SaaS Interviews with CEOs, Startups, Founders
RentRedi Lands 5,000 Landlords as It Cracks $2m in Revenue and 3+ Product Lines
19 Dec 2021
Chapter 1: What is the main topic discussed in this episode?
This year alone, we've grown 10% month over month. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Hey folks, my guest today is Ryan Brown.
He's the brain behind RentReady's software. He's the company's CEO and co-founder. Before launching RentReady, he worked at Goldman Sachs and PricewaterhouseCoopers. He enjoys speaking about entrepreneurship and why he built RentReady to improve the renting experience. Again, property management software for landlords. Ryan, you ready to take us to the top? Absolutely. All right.
You're way cooler now that you're doing your own thing versus an accountant at PwC, right? You're cool factoring through the roof. Trying to work on it every day, a little bit, just a little bit. All right. Fair enough. So what's rent ready? How are you helping property owners?
So the real issue that we saw was a lot of people are working nine to five jobs and they happen to own some property on the side. The majority of landlords are like that. They're not these massive property management companies.
And right now they're kind of pegged with two difficult and not so great decisions, either hire a property manager where they have all the time in the world, but they lose eight to 10% of their profit or manage it all themselves and they pull their hairs out at night.
And so we kind of sit in the middle of that where they get to manage it themselves, but at the same time, they don't have to pull their hair out trying to do that. So we provide them with software that really goes end to end in the process and helps them manage their properties themselves without any of the pain. And what will they be paying you on average per month to use the technology?
Believe it or not, they only pay $9 a month on average, and that's total per unit. So it's a pretty unusual business model that we've set up, but it has worked really nicely for a lot of landlords that do want to manage their property, have a bit of a premium service, but not necessarily pay premium price of feel like they're being taxed on their growth. Yeah, that's great.
I want to get the backstory and the story behind your first customer, but where are you today? I want to bury the lead. How many customers are you working with? So we don't share the customer number itself, but I can share. We have landlords actively managing in all 50 states. And we've 3x that number actually this year, just in the year to date so far. Can you give me a sort of range?
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Chapter 2: What is RentReady and how does it help landlords?
And in fact, just to be clear, you didn't, you didn't have real estate that you want to use your tool to manage with you or you were coming from the other side and then built into landlords. Exactly. Yeah. Okay. Interesting. So, so first was the first customer, then your landlord. It actually wasn't.
The first customer in the early days were actually landlords that were trying to collect applications on apartments. And so in the very early days, it was really just by going to different association meetings, meeting with some of these landlords and getting them to adopt the platform. When you build the software yourself, it takes you longer than you would hope in the early days.
So there was quite a while of... you know, building up the software in the early days before. So Ryan, are you sole founder or do you have a co-founder? I do have a co-founder. Got it. Did you guys just decide early on? I mean, obviously the equity split at the beginning is a challenge everybody goes through. Did you guys just say, screw it, we'll do 50-50?
So the way we did, well, the easy thing for us is we're actually father and son. And the really nice thing was his skill set, I mean, perfectly complements I assume you're the son. You're the son. I am the son. Yes. No, it's not me and like a seven-year-old running. Yeah, absolutely.
So I mean, his whole background, sales and marketing, mine is really more so focused on the technology side and customer support side of things. And so it just works perfectly that- So what did you do? 50-50 or does Dad own more? Oh, I mean, we don't share the equity split, but I mean, we do have a pretty even split on it.
Well, no, I mean, I want to know more here because this is a debate every founder goes through. So are you saying, dad, listen, engineering here is more important than sales. Therefore I deserve more. Or is he saying, listen, son, I have more experience. Sales and marketing is critical. You could build a beautiful thing, but nobody knows about it. I deserve more.
I mean, I think it depends on your situation, but I mean, in a lot of cases, I do lean more towards the side of saying it's easier to just split it with your founders, unless you have someone that's coming in later or something like that. But, um, I tend to lean more towards the side of saying it's easier to not argue about. And honestly, I feel the same way about the investment side of things.
