Helping Landlords Find Tenants – Sean Mitchell of Rezi

Why don't we start with just a brief explanation of what Resi does and then go back to what you apply to?

I see with so. Resi is where a rental marketplace with the mission to make renting better. We use our technology and we use finance in order to provide products that allow us to do that. Our first product is a product called Upfront, which is essentially a solution that gives landlords an option where they're guaranteed to lease out their vacant apartments and gives tenants the ability to lease the lease apartments from us in under 10 minutes.

So we, when we applied to YC in the winter of 2016, we were focused on the rental space. We knew that there had to be some sort of risk transfer from the landlord to either us or some other party, but we didn't really, candidly, have a great handle on what the model should be. So at the time, we were kind of toying around with the idea of, okay, well, what if we gave landlords protection from the downside, like if it doesn't pay the rent?

Yeah, and to put a finer point on that, the risk transfer has to happen because that's your value proposition. Otherwise, no one cares.

Yeah, right. So a landlord principally has two risks with a vacant property: the vacancy risk itself, so the lost income and the carrying costs from owning that asset every single day if they're not generating income, that's a loss. But then when they lease the property out to a tenant, you know, will the tenant pay the rent? Will the tenant damage the unit? Will the tenant be, you know, disruptive to other tenants who live in the building? These are all considerations that they have to have.

And so we knew how to—we got fairly comfortable to how to solve that second problem. I think what changed during our time at YC was we decided to take this next step forward and solve the first problem. So prior to YC, we looked a lot like effectively a software solution that gave you better due diligence or better screening for your tenants. And I think while we were in YC, what we realized was, okay, what if instead of saying to the landlord, hey, if you use our tool, you'll have a better success rate with screening tenants, what if we said to the landlord, okay, you never have to worry about a vacant unit ever again?

Right? Yeah, yeah. And you know, would that be compelling enough of a solution that, you know, you can make a business out of it? And, you know, completely candidly, we got to YC on January 4th. I told the team I wanted to, you know, pivot the strategy probably on January 6th, and we went to office hours. Got it? Told them, hey, yeah, you know what, you let us in for the thing, you let us in. We're not gonna do that anymore. We try to figure out what we want to do. And I'd say by the end of the month, we had, you know, decided on this strategy, and they actually closed our first transaction at the end of the month.

Okay, so it was a whirlwind jam. And we got to go into the financing in particular, but what was a particularly relative elation that you had?

Yeah, it was—how big of a problem can we solve? Yeah, so you know, there's—I think everyone in any way, anyone in leasing and anyone in the rental space is familiar with the problems and pain points in the leasing plans. You know, tenants have terrible user experiences frequently. There are agents, whether there be brokers or other parties, who don't have skin in the game. Yep. So, you know, the landlord who is effectively at risk of finding a bad tenant or not finding a tenant fast enough and losing money, they don't have a partner who is, you know, in that same risk rate, right?

And so those two problems were pretty apparent, and I think what we— the quote-unquote aha moment—yeah was what if you could create a scenario where for the landlord that risk isn't existing? And if you could, if you could offer that product, and, you know, that B, we knew it'd be enormously complex to offer. But if you could, you know, you have to solve pricing, you have to solve funding, you have to solve, you know, technology. But if you could do it, could you then meaningfully improve the tenant experience where, you know, tenants have the ability to lease properties in minutes versus, you know, waiting days and sending all of their sensitive personal information in, you know, typically very unsecure ways?

And did you have cash on hand in the beginning to pay these landlords? Or how did you get that side of the marketplace?

Yeah, so the first transaction we did, we had the, you know, we had the YC SAFE capital. We had a little bit of money that we'd raised from friends and family. But the first transaction we did, I pulled my other two co-founders aside and I said, yeah, I'm gonna probably use 40% of the money we have on this one deal if this doesn't work, yeah, guys. And that was not an easy conversation.

Yeah, but you know, we felt fairly convicted that it was the right solution. Yeah, you know, knock on wood, you know, that that went well and continues to go well, right?

And so for people who don't understand the product fully, yeah, how much cash are you giving this landlord? Is it—it’s a full year, right?

So depending on, you know, depending on a given transaction, it could be anywhere from, call it, $30,000 to $50,000. Okay? And that happens, it's good on a per unit basis. Okay, so on a portfolio of units, if we're in, for instance, if we're engaging with a landlord who has like several units or something, then it can be, you know, several hundred thousand dollars cash or greater.

And from a tenant side, how do you meaningfully differentiate?

