Apply and hit Book and we’ll show them a clearing system, where we’ll actually show renters in a hot market where their application lies, which is typically what happens—
Andrew: Were you able to do this with this what you call crappy site?
Andrew: You were? I see. So you were telling them really openly, “We’re going to take your listing and we’re going to put it on these other sites. I know you’re doing it already, but we’ll do it on your behalf,” right? Okay. And in addition, we’re going to allow people to apply using this one application process and as a result, you’re going to get faster applications and they’re going to be organized and this will make it easier for you to book. I see.
Anthemos: Faster applications, better qualified renters, all kind of use data to inform which renter you should take.
Andrew: This is just you working the phone in Boston saying, “Hey, I know I’m not in town,” I guess it doesn’t matter whether you’re town or not. You’re working the phones, you’re calling up these real estate—I guess it would be. . .
Anthemos: Landlords, we’re working with landlords directly.
Andrew: You did work with landlords.
Anthemos: Directly with landlords. My cofounder and I met, he was in San Francisco when I flew out in my two years of grad school and we tested it like maniacs for like two months. We just worked 24/7 for two months to try to get enough data and then that was, to your question earlier, that was enough. No revenue, just [inaudible 00:17:54] but a really compelling story of how big the [inaudible 00:17:57] is an industry and how big the vision was and that was enough for the first money through the door.
Andrew: I’ve got to read you this one sentence from TechCrunch’s article about the launch, the last two words just got me. “The initial seed round was used to build out Zumper’s engineering team and build out a few as yet launched products that Georgiades,” sorry about that, “Labeled as ‘highly disruptive.’ If this thing didn’t work out, this line of highly disrupted would have been such a laugh line in the future.” But it did.
I’m on your site right now on the one right monitor of my computer. I see a beautiful building. I see all the screenshots I want, including this building has a pool table as one of the amenities. I’ve never been in a building that had that. It also has the gym and all the other stuff that I’m used to. What it has that I always wanted is freaking floor chart. Show me where it is. There are basically like three different layouts that these professional operations have. I want to see which one am I getting. I see. It’s all in there and that’s the way the site works.
It took a while to get to this. Let me talk about my sponsor’s product for a moment and then we’re going to go back to how you went form this guy whether a highly disruptive idea and a crappy site in your own words to a great with a beautifully polished site that collects leads in a that I thought was interesting as I was using the site.
My first sponsor is a company called DesignCrowd. Have you ever heard of DesignCrowd?
Anthemos: Yes, I have. I haven’t used it, but I’ve heard of them.
Andrew: But you’ve heard of them. For a long time, I didn’t even use them either. To be honest with you, I even accepted their ads knowing they were good because people had used them, but I didn’t use them myself because I’m intimidated by design because I feel like it’s going to be so much work to tell people what I like and what I don’t like. Then I used them. My ads just suddenly changed. I became effusive. I became this loving person because it took me a few minutes one evening to just fill out a form saying I need new cover art for my podcast.
I recently used them again this past Friday. What I needed was a logo for my bot program. We teach people how to create chatbots. One that says this is a Bot Academy certified professional because the certified professionals wanted something they could put on their site. In five, maybe ten minutes I was able to say, “Here’s what I want. Here’s what I don’t want. What I don’t want is for you to invent a new logo for me. What I want is for you to have these words on it, certified professional. What I don’t want is excess content on there.”
I got over 100 different designs within three freaking days. Each one of them—actually, in this case, not all of them were good. Some of them invented a brand new logo for my company, which I didn’t like. I went in and gave them feedback. I rated them one or two stars if they invented a new logo for me. I rated them one or two stars if they didn’t highlight it was a certified professional because I wanted it to be clear. The ones that were good, I gave them feedback and told them how to improve.
To be honest with you, I gave my username and password to one of our certified professionals. I said, “This is supposed to be on your site. Can you go in and give them feedback? So she went in and she gave them feedback too. And now we’re getting better and better designs because all we have to do is say what we like and don’t like.
Her approach was slightly different from mine. I was being a little too nice. So I would say, “Here’s what I love about your design, this and this and this. By the way, can you make this small change?” She said, “Andrew, just be more direct with them, that’s how you get better results.” She went in and said, “I don’t like this because of this reason. Adjust it. I don’t like this, adjust it,” all this for $200, 100+ designs so far. I think I’m going to get 300 designs as things go.
If you’re out there and you need anything designed—a logo, a t-shirt, a web design, a brochure, a business card, anything at all, really, I urge you to go to DesignCrowd. What you’re going to do is fill out a quick brief, it won’t take long. You’re going to have opinions because their questions are good at listening to your opinions. Then you say how many people you want to give you designs.
