RealtyTeam Final Pitch & Deck

Video Pitch
https://www.dropbox.com/s/c59x60uo1w9bsn2/EF2%20RT.mov?dl=0















Final Deck
https://www.dropbox.com/s/r315k5u3wcf8oj4/RealtyTeam%20Pitch%20Deck%20Final.pdf?dl=0

Marketing Campaign

Marketing Campaign

The marketing plan for the venture would be very lean in the beginning with an attempt to leverage word of mouth through strategic partnership with financial advisors and real estate agents/brokers who all regularly meet along with investors in community-based meetings and roundtables. Flyers and conversations would be how we garnish attention from the stakeholders within local real estate investing that goes on in the initial market that we attempt to penetrate, the highly fragmented and spread-out region of Los Angeles and Orange County. These are very similar tactics used by real estate agents who attempt to target the potential buyers and sellers of property in a specific area. Eventually, once we have a platform built out and have established a user base from our guerilla marketing efforts, we would then start to consider using digital marketing spend through social media, videos, testimonials, and SEO. Ideally, a lot of the digital media impressions would be able to come from press relations and get our product, brand and success stories into blogs and media coverage.

We do not currently have a website or social channels up and running beyond our blog presence, which we are using to document the journey of our ideation and design iterations. The website would essentially be the product itself, which will take awhile to develop, but in the meantime we will work on mockups and vaporware versions of the site to get consumer insights and help us design.

Realistically, we could start with one or two marketing teammates in the field, especially since they will work through various other intermediaries (e.g. advisors and agents) to achieve leverage in their reach.

Property management services generally are contract based, so a client is going to continue with the service for at least 12 months, and it may then renew at that point for another 12 months or could switch to a month-to-month agreement going forward. We don’t have an idea of the average churn or renewal rates of the industry as a whole because it is such a fragmented industry and the services are generally provided off-line. From personal experience, I switched property managers once every 18 months or so. What is great about our platform, is that we may be able to help our clients switch from one PM to another, if they weren’t satisfied for one reason or another, but they would still want to go through us to maintain their buying power and get a reduced PM rate or still be eligible for PM services.

Theory of Change

Theory of Change

We want to address the real estate market because housing is an essential component to our economy, to building wealth, and to maintain a safe and secure place to live. Our theory of change is multi-sided, since there are different stakeholders participating.

Property management:
We believe that if we provide a platform that ranks and displays property managers, then we can help these small business owners find new business and decrease their marketing spend. We can increase the size of the pie for them by bringing in real estate investors who never before would have considered or were precluded from being eligible for PM because they don’t own enough property to qualify or be worth a PM’s time. This will also allow new entrants to enter the market and increase competition so that property management quality increases with time and provides a better standard of living for tenants and ensures that properties remain occupied and prevent them from becoming vacant, which become abandoned, which become a greater problem for the community at large (e.g. breeding ground for drugs, crime, arson, etc). These new entrants will also find a way to generate new income for themselves, the way that the shared/on-demand economies of Uber or TaskRabbit have offered new chances of self-employment to people who may not have attained a 4-year degree.

Real Estate Investors:

Real estate crowdfunding has democratized real estate investing into large commercial projects and given opportunities to accredited investors. When the JOBS Act allows non-accredited investors, then we will see some new investors and individuals take advantage of the available investments, but we believe that many out there will still prefer to be in more control of which property they own, how it is managed, and when they may sell. We believe that if small real estate investors are able to join cohorts with others to be eligible for low cost property management, it would fulfill their need of taking care of the property and protect them from any difficulties they may come across (e.g. evictions, tenant laws, repairs, etc). This is just the begin of what we have planned to impact the real estate investors out there, our goal is to get them in with property management, but to eventually have these cohorts form LLCs together that buy property. Essentially, a form of crowdfunding, but we want to have the people within a community be the owners of the community, as a collective. This would eventually mean including renters and aspiring homeowners who are not able to buy a home on their on, whether it is a single-family or multi-family property, and give them the resources, support and network necessary to help them become a homeowner for the first time, which makes up the majority of people’s net worth in this country. With good partnerships, thorough analysis and financial leverage, a $10k investment into one’s first property can easily become $30k, $60k, or even a $100k within 5 years. That type of capital could change the lives of a household. This could be enough to ensure a child can afford college and avoid being bankrupted by student debt or for an entrepreneurial parent to finally start a business.

The YearUp case showed us how important it is to pivot along the way and to be open to partnerships. But these grander visions and strategic partnerships may not be possible until you have built a brand and a product that has attained some sort of following and track record to show a mastery of the space and the aptitude to do good work.

Testing Location: Whats Best for Us?

57% of booming companies are headquartered in San Francisco. Yet housing markets for investors are likely to boom in Texas, Utah, North Carolina, and Colorado. And furthermore, we have great access to investors, mentors, and real estate agents in Boston, New York, and L.A. So, where should we go create a company- a place close to the technology center, a place close to our customers, or a place close to our startup network?

This really comes down to a conversation about philosophy and business mindset.    Some argue that proximity to tech partners and the epicenter of innovation trumps proximity to customers.  Others argue that you’re a very small fish in an exceptionally large pond by going to Silicon Valley, so stay in Boston where we have great access.  And then there’s the argument that being far from a customer creates a bubble where customer problems are not solved.  

Overhead costs are going to vary greatly in all three locations.  Ultimately, we’re leaning toward operating in Boston or NYC given our network.  Property managers and small investors are plentiful in the northeast (to say the least), and we will have access to tech talent here too.  But the beauty of launching a startup is that it’s a journey: flexibility matters.  

