SaaS Interviews with CEOs, Startups, Founders
She built secret software to add $4m in deal volume to her brokerage last year
08 Jan 2023
Chapter 1: What is the main topic discussed in this episode?
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Again, both plural founderpath.com forward slash products forward slash valuations. 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. She's a top broker in Minnesota already.
Her secret power is the software she built for herself. Bluestream Analytics generated over $4 million in deal value for her in 2022, of which she keeps 3% of. So call it $150,000 there of revenue. Now, she has been frustrated investing over $100,000 of her own money in the engineering on our third iteration. But you know what? Now it's working. It's paying for itself.
And the only question is, who should she start selling this to? She wants to sell it to other folks, other brokerages, but also doesn't want to lose the advantage it brings her. We'll see what she does next. Hey, folks. My guest today is Maureen McGarry. She's a realtor and broker since 1995, passionate about working with investors and developed Bluestream Analytics for software companies.
It's a proprietary software that pinpoints investments and delivers analytics quickly. As a market leader in residential investing, she's eager to help investors succeed in reaching their goals. Maureen, you ready to take us to the top? Sure. Absolutely. So how do you decide to go from making 6% commissions to going, you know what? I want software margins instead. Let me build software.
That's a good question. It was pure frustration trying to find investment property for my clients and sitting there with spreadsheets punching in numbers, after a few hours of that, you start pulling your hair out.
And when you have clients sitting there with hundreds of thousands of dollars saying, find me something, and you can't get through the properties fast enough, I literally just one day said, there has to be a faster way to do this. And that's where the idea was born. So I never intended to be a software developer, but that's what happened.
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Chapter 2: What is the secret software that generated $4 million in deal volume?
So he helped and he kind of guided me too. You said your husband is from the software world and sort of helped you find the first engineers? Yeah, kind of. I could talk through what to look for, what questions to ask, that kind of thing. If I had specific questions on what I needed to be aware of, yeah, that helped a lot.
I mean, the thing with a lot of folks make mistakes here because it's just you're speaking a different language. So you end up spending a bunch of money on a spec that isn't what you need. Then you have to fire that person. And the next person needs to start from scratch because they want to build on Python instead of SQL or whatever, right? It's a whole different set.
I mean, how did you go through these iterations? And I mean, I don't want to ask this question. I hope it's no dollars. But how much money do you feel like you wasted sort of before you figured it out? We're on the third revolution of this software. I would say we probably have 100,000 into it. That was a waste. Yeah. Yeah.
But I mean, look, it's a waste, but also you sort of needed to do that to learn, right? Right. Yeah. It was a process. And because of what we're doing and how we're doing it, it was tricky to put it together, too. So what percent of your time last year was spent on the traditional brokerage business versus trying to build the software company?
I would say probably a third of my time was just on software. And a lot of that was just making contacts, finding data, because expanding it nationwide means finding the right data to do that. And that took a while. But I also used the software. What does that mean? You're identifying sources for the engineer to build into the tool? Yes, yes.
One of the pieces that I use here in Minnesota, which is where I am, and by the way, today is a snow day, so I'm working from home because we got this much snow. We have a direct feed of the MLS coming into our system. So if you've ever worked with the MLS, which I don't know that you have, there's, I think, 500 or 600 MLSs in the country.
And you can't just go in and sign up for that and get that data feed. You have to be licensed in that area. You have to jump through all kinds of hoops. It's not easy to do. So tracking that source down and figuring out how to expand to multiple markets is not easy. Yeah.
So that was spent a lot of time on what pieces do I need to put all this together so that when we roll it out into other markets, we're ready to go. Well, so how do you do that? I mean, don't you either have to sort of figure out a way to scrape it or have a local contact in every area who's got all the certifications to get you direct access? And in that case, why do they need BlueStream?
Why don't they just use the MLS? Well, the first to answer that question, the MLS doesn't analyze anything. It just you just punch in how many bedrooms, how many bathrooms, blah, blah, blah. Do I want what our software is doing is what an investor wants. They want to know what their cap rate. They want a specific cap rate out of a property. They want a property that's going to be a good rental.
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Chapter 3: How did frustration lead to the creation of Bluestream Analytics?
That's what our software does. So it's much more advanced than anything you're going to get out of any MLM house. How would you compare yourself to some of these tools that are using Airbnb and VRBO data as their data source to get to cap rate, round rate, vacancy rate, you know, tools like AirDNA, for example?