You could be showered with hundreds of designs the way that I am. You then give feedback. They will improve. You give more feedback, they will improve and then you only pick and pay for the design you love and you can continue to work with that designer forever if you want. This is such a freaking good company, as you can see. I’ve been impacted by them every day. My cover art looks like something I’m proud of, where before my podcast cover art looked like ass. I urge you guys to go and take any design issue that you have to DesignCrowd. Go to this special URL and you’re going to get a big discount. That’s the URL that I use, by the way, to get a big discount from them. It is DesignCrowd.com/Mixergy.
I saved $100 on my custom design. DesignCrowd.com/Mixergy. I freaking love them so much I’m going to make out with them. That’s how good they are. You can see the design right there if you go to that URL, you’ll see what they did for me, DesignCrowd.com/Mixergy. So, you now, coming back to this story, they did not have to pay extra for me to say I would make out with that company. That’s just how I really feel.
So you finally get this extra money. What do you do? What’s the first thing you spend the money on?
Anthemos: Once we raised money, we spent the first two years just building supply. So before we got to our first $100,000—
Andrew: Why supply? You’ve got a marketplace. Why not say, “I’m going to get as many different renters as possible, then the guys who have real estate to offer will come and list it?” Why’d you go after one?
Anthemos: Just like it was a guess, it was just intuition early on. You could build the best brand, do a bunch of really cool content marketing, but ultimately in rentals, there’s huge FOMO. A renter has gigantic fear of missing out. It’s such a big transaction. So if you don’t have 90% to 95% of the listings in the market, you’re toast. So we had to focus on supply side first.
So the first two years before series A, we just built out a really great supply side distribution of landlords and our series A, which Kleiner led, was entirely based on we had tiny user adoption. I think we had 50,000 users a month on the consumer side. It was super small. We said, “All right, now we’ve got supply baked out with various strategies. We’re going to spend the next two years building millions of monthly uniques on top of that supply and that’s the series A story that could have ended up working out.
Andrew: I see. So you didn’t need supply, meaning you didn’t need renters because the first couple of years what you were doing was just syndicating the apartments that you had to other people’s sites anyway. So that’s how you were able to balance out your market. You had this real estate and you got your renters by posting on other places. Is that right?
Anthemos: Yeah. You’ve got to basically say, “How do we fake demand? How do we create demand before we have it?” We were like, “We just want as many landlords as possible.” I think when we raised, we’d grown from zero to 30,000 landlords using our small landlord tool, [inaudible 00:24:55]. Yet, we were like it needs to be a one-stop shop. The only place they can go curb marketing on their listings, tenant screening and we’ll bring all the demand into the CRM.
We basically had various strategies, whether it was pricing advice or syndication or tenant screening to basically build the first ever one-stop shop for small landlords and then Zumper being one of the sites, like you said with your podcast, on day zero, it was irrelevant, one day 365, it was kind of relevant but then two years in, it was super relevant. So, we didn’t then have to syndicate to the other guys.
Andrew: I see. What I’m trying to understand in my notes here, you talked to our pre-interviewer and you said that when you show the price, people renters think that there’s an auction and I don’t understand that. It seems like that was something you did that didn’t work out. I’m seeing the price on your site right now. What did you mean by that?
Anthemos: Sure. The first four years of the site, we ended up [inaudible 00:26:00] a really large search audience that has five million users a month. But now with Zumper Select, which is the new end-to-end product that we launched in Q2 this year, it goes back to our origins, which is like how can we create the book button for a 12-month apartment lease. In the early days in those 35 leases before we raised our seed round, we tested everything.
One of the crazier ideas we tested was hey, renters never have transparency. What happens if you showed renters not only that they could edit the offer they made—say an apartment in San Francisco at the time was listed at $3,000 a month. Not only could the renter edit the price and they could offer less, but we also show renters what the other applicants had offered. So it was a really well-intended thing to bring transparency for the first time. But you can imagine if a renter sees what other renters have offered, it implicitly created an auction, which was the opposite of what we were trying to do. It was a really interesting lessons that we learned earlier.
Now we’ve gone full circle and coming back to book is not going to really show what other people have offered, but it will show you if you hit book because we’re representing the landlord where you stand in order if there have been applicants before you, if there are applicants afterwards, where you are in processing.