Yeah, so I think user experience is a big focus. Share has released two tenants. So I think you look at the leasing process. So I, particularly I, leased in New York. You've been through this, you know leasing an apartment, particularly in any competitive was a very painful process. There's no standardization on the qualification criteria. You know, typically, you know, if your broker is not being really responsive, you can have, you know, missteps with being able to see the unit or visit the unit. And so we really focus on, okay, how do we make this process more efficient?

First and foremost, we decided to tackle showings and said, okay, can we make it possible for somebody to schedule a showing anytime they want? And we did that, leveraging our, you know, concierge team. But after they can see—after they see the property, how do we improve the application process such that it's more secure and it's better? And really that's where, you know, the technology kind of came into play, and kudos to our CTO, Hersh, who really thought through how do we implement this in a way where a person can just apply and get a decision, you know, fairly instantaneously?

And so, you know, we've been fairly fortunate to be able to achieve that. And so volume wasn't a critical issue; it was mostly nailing the user experience. For example, you know, like all the apartments or a majority of apartments that I looked for when I was living in New York and out here actually just Craigslist stuff, right?

Yeah, and so you didn't need to have an apartment in every area in Brooklyn?

No, because we typically use third-party rentals to market through. No, it was really user experience and making sure we got pricing right.

Okay, and where do you fall in the pricing spectrum?

So, yeah, we're alive in the Bay Area and in New York at the moment. A typical apartment, you know, our price ranges are, you know, probably anywhere from $2,000 to maybe on the upper end $6,000 on a given unit. It really depends on you as a studio, one-bedroom, two-bedroom, etc. I think where there's, you know, a tremendous amount of value of what we do is that we are able to provide a fair amount of insight to our landlords, even landlords who don't end up transacting with us.

We're able to provide them a fair amount of insight on where their units are likely to transact, give them a certain price, because, you know, the thing is when you think about the resources that landlords have to kind of get price discovery, you know, the tools are not very nuanced and precise. They don't provide the landlord insight, okay? And into, you know, how does my likely, you know, executable rent change if I add stainless steel appliances or not? That's a change if I have a patio or not or if I have a deck or not.

And you know, what we've tried to accomplish on the modeling side with our internal system is can we put a price on those things? Can we say to the landlord, okay, if you have stainless steel appliances, your rental rate should increase by fifty-seven dollars on that corner of 72nd and Second for a one-bedroom apartment?

And so that, you know, that research process and, you know, developing that sort of pricing, I think at minimum provides landlords with, you know, valuable insight into, you know, where the market may be even if they decide for whatever reason that our product isn't the right fit.

Okay, and so following in that, we had a question from Twitter from Roberta to Marcus. What mental frameworks and thought processes were behind growing the supply side around landlords doing things that don't scale in particular?

Yeah, I think landlords are probably one of the more nebulous communities to figure out how to sell to, and I first and foremost will not pretend that we have fully figured it out. I think we've learned a lot, you know, when we started. Yeah, you know, Keenan and I, another one of my co-founders, we essentially, in our, you know, in our little rental, we were going through YC. We essentially set up a two-man cold calling operation, okay, where we would go to Craigslist, Zillow, and any other site, pick a hundred units, and we just called people.

And I think, frankly, the willingness to be able to just talk to your customer, just like—it’s just like the funny thing is that it's not complicated, it's not fancy, it's not using, you know, AdWords or, you know, PR or anything like that, you know? And we, you know, we graduated to that stuff later, but I think to start it was like, you know, call a thousand landlords and have nine hundred of them tell you, you know, I will say it more politely than they did that they're not interested.

Yeah, and you learn a lot. And what are you asking them?

Yeah, so typically we, you know, we confirm at that point—we confirm, do the units still vacant, first off? And second of all, if the unit was still vacant, then we said, okay, well, this is what we do: we will make you an offer to rent your apartment. We're able to close in 48 hours. We would love to send somebody out to come and just take a look, and we'll make you an offer. And, you know, frequently, I think we almost a hundred percent of the time have landlords who say to us, I haven't heard of this before.

Yeah, could you explain to me how it works? Because I think they’re fairly curious about the process, right? And I think what we're really able to speak to is the fact that not only we're gonna provide them that certainty of execution and, you know, give them that cash in hand, but we are fairly sophisticated in how we approve tenants.

Although we've meaningfully improved the tenant experience, in many cases, our due diligence process is meaningfully more robust than what the landlords have, so they kind of get this, they kind of get this best of both worlds where, you know, they have the certainty, they get the shopfront, but they also have now this, you know, this entire technology company that has skin in the game with them.

Yeah, due diligence on these tenants extremely well. And so for the ones that we were able—that the hundred that stayed around, you know, I think that that was fairly interesting.