I mean, when companies go to raise that money later on, I think there's arguments over... There are big market movers where it does matter to talk about how it will impact your business in five years or 10 years, or in the case of funding rounds, three rounds down the line.
But I think the same applies with founders, especially if you're going to be in a venture business, you're going to dilute yourself as you raise future rounds. You do want everyone to be invested. It's not good if you don't have a founder. So Ryan, have you guys bootstrapped this or have you raised capital? So we actually bootstrapped for the first two years of it.
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Chapter 3: What unique business model does RentReady use for pricing?
In the very early days, it was just me doing all of our development and mainly doing our sales. And the two of us, honestly, handling all of the chats that would come in. We were anytime you messaged in on writing those first couple of years, it was literally us on our phone or computer messaging back. In 2019, we raised our first venture round, and that was really when we brought on
the core team to rent ready. We grew to about eight as a team. And then we raised a venture round earlier this year. So we've raised about $5 million to date. What was the pre-seed in 2019? How much? We raised 1.4 million. 1.4. Okay. Interesting. And then, so you raised 3.6 this year? Right. Looking back, I mean, obviously you guys took dilution to do that.
Most people are selling 10% to 20% of their business in these early rounds. Do you regret that at all? No, not at all. I mean, especially from the perspective of we've looked at it not just from the capital perspective, but what also do those investors bring in each round? So, for example, TI Ventures was the lead for that very first round.
One of the things that we have been focused on since day one has been how do we take customer feedback and convert that very quickly into action that we can change in our business? And a lot of their model in even doing their diligence on us, but what it went beyond that and doing was saying, how do you learn from those customers?
And that was something that we've been able to implement with them post rates. Like they've helped talking to our own sales reps or talking to our own marketing team or support team and understanding how do we actually synthesize that feedback, turn it into action, create a better product, and in the end result.
So, I mean, from one side of things, rent ready would certainly not be what it is today without that funding, but also beyond just the capital itself. There's a lot of knowledge that comes along with those investors, hopefully, if you do it right, which I feel like we've been very lucky to have so far. And then Ryan, obviously the market's a big one. You're north of 5,000 customers today.
Do you think you can break 10,000 by the end of this year?
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Chapter 4: How many landlords are currently using RentReady's platform?
Is that going to take into 2022? I mean, we are on track to hit all the goals that we want to by the start of Q1 or end of Q1. We actually plan on raising our A in just a few months in Q1. So the nice thing is we're right on track for where we want to be. Well, no, I don't know what your goals are. So my question specifically is just around the market size and how fast you can add customers.
Can you break 10,000 landlords in next year or can you do it this year, you think? I mean, I'd rather not speak directly to the customer amount itself. It's just not really a number that we share publicly. But in terms of the growth or understanding that side of things, I can't say. I mean, we grow. This year alone, we've grown 10% month over month.
So certainly in terms of how fast we can grow, I've talked to a number of even founders in the prop tech space and the space itself is really exploding. But even within the space, from what I've been hearing from founders, we've had a healthy growth rate even above the average in the prop tech space. Got it. Sorry. What I'm trying to understand is how big you think the market is, right?
Actually, I'm a little confused why I don't want to talk about, do you think you can break 10,000 this year or next? I mean, in terms of how large the landlord market itself is, there's about 20 million landlords in the US. About 16 million of those are our segment. They're the smaller landlord segment.
The Appolios and Yardies of the world have primarily focused on massive property management companies, and they've done it well. So small landlord managed by what? Number of square footage managed? Number of beds managed? Number of units? What is defined small? So in our case, I normally say 1 to 100 units.
We have some people that break that and say, I don't care if I'm over what you've designed it for. I'm more than 100 units. But in our case, it can be as little as one single family home that you own to around 100 units. And a lot of it comes down to, I would say, more so the mindset of the person.