Andrew: I see. I didn’t realize people were basically making an offer. I thought if I go and rent from a landlord, I’m just paying whatever he’s offering, whatever he’s asking for or moving on. You’re saying some people will offer more money.
Anthemos: Yeah. Some people offer more in hot markets and just as importantly, some people offer less in markets where there isn’t such crazy demand like San Francisco.
Andrew: I didn’t realize that was going on.
Anthemos: Yeah. The multi-family are typically less malleable, the big tower buildings with 150+ units. Their price is pretty much their price.
Andrew: That’s what I was renting from. But you’re saying mom and pop, you can negotiate.
Anthemos: It’s more malleable. Like when you buy a house, sometimes the price is like an opening gambit. So we want our renters to feel very encouraged that if they felt it wasn’t worth what it was advertised that they could offer less. Often the landlord is still [inaudible 00:28:09] and in some cases, that backfired, not necessarily for the landlord but for the renter that we’d inadvertently created an option where if the renters were bidding above the price, they would bid up on each other and that was not what we were trying to create.
Andrew: Why wasn’t that a good thing. Why wasn’t creating a bidding process, an open one, a good thing?
Anthemos: I think that’s obviously for a landlord a lot of [inaudible 00:28:33] set market price for them. I think it didn’t really solve the problem we were trying to solve. We want to get a renter a fair market price as transparently and as easily as possible with no paperwork and just with a book button. So I think the best way to do that is to give the landlord when they post the listing the best possible comment to know what the fair market price is and then instead of creating their brand as a malleable field that can go up, actually as long as we priced it right, we feel like a renter who books that one, they get the fair price and they get to close instantly instead of applying and waiting seven days to close.
Andrew: I see. You applied for TechCrunch Disrupt. Why? Why does being in TechCrunch Disrupt matter at all?
Anthemos: Good question. I think it has some of the halo effect that a YC demo day does without having to go through YC. So I think what’s nice about TechCrunch is we already—it wasn’t like YC even though we went in and had to develop the idea. We worked on the idea for a year and so what we really wanted was the event where it was like let’s launch and get a ton of press on day zero and see what we can do with it.
So TechCrunch was perfect where they had a huge event, like 5,000 people in the audience, I think they had like 50,000 people live streaming our launch, which was genuinely terrifying. I’ve never done anything as scary in my life. Just what a wild ride. The first day, you get a huge traffic spike, like 20,000 people on your website. The next day, it’s like 10,000, you’re like, “Okay, they still remember us.” Day three is like the pit of despair and you have 1,000 users and you realize you haven’t yet built a product that’s sticky. It’s really humbling to come down from that rollercoaster.
So it was like the highest of the highs and three days later it was the lowest of the lows when everyone’s forgotten you and moved on to the next big thing. It was to get our name out and help with fundraising, but in retrospect, we didn’t sustain any of the momentum we got. It was just the first ever foray into the press and getting our name out here.
Andrew: Do you do any conferences for landlords for the real estate industry at all?
Anthemos: Yeah. There’s a really big conference called NAA. That’s the large multi-family landlord conference that we go through every year. We’ve spoken at a few of them. We want to build the first ever brand for renters because I don’t think anyone’s really built a renter-focused brand. Everyone’s always focused on where the money comes from, which is the landlords or the brokers.
It’s still critical that we don’t just build a crazy product that works for consumers that landlords despise. We’re really tightly knit with both the multi-family landlords, the big guys, but also the long tail mom and pop landlords who really actually control the majority of listings. We meet both of them at these landlord conferences.
Andrew: So, so far we just talked about a guy who’s gone from heights to heights, everything just worked out. But it wasn’t like that. Around the seed stage, you were flying back to San Francisco, you were reading online about one of your competitors. What did you see and how did that influence what you were thinking?
Anthemos: Yeah. As every entrepreneur listening to this knows, there’s never a linear growth curve. You go through such ups and downs, and your job as the CEO is to keep the trend pointing up. I think the lowest point in the early days was, as I mentioned, we had all this early data and then we sent the investors off to raise the seed round. Great. We’re going to come back to the concept of the book, but first we’re going to build lead gen to get to millions of monthly uniques and that took like three and a half years to get there.
So downside of doing that was we caused on the really disruptive idea like you mentioned before, which was book, which was how can you take every intermediary out and go direct and create a book button. What we were scared of the whole time is what happens if someone does this first while we’re doing all this semi-clever stuff to build liquidity. I’d just spoken at a conference in Boston. I was about to fly back. I was absolutely exhausted. I was getting onto a flight with no Wi-Fi. Just before takeoff, I read a TechCrunch article that one of our competitors had built something that sounded a lot like what we were trying to build.