Okay, and so what exactly are you doing to screen tenants?

Yeah, so when a person applies for a Resi apartment, you know, we're looking at some of their rental history. We look at credit and we look at their income and employment status. I think one of the things I'm probably most proud of is the fact that what we're not doing, which I think a lot of tenants have commented to us that they like this about our process—what we're not doing is evaluating things that don't relate to whether or not you're going to be a good tenant.

And I think the fact that it's, you know, an automated and algorithmic process really reduces the potential for discrimination and reduces the potential for, you know, not approving tenants who are viable and potentially great tenants.

Yeah, you know, I think we, we balance the right line. We want to make sure that, you know, you've in the past been a good tenant, you have the ability to pay your rent, your, you know, your background indicates those things, and if we can verify that—yeah.

Does the landlord have any part in the final choice?

No.

Okay, so that's how you avoid the bias?

Yeah, okay, got you. Yeah, I've gotten apartments in funny ways. And you're just like, I don't know, they said— they thought it was cool that I worked at the Onion a long time ago. That's what they thought made me a good tenant.

And we hear all types of stories. We—I mean, we meet tenants who are like, you know, yeah, the guy just, you know, just shook my hand and just, you know, liked the way I presented myself. I mean, and like, listen, you know, I mean, those landlords, they’re great. You know, the stories we hate to hear about—yeah, yeah, the other sides of that.

But I think from our perspective, you know, we know that we're taking not only a financial risk, but we're also taking, you know, the risk of the type of tenant this person's gonna be. Are they gonna be disruptive? Are they going to—do they have a history of not, you know, being the best member of that community?

And so we take that fairly seriously, so we really try to balance this line between giving a great experience but also verifying that where we're screening, you know, I would say probably 90% of the cases, we're probably screening better than our landlord clients would have if they hadn't used us.

Do you have a ballpark acceptance rate?

I think that's not even the right word, probably.

Yeah, I know what you mean. It's a little sort of— to give you context because it really does vary by apartment to apartment. I mean, we have apartments that, you know, we’ll show it two times at a lower rent, and it'll only get two leads. Then we have apartments where it'll get forty leads a day for a month in a moment. And so it really does vary by location. I could give you an aggregated number, but it's actually not the most correct.

So it's actually apartment-specific. It's not just like, hey, I'm gonna sign up and then I apply anywhere? Well, so any person who applies for any Resi apartment, we don't charge application fees, okay?

So if you apply for a Resi and you're approved, yeah, if you decide that you want to take, you know, apartment A instead of apartment B, you're really able to do that. We don't charge application fees; we don't charge broker fees, so tenants have a very frictionless process as it relates to renting the units. But, yeah, different units, they just attract different types of volume.

If it’s a three-bedroom versus a studio, you know, the right part of New York or the right part of San Francisco, you know, you're gonna drive a meaningfully different amount of traffic.

Okay, so let's talk about the financing side, because I think this is quite different from the average YC startup, the average VC-backed company. The standard path is to, you know, sell equity in your company, shares, whatever that might be. You guys did that, but you also raised debt to finance the leasing of the apartments. Explain.

Yeah, sure. So we, you know, pretty early at the outset decided that we wanted to be able to have capital to provide the solution at scale for our landlord client, and we knew we had to be kind of thoughtful about that. I think a lot of companies approach that, and they kind of think, all right, well, I raise X amount of dollars and, say, I raise X amount of dollars in VC capital. I gotta spend that equity capital to fund my origination. And, you know, from our perspective, we thought, wouldn't it be better if we intelligently kind of created a financing mousetrap?

Because we're generating a return on these investments, those returns are attractive to third-party investors. Can we create a structure that allows those investors to earn that return and allows us to use the money that are invested in our SAFE investors gave us, you know, just to operate the business? And so I think we were fairly successful in doing that, but I also think, you know, it's the sort of thing that you don't even know to ask that question unless you've kind of been on that side of it.

You know, my background's in financing and structured products, and so I did a lot of that in my past life. And so I think we had a little bit of an advantage.

And how did you package that product? Because, like, the closest thing I, as a consumer of this, I've never worked on that side is like a REIT, you know?

Like, yeah, like, okay, this is kind of real estate.

Yeah, it's a really good comparison, actually. So, in effect, what we did was say, okay, you know, we leased apartments. Yeah? That creates a receivable. Huh, is there a way to kind of put those receivables together and then raise money from that? And that's essentially what we did.

I mean, REITs are effectively that with properties attached, right? So before you raise the debt, had you standardized what you expected to return across all of these units?

Like, did you—how did modeling that out even work?