Wharton Simulation Game

From negotiating a valuation with an investor without a product (or MVP) to joining a startup as the first employee, the Wharton Game Simulation was a 50 minute crash course into startup chaos.  My character was a pharmaceutical executive who managed a major product line, and interested in joining a startup in the early-stages.  Of course few people can go from being hired to helping the company raise four million in 50 minutes.  But the simulation “built the muscle” by forcing us to navigate a world without perfect information. Here are a few things I experienced and what I learned from the exercise.  

1. Skills, Background, and Domain are Relative: I shopped around by speaking to four co-founders who needed to hire employees.  I met a team that was creating a SaaS product for DNA and genome discovery, and the two co-founders needed a first employee with key experience in marketing. Though I was not an expert marketing professional, both of us realized that deep expertise in one domain (unless it’s a technical skill like front-end web development) is not necessary at such early stages.  Instead, the team needed strategy chops, a passion for the field, and ability to get things done.  I was able to offer that to her from my employee profile and experience.

2. Equity Trumps Salary in the Early Stage: I had the luxury of joining the startup with some cash in my own personal bank account.  I was in it for the journey.  But we had to negotiate (and use precious time) on salary versus equity terms.  This obviously will be person and industry specific, based on risk preference, skills level, and lifestyle flexibility.  But as Carl said about the reality of joining a new startup, salary matters less in the early stages because if the company folds, you don't receive the money anyways.  On the other hand, negotiating more equity gives you more upside if the startup matures.  And afterall, why would you join a startup that you don’t think will succeed?

3. Negotiating with Investors is like Dating: This was the most invigorating piece of the puzzle.  We needed to raise four million dollars to ship product in six months.  After having brief pitches to four different investors, we realized that their interest, background, and risk profile could change the deal terms immediately.  But once we had three solid offers (valuing the company at $10m post...come on, without even a MVP?!), we thought we made the mistake of allowing each of these investors to discuss among each other about their interest and goals.  They came back to us with a more aggressive offer taking more equity share, and we had to settle in the interest of raising cash.  But that's the reality of living in the 21st century.  Information is not perfect, but companies like Angelist, Crunchbase, and Mattermark are getting us closer.  So I have yet to decide if it's unrealistic to think that a co-founder can expect that the investors will not pool cash and potentially collude (in the words of Carl)? Or are there major rates for this collusion process?  

So as you can see, the simulation provided a snapshot of startup chaos. But I’m cautious of the fact that the journey is almost never a cinderella story.  From my personal experience in Kenya, I also know that time, passion, and luck play a significant part of the hiring and investing game.  Even more, a simulation can never help us experience the blood, sweat, and tears of moments that you hit a wall.  It could be failing to raise money, failing to sell the product, or failing to attend a family wedding because of work.  Sure, these are normal balances and roadblocks in the working world, but it's often a lonely journey with you and your co-founders.  More to come on this topic!

Venture Capital Tips

Chris Dixon joined class on Thursday to speak about the Andreessen Horowitz investment criteria and operating model. I’ve read about the good, the bad, and the ugly when it comes to working with VCs.  Two books I’ve personally found helpful to navigating the VC game are by Jeff Bussgang and Brad Feld.  And Chris offered one model that summarizes what I’ve seen so far:

Tip #1: In-House networks are critical for each stage of a company.  Sure, some VC’s like Fred Wilson stay away from angel investing, but a network of experienced strategist, designers, ex-CEOs, and investors should be a criteria in selecting a VC.  Startups don’t always have a choice, but if you do, network over brand can really matter.  

Tip #2: We live in a matrixed world, void of silos, and VC’s need to have a network outside their specific domain expertise.  Real estate and financial technology interact with two major “unbundling” effects and two sectors that Fred Wilson previously described (check out my post on his talk).  So having a VC adept at strategic partnerships and networks in each of these domains would be powerful.  No, Chris Dixon himself may not be a designer + technologist + real estate expert, but his venture firm has that network.  

Tip #3: In our talk, Chris said: “Think of startups not as a static and linear model but rather an idea maze. Some paths lead to a prize, other paths lead to danger. Good entrepreneurs think through the paths.”  What Chris did not say, which was covered in our case about Andreessen, is that a VC should be helping you think about the dangerous paths.  It could be regulatory, it could be trends, it could be operational, but VC’s should be far more than a bank account.  

Brandon and I will have to think through the technical, design and market goals and advice we’d seek twelve months down the line.  We’d be first time founders of a tech company, and Chris’ advice about his VC philosophy pushed us in the right direction to think about creating the best VC and founder dynamic.

New Assumptions, New Research

New Assumptions, New Research

Our market research, customer interviews, and ideation have been rapid paced, but critical to refining our business model canvas and value proposition, testing metrics, and assumptions about key-hires.

First, about the customer. Attending Lendit 2016 where Realityshares.com presented about the unbundling of real estate through crowd investments confirmed that small-time investors need a platform like Cash on the House. Market research on platforms like Trulia and Realtor and industry data confirm that small-scale investors do not have robust platforms to provide information about property managers. But most of all, in our own attempt to find property managers in Boston, L.A., and Washington, DC, we confirmed that the process is far from automatic, and there are barriers to entry for our target customer. On the other hand, customer interviews with current investors illustrate that once they buy a property, they use the same property manager. This last piece will be critical for our Phase 2 plan as we think about value add services by property management function.

We’ve also learned that technology tools to create a MVP reduces the immediate need to have a full time developer on the team. We’re still in market development, testing, and discover phase, so we do not even have requirements for a developer! Platforms like Balsamiq and InvisionApp allow tech proficient, though not coders, to help potential customers understand our idea. Our best estimate shows that we could have prototypes, market research, and a solid canvas without a full-time developer for another 60 days.