As you know, everyone’s had every idea before. It’s all about execution. I wasn’t pissed that someone had stolen out idea or anything. I was just pissed that someone was executing in that direction faster. So phones off, turbulent flight from Boston to San Francisco in the middle of the night and all you can think about is what on earth are you going to talk to your team about when you go and see them the next day. How are you going to pick morale up, like are we doing the right thing waiting this long? There were various moments like that. But that was a really low moment where we had no traction yet on the landlord or renter side and we were nine months into the company.
Andrew: What’s the name of the company that was coming out?
Anthemos: It was a company that was older than us called Lovely. They ended up—
Andrew: They’re big in San Francisco. Are they gone now? Love.ly from what I remember.
Anthemos: They were bought, I think, a couple of years ago by RentPath, and I don’t think the team stayed. It’s run as just a search website now. I think they originally had a very similar vision to us, and they’ve been going for two or three years before we even launched. We were playing catch-up from day one. I always reminded my team that we were the young guys. We had to execute like crazy people and they seemed to get towards our vision like before we took the stride even though we maybe had done a bit more beta testing of it. So, in the end, they didn’t end up executing against it. We were the only people in the residential rental space doing end to end.
Andrew: What happened? Why didn’t it work? Actually, they are still in business. I do remember I did use them because they have what you guys have, which is good search. You guys bought PadMapper, am I right?
Anthemos: That’s right.
Andrew: Kind of like PadMapper created a nice experience for seeing listings that were available everywhere else, why didn’t it work for them, do you think, the ability to go on a website and rent?
Anthemos: I don’t know. They never really got that much further than that. I suspect it’s because you really have to have to have a deep landlord penetration to do this. For example, if someone went to Zumper in New York, you’ll see Zumper Select on like one in five listings. The four out of five listings that don’t have it are landlords or property managers or brokers that we’re not working with on select, but on one in five, it has it because we have really deep relationships and contacts in the industry.
It’s kind of the boring biz dev piece but it’s actually essential that you can’t just add a book button on top of all of your listings because the landlord will be like who the hell are you guys or like, “Hey, I didn’t sign up for this. I just wanted an email message from Andrew saying, “I’m interested in coming to the open house.” But for a subset of our listings that we’ve been working on for five years now, they’re all in on the end-to-end model. They want higher quality renters, overnight. They don’t want to wait. They want some kind of rent guarantee.
So I think we have the best shot at pulling this off because we have really deep relationships on the landlord side and we’re bring the industry with us to do this, not just saying, “You’re all idiots. You don’t understand millennials. This is how it’s going to work,” because that will never work. These guys are smart on the landlord side. They understand it. You explain it to them. It takes time. It’s a very new concept.
Andrew: Our producer told me that you were trying not to show anxiety or worry when you saw the competitors were coming out with this thing that you had envisioned. How did you stop yourself from getting distracted by that, from losing faith, from over-worry and stay focused on creating your product? What’s your technique for doing that?
Anthemos: I learned it the hard way the first year I moved to Silicon Valley. There’s all these TechCrunch articles, all these blog posts about your competitors, you read them all. You realize honestly when our numbers weren’t moving fast enough, you didn’t realize none of it matters. There’s no way what Zillow is doing is going to affect us going from 50,000 uniques to 1 million uniques. It’s so small in the early days that you’re crazy if you think you have competition from other players. It was actually just from a lack of focus that we need to execute and be really introspective.
So, in terms of how I deal with it, the truth is ridiculous transparency with the team. At the time, our team were five people, six people, just coming back the next day and being like, “You’ve already read this, it doesn’t matter. We’re going to execute better than anyone. It doesn’t matter that we think we had the idea first or someone else had the idea first. It’s just about execution.” I think it’s really hard as a founder or CEO to look your team in the eye and be like, “Yeah, not great news. I’m aware of it, but it doesn’t matter, guys. Let’s just focus on the roadmap and on our metrics and every Monday, let’s review all the data and that’s all that matters.”
Andrew: Then someone says they’re going to build this thing out. People are going to eventually buy on their platform. We’re fools for not building this now or even months ago. How do you respond to that? What do you say when someone’s skeptical?
Anthemos: Yeah. People would bring that. You’ve just got to remind them it’s why we all agreed on it in the beginning. It was never like, “Hey, I’m Anthem, I’m the CEO. This is what we’re going to do.” As a founding team, we’ve got to be super tight and make decisions together. Just like guys, you’ve got to be patient with this.