Yeah, I think we had a fair understanding of what the market would require. So, and when I say that, I think whenever you're thinking about, like, the returns of your asset or your receivable, whatever you're doing, yeah, at the end of the day it has to be at a return that's attractive to investors.

So, you know, we knew, you know, investors in consumer receivables tend to like to earn something in the ballpark of mid-teens or greater, yeah, into the 20s returns on their cash flow. So we said, okay, we probably need to solve to be somewhere around there or, at minimum, if we're gonna be lower than that, then, you know, we just need to budget for it.

But I don't think it's very difficult, I think, for particularly the startup founder to know exactly what you're gonna—what the return is, right? Because you have these—it’s effectively two markets. There's an investor market that has its required return and then there's a product market that has its potential return.

And your hope is that those two are minimum fairly similar; ideally the product one is a little bit more. But I think there's a discovery process there, and I think that we so far have been fortunate enough to, you know, provide that solution on both sides. But, but that's a pretty important consideration whenever you're launching any FinTech company is, you know, if you're creating a return that's, you know, two percent, well, you know, investors can go and invest in U.S. Treasuries for two percent.

So do they really want to invest in your thing?

Right, yeah, which is not a sure thing, by any means, right?

So what did the education process look like on both sides, right? So, like, both on the debt side of, like, hey, we're doing this thing, and then on the venture side of, like, hey, just so you know, there's this debt thing?

Yeah, yeah, well, I think on the—on the debt side, I think, you know, we were fortunate. We had pretty thoughtful and educated investors there—they're, you know, I think fairly sophisticated and also very capable in getting up the curve on new assets. And so I think that we can't really take all the credit for that.

I think we were fortunate in that regard. As related to our VC partners, I think whenever they invest in FinTech, whenever they invest in this space, I think they probably—one of the biggest risks that they are worried about is can this company fund whatever like the origination that's creating?

And I think, you know, from their perspective, the worst-case scenario is that, you know, I gave you five hundred thousand dollars or a million dollars to, you know, pay for salaries and pay for server costs, and you went and lent it out. Not that—that's not a bad thing, per se, but it's true.

Yeah, it's now limited your ability to do anything else. So I think when we, you know, and we went to our VCs, we said pretty clearly where our intent is not to use the majority of the capital that we raise from you for funding these receivables. Our intent is to, you know, create this financing solution that allows us to do it right.

So, it's not necessarily—it’s actually maybe more attractive, right, to the potential, I think. So when we go out and raise a kind of later.

And so when, asked an interesting question, Akash Jane asked, how do you model risk getting your business model in place?

Yeah, that's—I could probably talk for like an hour on risk. But I would say, so our team, if we bring a lot of different sort of types of expertise to bear: mine is in structured finance; my co-founders have purely in commercial real estate; another co-founder is purely in engineering; and, you know, two of our senior team members, one’s entire background is in receivable research and analysis, and the other is on, you know, product development and design.

So I think, you know, the one thing that I would say that we've been fortunate with is that, you know, we each kind of know our strengths. You know, where were we got more specifically to this question when I think about the risk we have. So again, it's principally two things, right? We're taking vacancy risk; we're also taking the performance risk on the tenant side.

You know, does the tenant perform? In other words, do they pay their rent? Well, do they pay their rent, but also, you know, are they, you know, are they a good tenant?

Yeah, right? Because even if they are paying their rent, yeah, if they create a scenario where the landlord doesn't want to work with them anymore, or work with us anymore, like that creates a business risk for us. And so I think, you know, our process and understanding that risk has been a kind of a combination of looking at other types of consumer receivables and understanding how those are underwritten as well as, you know, kind of testing things.

And saying, okay, well, you know, we think the timeline for this particular rental should be X; let’s go back and see if that's what actually happened, right? So not even like testing it with a live transaction but just like seeing, you know, kind of back-testing our own models and saying, okay, you know, our models would suggest that lease-up would happen in 60 days.

Let's look back—did it happen in 60 days or sooner? Or in some cases, so I think there's a fair amount of back-testing for us on the pricing side and on the vacancy side, and there's a fair amount of—not necessarily comparable, but other types of consumer receivables that we can learn from on the, on the tenant due diligence side.

And so that’s kind of how we approach understanding our risk.

Hmm, okay. And then on the pricing side in particular, are you basically suggesting to the landlord this is where it ought to be?

Yeah, and that’s just how it goes, yeah. Well, I mean, we say, you know, I mean, there's no landlord that we've ever engaged with that doesn't negotiate. They always want to. And we have a, you know, a fair understanding of the amount of room we have to negotiate, but you know, we are fairly transparent with our landlords on, okay, you know, this is where we’re gonna pay you and this is where we're probably going to re-list it.