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Chapter 5: What was the backstory behind RentReady's launch?
So there's a very large difference between someone says, I'm running a property management business where I've hired a number of employees. They are working under me. And someone that says, I have my day job that I'm working on. I have this real estate business that allows me the freedom to either put a kid through college or retire earlier, go on a couple extra vacations.
And I'm trying to figure out a way that I can manage this myself simply and easily without necessarily needing to hand it over to one of those management companies or go gray trying to do it all. Got it. How are you adding new customers each month? What's sort of your go-to-market strategy?
So for us, it really has been, again, totally opposite from the enterprise side, which is normally booking demos and doing a demo with that person and helping them onboard. Ours has been totally product-led growth in terms of going out and, yes, marketing it so that landlords find out about Renready. But how? That's what I'm asking. How do they find out about you?
so a lot of it is through paid marketing so we'll we'll do ads on different channels um they'll find rent ready and they actually from that point will self-onboard onto the platform and set up their property certainly they have us anytime they need we have live chat on the site but they don't have to interact with a person unless they want to This is the biggest waste of time.
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I see you've probably advertised on BiggerPockets and some of these sites that a lot of my listeners listen to as well. What does it cost you? Or maybe what are you willing to pay to get a new $9 a month landlord? Oh, I mean, I think it depends on the channel.
I think in the early days when you're testing out different channels, going back to the beginning of last year, we were spending upwards of $1,000 a customer to add. To get a $9 a month customer? Yep. And as that year went on, I mean, we were able to drop that customer acquisition cost to 80% of that. What are some of the changes you made?
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Chapter 6: How did RentReady grow from its initial customers?
Uh, it's actually further. So we spent probably the first year and a half just in development. Um, we had, I mean, a small number of landlords on the platform. Um, but I remember we had passed our, uh, our hundredth customer back in 20, early 2019. Um, And he and I actually happened to be together. A lot of the time, we aren't necessarily in the same place.
We happened to be together that day, which was pretty exciting to kind of be next to each other, cheersing to that. It's funny to say, to look back at that now, I think we're as excited as we were about 100. As the scale changes, you have to readjust how you feel for each 100. But it really was a super, super experience.
you know, personal, exciting moment for us to, to a hundred landlords back there on, you know, early 2019 at nine bucks a pop there, you're, you know, a thousand bucks a month in revenue. Is that the traction that you're able to take into that pre-seed around to attract the 1.4 million? Yeah.
I mean, that was a huge part of it, but to be honest, even more so than the scale was the reviews of the customers that were on the platform. And I think that is, um, certainly the number side of things is, is, is phenomenal to me. Um, I, um, major to math. I love the number side of things.
The part that I think was really the difference maker for that round was once investors started to talk to some of our landlords and hear not just, I like this, but if you removed this from me, I would be really pissed off at you. I think there's a huge difference between just, I enjoy having this in my life and this would be incredibly detrimental if this disappeared.
And that was really the big difference maker was how emphatic they were about the product they were using. And then look, you're north of 5,000 customers, say, at a $9 price point. So we can say more than $45,000 in MRR. But what will it take to get you up to $5 million in ARR or $10 million in ARR? Are you too cheap? No, not at all.
When you look at our market of 16 million landlords, 5 million or 10 million is only a drop in the bucket compared to what you talk about when you look at the TAM or the total addressable market related to our landlords. In addition to that, the way that RentReady generates revenue isn't only from that landlord subscription. We do offer a number of services that
Landlords have the option to add on and we generate revenue from the... Do you take a percent of fees? Do you take like 2%, 3% on rents paid through the platform? No, no, we don't. Okay. So what are some of those other models? So like on the payment processing side of things, we do allow tenants and landlords the ability to process payments through the platform.
If a landlord wants to incur that so the tenant has no charge at all, they can. But if they'd like the tenant to, essentially when the tenant pays a dollar for ACH, We make some of that off of that dollar.
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