The strategy is smart, like our investors back it, it’s not as sexy as launching all this stuff overnight, but actually launching it half-baked isn’t going to work. I was wrong. I told the team it would take two years to come back to the book. It took four. We’re here sitting after four and a half—actually, we just crossed five years old. Now we’re doing it for an audience where we already have all the demand and now we’re bringing in the supply to go end to end.
Now it’s just like so much easier, but I was wrong. I told my team it would take two years and I think they believed me and I believed it. It took five, but all those people are still here and they’re all ready to finish the job. I think at the end of the day, you solicit opinions and make decisions together, but your team have to look at you and believe that you’re right. Even if it turns out that you’re right that it took a bit longer, you’re someone they could get behind. I’ve never run a startup and grown. The [inaudible 00:39:06] grows is you make risky decisions, but if they pay off, it makes the next one easier.
Andrew: All right. I’m going to talk about my second sponsor and then come back into this. I actually had dinner with Dylan from Toptal. Toptal is this company that helps companies hire great developers. Just last night, we had dinner and I said, “Are the ads working for you?” He said, “Yeah.” I said, “You’re profitable based on the number of people who come to the site, say that they came to you from Mixergy?” He said, “Yeah.” I said, “Great, what are you doing now?”
He says, “I’m trying to evaluate how many people are buying from Mixergy even though they’re not telling us they’re from Mixergy because we know we get some kind of a brand lift.” I said, “How are you doing it?” He says, “Well, there’s a company that will track how much traffic is coming to the site and then based on when the podcast goes live, how much extra traffic is coming in and what’s the likelihood that some of it’s coming from Mixergy.”
I said, “It’s already profitable. Why are you going through all this work?” And he looked at me like I was crazy, like I was maybe slow-witted or something. He said, “That’s who I am, that’s what I do. I want to understand fully how effective this ad is. It’s not enough for me to know it’s working.” I said, “Why?”
He said, “I didn’t think it through fully. You can understand the value of it. Maybe we want to buy more ads from Mixergy than we already are if we understand how much more value you’re delivering, we can buy more ads or maybe there are other podcasters who aren’t leading people to use their discount code properly and were not going to buy ads from them because we think they’re failures because we’re not fully anticipating how much revenue we’re getting. We want to understand that’s the way we operate at Toptal.”
I realized that’s why they hired him. These maniacs at Toptal love to hire people who are maniacs for detail like this who when they’re having drinks with someone can’t just stop and say it works. They have to say, “I want to understand this full problem and I want to figure it out better than it needs to be figured out and that’s the magic of Toptal.
So, if you guys are out there and you’re looking to hire developers and trying to understand why Toptal’s people think differently or work differently than the average developer, what the difference is between the best developers and the regular developers, you can see it through everybody who works at Toptal. So, I urge you to go check out this special URL where I can get credit but now they’re going to figure out how like if you don’t use the URL how many people are coming from me.
Here’s the URL that if you go and hire a developer from them, they’re going to give you 80 hours of Toptal developer credit when you pay for your first 80 hours in addition to a no risk trial period of up to two weeks. It’s top as in top of your head, tal as in talent. Go to Toptal.com/Mixergy.
I’ve heard forever you can hire great developers from them. I’ve heard now for a long time you can hire great designers from them. I’ve known for long enough that I could also hire MBAs from them. It didn’t occur to me through last night at dinner that maybe this is where I can find my par-time CFOs, someone to just look over my numbers and tell me am I missing something, am I overpaying. So, they’ve got finance people now and I plan to hire one from them.
Go do it too. Go check out the company that I’ve used already and will continue to use. It’s called Toptal, check them out at Toptal.com/Mixergy. Also like you an Andreessen Horowitz-backed company. Those guys at Andreessen Horowitz, they’re very selective. They’re good.
Okay. So what took so long? You thought two years. It ended up being four years, this magical moment that back in high school you wanted to create. Why did it take so long to create it?
Anthemos: Yeah. I think I think marketplaces are super-difficult. When you build marketplace liquidity where you have the demand and have the supply, once you have it, it’s really beautiful because it’s incredibly hard to lose that, but to get there is a pain. I think one is market risk because if I start another company tomorrow with you, say we did a furniture startup and we wanted to build a marketplace for furniture. I still think it would take us like three to four years, maybe shave off a year, two to three years to get to marketplace liquidity, just really hard to build supply first and then demand. It takes a long time.
Andrew: Why not just create it like you did before, for a handful of customers who could then put your tool on their websites and when someone goes to their site to rent they could just press a button and rent.