And the reason we're gonna re-list it here is because this is what we think the right price is, okay? And I think, again, that information is valuable. You know, taking rentals out of the equation for a minute: Any asset, yeah, if you're selling your car, yeah, right, and Kelly Blue Book doesn't exist, some of the best ways you can have, you know, an understanding of where your car is valued is if somebody else comes and makes you an offer, right?

And so we try to be a, you know, very transparent partner to our landlords and say, look, you know, this is what we’re gonna pay you and this is where we’re gonna re-list it. You know exactly what we’re gonna make from this transaction, and we’re telling you why we think this is the right timeline.

And then that doesn't put them off?

No, I think actually, frankly, you know, that transparency is helpful because, you know, this is their asset, right? And this is—you know, our landlords, you know, this is their investment. Managing property is a very difficult, very arduous process, and so it's important that they see us as their partner.

Yeah, you know, from our perspective, the biggest value out that we give to our landlords is that, again, we have skin in the game. Yeah, right? Like, if we're, if we think it's gonna take three months to lease us up and it takes four months to lease us up, like, we're gonna lose money, not you.

Yeah, right? Yeah, and so, you know, we want to be able to communicate to them, you know, transparently in order to solidify that trust. You know, I think it's a fairly important thing with any business relationship.

Mhm. And so now do you have just like a network of people who are essentially reps for you to interact with these landlords? How are they assigned to like a rep the whole experience?

So we have a sales team. They engage with landlords at all different levels, and I think, you know, what's been important for us is learning that the market has to teach us a bit. You know, real estate is so wide and so diverse. You know, there are mom-and-pop landlords around one or two units, and there's, you know, Blackstone with a hundred thousand units, and there's a huge subset in-between of people, you know, a hundred units up to like 10,000 or 20,000 units, and all of them have different, you know, pain points.

And so I think particularly when we were in YC, we were very adamant like, okay, it’s this type of landlord. And I think what we've had to learn is like, okay, let’s go find out and see, you know, who wants the solution and why and, you know, try to craft a solution that works for everyone.

I think the other thing is that we’ve learned to be a little bit flexible to really respond to landlords’ concerns, right? Because the interesting thing about it is that if you are able to solve the problem on the landlord side, that the benefits really accrued to tenants.

Mhm. Right? If landlords have lower friction, if they have lower risk, if they are happier with their process, if they spend less money, a lot of that benefit gets felt by tenants who, you know, are able to have a faster and more secure application process but, frankly, you know, often are able to get much better deals in terms of their pricing and as it relates to broker fees and as it relates to application fees and as it relates to the actual rate itself, right?

And now do you have an average length of a tenant right now? I mean, I imagine—your winter '17—right now you're just coming up on a year, right?

So we had a fair amount of renewals over the last few months and we—in the last quarter, yeah, I mean, typically we’re leasing, you know, call it in between one and two years.

Okay? It's pretty standard for New York or San Francisco, same deal. You mentioned learning from the market; what were the other surprises post-YC? I'm sure there are about—

Yeah, I would say I think the thing that was probably the most surprising was finding out, you know, when you're a startup founder, you know, you research other startups and you kind of, like, try to understand, you know, how they solve these problems in their markets. And I think, you know, some of the companies that you would imagine had very sophisticated mechanisms to, like, acquire customers actually just had, like, regular sales teams that—

Yeah.

—like, yeah, and like, I think that was one of the biggest aha moments where, you know, interestingly, I think sometimes you get caught up in the idea of like, I have to innovate everywhere.

And I think one of the things that we learned, and, you know, I want to say thankfully, we learned this now, yeah, yeah, is that, you know what? Some processes work because they're the right process. Grand! So you should just do that!

You know, I think, you know, we learned, you know, fairly early that, you know, if you really want to work with the landlord and want to get uncomfortable, talk to them. That there’s not a scenario where you’re not gonna engage with this person.

Like, you know, this is particularly—it's a mom-and-pop landlord; like, there's an emotional attachment to this asset. You don't expect them to just, like, come over and, like, you know, just list it on a platform that they don't know.

You know, there's, at this early stage at least, there’s gonna be an education process. I think, you know, for tenants, you know similarly, our experience has been we give them an automated experience in the leasing, okay?

But, you know, what there are times where just even after someone's leased an apartment, just interacting with a person, like giving your customer a call and saying, hey, you know, how did you like your experience? Hopefully, everything went well—that sort of like small stuff that's like not just an automated response, which we do; like we have automated responses, we have automated notifications, you know, we can’t engage, right, with, you know, with every single time that we have or every single landlord that we have on a very hands-on level, but we do make the effort to do it a little bit.