Well, AirDNA is a really cool tool if you want to do short-term rental because you can go in and you can look around kind of like Zillow, what's going on. But what ours does is it says, okay, here's all the properties that are for sale in a market. Let's say you want to buy a rental, and this is your budget. This is how much you're putting down. This is your interest rate.
This is the kind of return you want. These are your goals as an investor. That's what I'm putting into it. It's going out. It's looking at 10,000 properties, and it's saying, here are the best properties. eight properties for you. These are the ones that will produce the best return based on what you want. These will meet your criteria.
So it's not, it's not, you're not going in and sorting through hundreds of properties. It's doing all that for you in a matter of seconds. So for an investor to be, so for a realtor, for instance, to be able to go into a market and find a property, find properties like that for investors, there's nothing like that out there. It's a game changer. Yeah.
So when do you think you will be able to release this to the market and start signing up paid customers? I'm hoping by this summer. Yeah. And I guess why have you... Learning when to quit is also just as valuable as learning when not to quit, right?
So how much time and budget have you given yourself before you say, you know what, I'm going to go back to making whatever you make at the brokerage and just focus on that? When am I going to quit? I don't know. Right now, I think I'm at the age where I just want to see if I can do it. I like that. You like a challenge.
Everybody that I show it to, I have a coach that I'm working with who's great. His name's Carl Gould. And Carl, he said, all right, go out and show it to, do 10 sales calls, do 10 Zoom calls, whatever. And I did like, I don't know, 10, 15, 20 of them. Every single person was like, how do I sign up?
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Chapter 4: What challenges did the guest face while developing the software?
And I finally called mine. I'm like, I can't sign up. Do you send them an invoice? But I'm not in their market yet. You know, so I mean, look, your friends are all going to say yes. I mean, why? These weren't friends. These were people in other markets. My point is, why not like lock them in? Right.
If they're saying yes on a Zoom call, why not follow an invoice and say here, pre-commit to paying? Right, right, right, right. We can do that. We can do that. But my point was everybody that sees it. I have, yes, I have a list of people that want it. Absolutely. My point is though, is like when we do these user research calls, people will say yes to your face on Zoom.
When you follow up with an invoice and ask them to sign committing to 200 bucks a month for 12 months, then pedal goes to the metal. They tell you the real truth. Have you gotten people to sign invoices? I have not gotten them to sign invoices. No, no. But I have a list of people that want it when we're in their market, right? How did you decide who to get on the phone call to show it to?
Different connections. I had different realtors that I knew. And then they referred me to other people. I reached out to different markets. I asked different people I know in different markets. I know a lot of entrepreneurs. So I would ask different entrepreneurs.
different markets i have clients in different states uh so and and what's your burn i just want to understand how much like how much pain you're feeling here bro until you get it released to the market right i mean what are you spending per month right now on engineering costs to keep building this thing um well right now we're not spending much until we get ready to to expand it to the different markets i think um to keep it going in our market it's not it's not much it's maybe a thousand a month um but we use it within our brokerage
Once we get it out to the other markets, then it will depend on which markets we're in and what data we're pulling and that type of thing. Has this led to increased revenue at the brokerage? Can you quantify how much sales last year came from the software identified? I had, yeah, I had, so just working part-time on sales, I had almost $4 million from the software. In closed deals? Yes.
Of which you would make, what, 3% of or 6% of? Well, I figure 3% on those, yeah. Okay. Got it. Got it. So you could say the software generated 120,000 bucks of revenue for you last year, 3% of 4 million. Right. Right. Okay. So maybe it's probably, maybe you've actually already recouped everything you've spent on this, on the software. Oh, absolutely. I have. Yes. Yes. Yeah.
If you think about your own dog food, we love that. I didn't think of it that way, but yeah, that's true. Well, I mean, that's the best way to build a software product, right? I mean, if it's working for you, then the question becomes, well, wait, do you even want other people to have this? Or do you want to use it just as your secret tool to build your brokerage to be the biggest, you know?
Yeah, it works. It works great. I mean, you know, if you get on a Zoom call with an investor, you know, I had one that had to quickly within 30 days buy a one and a half million dollars for a 1031 exchange in single family homes. No brainer. 10 minutes later, we're signing a contract. How do you decide though? I mean, it sounds like this is a powerful tool.
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