Anthemos: We’ve been through all that, even that took a while. Just figuring out what the one-stop shop is for someone selling furniture, what are the features they way, how do you get the big guys, how do you the mom and pop, how do you get someone in the middle who owns a couple of stores in the Richmond District. So it’s just like mapping the industry. I think first of all, marketplaces are difficult until you get to liquidity.
The second one was kind of like [inaudible 00:43:42] was I had no experience in the real estate industry. So I came at the problem with beautiful naiveté for just having a problem, like every time I rented it sucked and it was the search that sucked or there was quality search but it was the second part, which is actually how do you get to closed release. So part of the reason it took time is we build bottom-up. So we were like, “Let’s redesign the industry bottom-up with no experience of having ever really worked in it. That takes time as well because you make mistakes and you make assumptions that just—
Andrew: Like what? You believe in transparency, be transparent. What’s one big mistake you made because you came to this industry so naïve?
Anthemos: Yeah. We thought book, same concept, we thought book was a SaaS tool originally. We thought let’s just build it and we’ll give it to brokers, landlords, property managers. They’ll just use it and they’ll change their behavior overnight. You remember a small property manager, they’re not trying to fix the problem for the renter. A small property manager, it’s such an obvious conclusion but it takes a while to figure it out—their client is the landlord. Their trying to grow their business by growing more landlords. They don’t care if a renter has a crappy experience.
Andrew: I get it. Right. Maybe they’re not completely immune to it, but it’s not the pressing problem for them.
Anthemos: No. So our tool, which began as a SaaS tool, it’s such a naïve assumption we made is that was incorrect is that if you build it, they will come and they will change their behavior overnight because of a software tool, whereas now the way I look at it, if I knew what I knew now four years ago, the way I look at it now would be like, “This has to be more like Uber.” We have to go completely vertically integrated on a subset environment and we have to have to help the renter search, we have to help the renter at tour booking and we have to help the renter at booking.
The only way to do that really at scale is you’re representing the landlord directly and you’re actually interacting with the renter the whole through. So the renter never comes out of the brand from A through Z. That was like a pretty obvious conclusion. And actually at the same time we were launching, Uber and Lyft were getting going. At the time, it was like wow, that seemed quite aggressive to go full stack, whereas now looking back on it, so obvious. To really drive behind a guest and drive consumer satisfaction in our industry. You also kind of have to go full stack. That’s the biggest mistake we made from our naïveté on the way in.
Andrew: Yeah. You know what? I kind of think everyone is like me. They’re willing to try new software, figure out if it improves their business and they’re constantly on the hunt for new software. That’s not the way they think.
Anthemos: Yeah. Real estate is conservative. If you look at the verticals on the internet, even fintech has moved forward. There’s loads of great ways to invest now. But real estate, as you mentioned in your opener, it’s barely changed and it’s because it’s owned and controlled by very old school historic parties who built these buildings for like a century plus and it’s slow to change. I think that was a big thing we got wrong. You can give it to them and they’ll change.
Andrew: I’m learning about your past by seeing what your Internet Archive shows about how the site looked over the years. One thing I saw you emphasize a lot was the credit report, the instant credit report, your partnership with the credit agencies, Experian. Talk about how that came about and what importance that played.
Anthemos: Yeah. It’s really critical to everything we do in two phases. To begin with, it was to test the assumption of can we get prequalified renters. In the core model before Select launched, which is the end to end model, a renter can actually pre-qualify themselves by running credit, criminal and eviction either from their Android or iPhone or web through Zumper and it’s like the most sophisticated data pull on the renter’s credit and rent worthiness that anyone’s ever built.
So, in the self-serve way, we allowed landlords to request it from renters or renters to proactively submit it to landlords. So you can kind of guess, but kind of baking what we were going to come to eventually in the self-serve world of having renters do this in open houses on their own and watching their landlord pick it up and say, “You’ve got it.”
So now, in the second phase, we’re usually exactly the same API cores, the same integrations, the same native first approach to build it for ourselves where we build this pre-qual on a renter. It becomes part of their common app and then it applies to basically the majority of listings on select next year will all accept this common app. So, that’s why it was central to both phases of the company.
Andrew: I’m wondering how you get customers. I hate to say it, but I didn’t know about Zumper. I knew about PadMapper because people complained about them. But I’ve looked in real estate here. I didn’t know you guys existed. What do you do to get people to come to your site?
Anthemos: We’re still growing. We have millions of users a month just on Zumper even outside of PadMapper.