Yeah. Because we learn, and also, you know, we—I think we build a customer loyalty there that I think will play out to be pretty valuable.

Well, it's such a unique angle, right? Like I'm trying to think of an example where something that used to be so high-touch, it just becomes automated away.

Yeah. You know, like imagine the first time you go in a self-driving taxi, mm-hmm, and you're like, you just step out and you're like, you’re just gone.

Yeah, yeah, yeah. No, I think I think what's really exciting about right now is that we are kind of participating in a reimagining of a lot of these, yeah? You know, whether it’s, you know, if you take Opendoor and home purchasing, you know, you take Oscar and health insurance. There are a lot of businesses that the infrastructure itself that is allowing these transactions to occur actually looks very much like the traditional infrastructure of the past.

What's changed is technology's ability to improve the user experience, yeah? And I think that is something for us, it’s a very exciting thing to be a part of because we know, right, twenty years from now, you know, two years from now, more and more tenants are going to—they don’t want to feel like they're applying for a mortgage to lease an apartment.

You know, the same experience that they have with, you know, buying something on Amazon is the same experience they want to have leasing an apartment. And so we know that if we’re providing that right, we're on the right side of history. And similarly, for, you know, for landlords, you know, like anyone else, there’s actually no other investment that I can think of where the investor gives their asset to someone who has no downside.

Yeah, yeah. Whether it, you know, successful or fails, you know, real estate is probably one of those singular places where you see that happen and I just, I don't think that's something that's likely to continue.

You know, landlords are gonna want that accountability with their real estate transactions, and tenants are going to want that better user experience. And so I know— I know what we do is providing those things.

Yeah, and so given that, you know, our bet is on those tenants remaining true, uh-huh, and if they do, then I think we have a really good chance of being successful.

Yeah, that makes sense. In terms of broader trends, even like you're talking about trends and global consumer behavior, basically how they won't purchase stuff on the apartment level. Are you noticing like certain things are just really coming up and like this is what makes an attractive apartment?

Yeah, well I think, I think a lot of companies are—a lot of companies are of the same mind, yeah, that the application process, the search process, needs to be elevated, it needs to be more—we have more technology, less human beings. And so I think there are a lot of companies that are doing this in some way, shape, or form.

I would also say the other quote-unquote theme that is fairly powerful right now is this idea of creating communities in different buildings, and I think there are a lot of different companies that do this, you know, Common. I think there's gonna be Called Home that’s doing that with kind of common spaces. But this idea of creating, like, using technology, but also just understanding how to engage in a social level to create communities in buildings, and like the power of that effect, I think is it's very interesting.

It's something that, you know, I anticipate we’ll have the opportunity to play a part in as well. But I’d say, you know, automated processes and more community living and community frameworks for four different buildings in neighborhoods, both trends that I expect in the real estate space to continue and expand.

Anything on new construction in terms of in the context of like what's coming on the market? What seems to be attractive now?

Yeah, you know, I think landlords are constantly looking for differentiators, and so they're leaning towards, yep, more technology inside of your house, right? Like there are apartments in New York where, you know, they’ll give you a year worth of Netflix, they’ll give you an Amazon Echo.

Oh, you know, I think it’s really about just gaining an edge and getting the apartment marketed, at least. Yeah, I have to continue. Okay, and are you finding that these trends are kind of broad across the U.S. or is it super market specific?

I—where are you guys mostly right now?

Yeah, so we're in the Bay Area and New York. You know, we will potentially be in other markets over the next, call it, 12 to 18 months. I think those trends are common across every market, but they're moving at different speeds.

Okay, so I think New York in particular is very interesting because of the saturation of new development, yeah, has forced a meaningful increase in the concessions that landlords have to offer in order to get their units leased. And in lieu of a concession like lowering the price or in lieu of a concession like giving away a month free, I think a lot of landlords are thinking, okay, how do I better amenitize my unit?

How do I give you services? How do I give you, you know, an Uber pass? How do I give you a Netflix subscription to, you know, accommodate that tenants' desire? And I think that that's gonna be—New York's gonna be a place where that trend moves fairly quickly.

Mhm. Okay. Because there are buildings and landlords who are picking up on the fact that their, you know, tenants are noticing like they're—paying attention to what the leasing experience is and they're making decisions because of it, right?

And so I think, you know, just as much as getting those stainless steel appliances matters, I think the experience in leasing out your apartment matters and I think that they're starting to realize it, and I think that that's been triggered a lot by the new construction that’s kind of on the market. So I think New York is gonna move fairly quickly.