Andrew: I don’t see that. When I look at your SimilarWeb numbers—oh no. I see it now. Okay.
Anthemos: Zumper and PadMapper have about 2 million monthly visitors on the web and we also have huge adoption on native. To answer your question, how the hell do people find us because we don’t spend lots of money?
Anthemos: PadMapper, they’re the best known brand with under-25s. They’re like college generation, so we love them. They’re a huge part of our vision for the future. On Zumper, a huge part of it has been native mobile. If you went to the App Store under find a rental on lifestyle, Zumper is the number one recommended app by Apple and PadMapper is the number two recommended app by Apple. Then on Android, we’re kind of editors choice, which means we’re kind of up there featured pretty high. So we’ve always built early products for Apple and Google, whether it was Apple Watch or Google Wear or some of the new things that are being announced this week by Apple. So, between native, SEO, branded awareness and ultimately content marketing, which has been a really good hack for us to get widespread distribution without spending money in terms of like doing rent price infographics and stuff, which is 90% of our distribution is organic and we’re trying to grow as fast as humanly possible.
Andrew: What are the organic traffic sources? I see things like I’ve never heard of this company, but Trovit.com, so Homes.Trovit.com is sending you guys traffic. What’s that?
Anthemos: We have some referral traffic, which I think that one is. The majority of organic traffic, it’s either SEO just trying to come to the first page of apartments for rent in San Francisco queries or it’s the native stuff. It’s like how do we brand [inaudible 00:50:49] go to the App Store and type Zumper, which is how a lot of people find Zumper or when Apple have actually vouched for Zumper and said if you’re looking to move, the top two apps are Zumper and PadMapper. That’s been really great for us as well.
Andrew: I saw over the years I don’t have it in front of me right now, but I saw over the years what you guys were doing is some kind of report. That seemed to help, right?
Anthemos: That’s been the single best marketing tip we found, which we sit on a bunch of rental data and no one was publishing their rental data. Yet, journalists love it. It’s kind of like food porn or like rent price porn. We were really the first people to start publishing infographics on rent trends and how markets were trending. So 50% of the times you read a New York Times article or another article about a rent trend in New York or in the U.S., they’ll be using our data and we found content marketing like a really good way to get the brand out but without shouting about the brand. We’re not saying, “Hey, Zumper is amazing. You have to use us.”
It was more like, “Hey, we’re trying to become and have become like an expert on rent prices and rentals in our industry in the U.S., here’s the data,” and then we don’t say anything more, which I think is a good subtle marketing tactic, where you’re not shouting about how amazing you are.
Andrew: You just give the data.
Anthemos: You’re an authority.
Andrew: I see it right now. I’m looking at an article that was written a few months ago, “New York’s one-bedroom rents drop,” the information is from website Zumper.com. Now that’s the way people are discovering you guys too.
Anthemos: Yeah. It’s not like we have a massive team doing this. We have like two people who spend part of their role cutting the data and working with journalists on how to present it, but it’s been fantastic. Because our data is really second to none, it’s super clean, we take out duplication, journalists really trust it.
Andrew: I’m trying to think of one other thing I saw you guys are doing. You mentioned earlier that whatever Apple announces you guys incorporate into your app. I freaking love my Apple Watch. Nobody else cares about it. Amazon got rid of their Apple Watch app. Google got rid of—I liked the Amazon, I didn’t love Google maps. I’m still surprised they took it out. I’m even more shocked you keep yours. It’s still up. Why? Are people using this or is this just your new marketing? Whatever they launch, we do and if you’re someone who’s looking to experiment with apps just because of whatever Apple launched.
Anthemos: Apple and the Play Store from Google, they build amazing new tech and some of it is going to work well and some of it’s going to work amazingly well. Obviously you’re making the same bet they are when you develop with them that you’re going to help them make it amazing. With the watch, it’s not a majority of our users, but for engaged users who want real time notifications, they want to know if that apartment over there just became available and there are people who are—
Andrew: They want it on their watch and your watch will tell you? If I’m walking down the street, it will say the apartment over here is available?
Anthemos: That’s right. If you think about real estate in a competitive market, it’s actually helpful to have that now. It is not the majority of our users but the Apple Watch and actually also the Google Wear integrations were good. For renters in market right now actively looking, real time notifications with whatever medium you receive them through are actually really good. So, we really enjoyed the watch integration and some cool stuff this week we’ll be announcing with Apple around some of the new stuff they announced last week.
Andrew: I’m excited to see it. I love my freaking watch. This is kind of outside of your business, but I’m curious about the Xfund. These are investors in your business, right? The two cofounders, I think, were arguing, the got into this legal dispute, one was trying to take the investments away from the other, how did that impact you?
Anthemos: Yeah. We were aware of it. I think they dealt with it really well in terms of the portfolio companies as far as I know. They were always very vocal and they let us know what was going on. I knew both of the people as investors and personally. So it was a really hard situation for both of them. We focused on execution.
Andrew: That’s it. They told you what’s going on. They say they’re arguing. Did they settle it?
Anthemos: I don’t know. We really did just put our heads down and focus on execution. It really didn’t involve us. It’s like always sad to see that when it happens and I feel for both of them. We weren’t involved and we just kind of had our heads down.
Andrew: The thing I mentioned earlier about how you guys are good at lead gen or collecting information, I brought it up, I’ll say it now because I didn’t get into detail about it earlier, the interesting thing is I find an apartment on your site, on Zumper. When I want to see availability, you immediately say, “Who are you? Give me your name and email address.” I give you a name and email address and I’m basically logged in to site from then on and I get to see the floor plans and everything else, which is such a marketing technique and I feel like is there something else like that that’s helped you guys build your collection of renters. Is there something else like that because I’m not knee deep in your site that helps you guys grow?
Anthemos: I think actually the two things that are really going to help us grow in the next year that have helped now is you need content and then you a really unique value prop. You need content. We have hundreds of thousands of small landlords who just post to us now because we don’t work with other partners, so in markets like L.A., for example, Santa Monica, some of the charming buildings, small mom and pop stuff, you really could only find that stuff on Zumper or PadMapper. That’s one reason people do come to us.
The other one is really Zumper Select, like the search, just to put it bluntly, doesn’t really fix the landlord’s problem. All the public companies in our space are fixing that problem and it’s great and they’ll do just fine and make a ton of money, but no renter is going to come away as you were saying, “I sent ten messages from ten landlords.” I love Zillow or the other sites. I think that’s fine, but it doesn’t really solve the kind of problem we’re going to solve.
So the feedback we have on select right now, which is the end-to-end product, you only interact with Zumper until the very moment you lease. We track NPS, Net Promoter Score as a proxy for how successful that business is. When we saw Redfin go public with a 50 NPS, which is really good, I think most lead gen sites are much, much lower, maybe in the 10s or 20s of NPS. Zumper Select is currently an NPS of 82. Now, that won’t continue, it’s far too high. It’s based on hundreds of transactions. So it’s not on the low end. It’s on a decent wide base, but it turns out that this is for renters and if you sold it, the Net Promoter Score is super high.
Andrew: This is for people who have actually rented, not just sampled it?
Anthemos: This is transactional NPS. It’s people that have gone through. The equivalent would be if you’re buying a car, if you went through the whole process, actually a lot of car buying NPS is still really crappy because people hate the experience and feel like they’re being lied to, so this is like transactional NPS that you’ve got to the end to the funnel.
We’ve mentioned a [inaudible 00:58:24] through the funnel and how you’re doing through the thing. But in the short-term as we launch, the most important thing is if we did take it end to end, we want you to feel that you felt the love and you got a great deal from us and it’s a really good indicator that we’re onto something and we just need to move as fast as humanly possible before someone else comes in. So, we’re just heads down executing really quickly right now.
Andrew: All right. The site is looking great. I can understand how people—I think a specific kind of person is especially eager to just rent online and I know that up until I got married, that would definitely be me, even after we got married, that was me. I’m excited to see what you’re going to be doing with Zumper Select.
The website for anyone who’s listening is Zumper. I didn’t even get to bring up how you said, “I’m much more risk averse than other entrepreneurs. There are some entrepreneurs who are born entrepreneurial. I happened not to have been that,” you said, “But there are some people who are born entrepreneurs and others who just find a really ridiculous problem they have to fix,” you said that is you, and I can see it. And I can see you fixing it. It’s exciting to see how much you’ve done. I’m looking forward to finding out more.
Guys, check out Zumper.com and of course my two sponsors, the company that’s now designing my new logo for my graduates, it’s called DesignCrowd. Check them out at DesignCrowd.com/Mixergy and the company that we have hired a developer from, a designer from, and soon a CFO from, great for hiring part-time, full-time whatever, check them out at Toptal.com/Mixergy. Thanks so much for doing this.
Anthemos: Thanks for having me.
Andrew: You bet. Thanks, everyone. Thanks, Erica. Bye.
Anthemos: Thanks, guys.
Andrew: Thank you. Bye.