I think San Francisco is somewhat similar. Markets like Dallas, D.C., Atlanta are all kind of in that boat, Miami also in that boat. But there are a fair amount of cities in the kind of the Midwest or Central Corridor of the U.S. that, you know, they're moving in that direction as well, but there's still so much potential return available in those rental markets that those landlords don't feel—they don't have the same urgency.

Mhm. Okay. And there are these landlords all in—I mean, I guess it's probably location-specific in terms of margins, where you see certain landlords are like doing quite well and then others are really feeling the squeeze?

Yeah, I think, yeah, I mean, it's definitely market-specific, and you know, that's a long-term trend that, you know, metro areas tend to have lower returns on in terms of a rental basis than non-metro areas, so we've seen that it'll continue. I don't anticipate that change.

Yeah, nothing changing. Alright, cool. So now that you're like a seasoned, wise entrepreneur, what would you have told yourself having now started a company having now gone through YC, say, like three or four years ago?

Well, I think I'm still a fairly young founder, so I think I'm still learning quite a bit, actually. Yeah, and I think what I would have told myself what I kind of continually tell myself is really be focused on solving the problem.

I think once you, you know, particularly what you raise some money and, you know, once your team kind of expands a little bit, there are a lot of ways to get kind of lost in the shuffle of running a company versus committed and focused on, you know, the reason why you started the company in the first place.

And I think it’s—it’s kind of easy to fall into the trap of, you know, you’re an entrepreneur, or you’re running a startup for startups’ sake, or for that sake.

Yeah, and I would say, you know, I continually told myself this today and I certainly told myself then to be hyper-focused on how do we solve the problem and be, you know, you can't—you can't, you know, over-optimize your business and over-strategize, but I think you have to be willing to iterate and willing to, like, learn from what the market tells you and not fall in love with, you know, I created this really cool fancy thing.

And you know, if nobody is interested in it, then you gotta also be willing to, like, throw it to the dustbin of history as well. And so I think just that commitment to being problem-focused is definitely something I would, you know, certainly continue to tell myself, and I would advise everyone to kind of think of it that way.

Yeah, I think it's so common, especially on the technical side, being like, hey, look at this crazy software I made. It's super fast! Yeah, I wrote it in all new programming language I invented, and I did it all last night, and I showed it to a customer, and I had been—if nobody wants it, it’s bad.

Yeah, okay. And have you now just hired people that you can delegate to so you can stay focused on that problem? What do you do?

Yeah, so you know, we have expanded our team, you know, I talked a little bit about I think I’m certainly among the most fortunate founders in that I have a habit of very, very experienced people who are also incredibly humble and willing to get their hands dirty, and I am very acquainted with the fact that that is extremely rare.

Yeah, I really tried to supplement weaknesses. So we haven't really expanded the team as it relates to the debt financing or securitization financing side because that's really my expertise and I don't think we need to.

We have expanded the team on the sales side, particularly on the real estate operation side because I think we needed to increase our bandwidth there in order to be able to engage larger customers, but we also needed to kind of import some expertise. We had to, like, you know, learn a bit about how is—how is the standard, whether it be broker or technology company—how are they solving the problem and how can we put our own spin on that?

We've kind of been fortunate on our sales side to really hire some people with some strong real estate and customer acquisition expertise.

What are your recruiting pro tips? I know, you get these people?

Yeah, recruiting is hard. I am aware it is so hard! They don’t tell you how hard it is—that’s the thing. Like, recruiting particular people were like great people—like, it’s very difficult.

Well, once you get out of your friend circle, oftentimes, yeah, I knew like three or four people we could hire and just done!

Yeah, same here, yeah! That's exactly right.

Yeah, my recruiting tip is, if you need to hire for a role at the outset, be very specific about what you need. And it’s important to know, like, what you need is what you want, right?

I think that sometimes you can get caught up in the, you know, optimal, like perfect, I’m gonna hire for somebody who’s going to become, you know, five years from now potentially, like, you know, very senior in the company. In a slick, you know, as a startup, you’re like, you know, your life exists in moments like, you know, at any given point in time here, you know, you know, maybe anywhere from six months to a year and a half away from not existing, right?

So I think it's very important to just remain focused on like achieving your goals—hire to do that, and then when you got to reassess, reassess.

And what about—so you were working a finance job before you started this company?

Know, what kind of mental process did you have to go through to like get ready? Did you quit your job before you guys went all-in?

How’d it go?

Though, I was so I was really fortunate that the company I was working at prior to starting the company they were very supportive and continue to be the, you know, great team. And, you know, I think we remained fairly close. So when we applied to YC, I was still working there, okay?

And, you know, I notified them when I applied and said, you know, listen, this could be a great opportunity, so I might leave, and they were, you know, I think they were really great about being supportive and being helpful there.

Yeah, so the process for me went fairly— it was fairly straightforward. Like, we let them know what we were doing, we kind of mutually agreed upon a time when I was going to leave, and that’s kind of how it ended.

But, you know, one of my co-founders, he quit much earlier, and you know, he was just working on the company kind of day in, day out. And I think that that’s the sort of thing that, you know, you got to have a really significant amount of trust between your co-founding team when you know, different people are in different life situations.

And I think it helped that, you know, particularly for me and Keenan, we've known each other for, you know, an excess of a decade; we've been friends for a very long time. And I think with Hersh, we kind of found somebody that—this is so cheesy, I know— but it kind of has somebody who's Sympatico who, you know, was willing—we’ve all kind of had this view of we’re just gonna work as hard as possible so we can get it done.

And so I don’t think, you know, even when Wind was working full-time and he and Hersh were part-time, I don’t think he ever felt that we weren’t contributing our share because we would just work until midnight and put in, you know, 16-hour weekends, like—until we shifted.

Yeah, so this is important. I mean, it’s a super common thing, right? You're like, oh, you're working on a full-time and you’re like the other guy is one foot out the door, like I am—me?

Maybe it’s special with YC. Yeah, if you get into YC, then I'll do it all—go to college!

So we had a great question from Twitter that I should ask more often. So from Renee, and they asked on personal life, how do you manage your well-being day-to-day?

Yeah, that’s a—that’s a fantastic question and something that I am constantly thinking about. I don't think when, when we started Resi, I don't think I appreciated how much taking care of yourself impacts your ability to run the business, and it's so important.

And so, you know, I'll answer a couple of ways. So, you know, I would say, you know, physically, I have been more recently, over the last few months, like trying to take better care of myself. So in terms of not only eating better, exercising more, I’m getting a checked—I’m trying to hit at least three times a week, if not get to the gym.

Yeah, and just like, you know, literally put yourself in a space where like you’re not thinking about anything else. Like, I think the mental relief from being at the gym is just valuable. But, you know, I'm a big guy—down 15 pounds and starting.

Okay! That's amazing! Thank you, man.

You know, I have a lot more to go, but I'm happy with the process. I would say, outside of the physical side, in terms of the mental challenges that you have, I mean, running a startup is—you engage with like terror and like your euphoria like, all the time—like, all the time, like I can't think of any other experience where like on a weekly basis, you're like, think the world's gonna end, and you think you're on top of the mountain, and you’re like, this company’s totally gonna fail, we're done, we should go.

It's not gonna work, we have a competitor, I should go pivot to being a beer company, which is definitely an inside joke.

Um, we—I think just being able to handle those ups and downs has kept, you know, very focused on the outcome.

Yeah, that is a skill that I’ve really only learned, effectively, my trial by fire. But it’s been very, very helpful and very, very, very useful for me in terms of managing my stress. Even in like the most stressful moments, I’m able to kind of level set and say, okay, this is what’s happening, I understand why I’m freaking out, let’s focus, let’s solve it.

And you put the purpose into words by just asking yourself like, are you journaling this down?

Yeah, so I do journal things down. Yeah, I do that all the time where I will—I have actually found that in those moments where I'm taking a step away and again, like I said, like I literally— I’m walking away, like I’ll go take a walk or I’ll, you know, leave the room for a minute and I’ll just open up notes on my iPhone and I’ll literally just start saying what I’m feeling.

And what happens is that it just like comes out, comes out, comes out, comes out. And as you express how you feel, you’re like the logical centers of your brain start to take over and it’s like, oh—that’s why I feel like that, okay, fine. That’s how I get myself, right? Whenever I'm worked up, I'm just like, write it down.

And you think this is silly—why do you care about this?

Yeah! But you can't— that logical assessment of the situation can't happen until you get it out, right? Because, you know, it like you feel how you feel and until you can accept that you feel how you feel, you know, you’re not able to, you know, actually move on from it.

And, yeah, it’s running a startup is a very like all-encompassing experience because it’s not just the running the business; it’s the what it takes from you as a person to do it. And, you know, I'm really grateful for the opportunity to do it because I think, yeah, I think it is driven a lot of personal growth just as much as it will drive, you know, a lot of professional growth.

Yeah, man! That’s great! A lot of wisdom!

Let's just wrap it up there. Thank you so much!

Alright, thanks!