Babson Business: RentingYourHome.com
Name of business: RentingYourHome.com
Mission: Provide a web-based alternative to property management for landlords to advertise and screen tenants, collect rents, and manage maintenance at a 60%-80% savings.
Revenues: <$1 million
Initial Investment: $100,000
Broke Even: Not yet!
Where: Run out of Boston, MA and Washington DC. We currently help hundreds of clients manage properties in 41 states across the country.
Founder: Jeff Takle, email@example.com, (857) 277-9050;Grad student, One-Year MBA Program.
Employees: 2 employees plus 5-7 independent contractors, depending. Outsourced legal, bookkeeping, taxes, and other peripherals.
Founder's Past Life/Business: I started a traditional property management company in 2003 but after just a couple of years I realized that the business model was terrible. It's all human labor cost centered around doing repetitive, administrative tasks like invoicing, depositing checks, scheduling maintenance, and making phone calls. That wasn't the lifestyle I wanted to build for myself. The property management company started as a side gig while I was still an intelligence officer in the Marines but as it grew it started consuming the majority of my time and I wasn't very happy about that. So, in 2006 I closed it down. Then, in order to leverage my experience in the Marines, I started a consulting company in 2006 to contract back to the defense and intelligence industries. Great income, prestige, and flexibility but the business model has limitations. Consulting is certainly profitable but there's an obvious ceiling to how much money you can make: there are only so many billable hours in the day.
How the Idea Began: Daren (co-founder) and I were sharing beers one night in his basement and I was bellyaching about my property management company, “If I have to fill out one more rental invoice in excel, I'm gonna go nuts!” Daren got us two more beers and said, “Don't worry. I'm a programmer and I'm here to help.” He built a tool to automate rental invoices and the idea grew into the complete RentingYourHome.com suite.
Initial Preparation to Germinate Idea: We decided to spend a month or two shopping the idea around before deciding whether to move forward. I was also a Realtor so I talked it over with investors, clients, agents, brokers, landlords, and tenants. They all loved the idea and gave us some indications of how much they'd be willing to pay. The very first landlord I pitched the idea to offered to give me $10,000 to start the company. Once we saw how naked the market was and how easily the product could scale, we went full blast. At the time, we estimated that we could have the product finished and ready to sell in two months…we had no idea how much more money and time it was going to take! It literally took 10x as much time and money as we planned – over $100,000 and 18 months to launch the first product! That's called “chasing perfection” and it's not a good thing for a startup.
Favorite Thing about the Business: I believe that ours is fundamentally the best product on the market—that really helps keep me motivated. The industry is so new and unexplored; competition is fragmented. It makes the profit potential fantastic and every day incredibly exciting. I also love that my competitors are rapidly evolving their business models too. There's nothing like the smell of hot competition to motivate you in the morning.
Worst Thing about the Business: The coffee. All I've got is a gigantic 55-cup “Silver Bullet” coffee maker left over from the One Year MBA's summer module. We all pitched in and jointly bought this huge coffee maker to get us through the summer at Babson. For me, one pot now lasts the whole week. Let's be honest…it makes a rotten cup of coffee.
Biggest Challenge: Being satisfied with producing a “great” product now, instead of waiting for a “perfect” product later. We spent the first year and a half trying to build the “perfect mousetrap.” Really, we should have taken only six months to develop and then immediately started selling the product to let the customer drive innovation. Instead, we tried to envision (and program) every possible problem/solution pair into the product before launch. C'mon, only iPhone can do that and get away with it!
Lesson Learned: Sell your product today. Everything else you might do instead – fundraising, research, systems, plans, brainstorming…it's all meaningless. There's no better endorsement, no better market research than having a client hand you several hundred dollars of cash. That's your business plan. Unless you're closing sales every single day, you're running a hobby, not a business. Sell the product to the point where, when people ask you how much money the company made, you can give them the real number. Then you can start obsessing about the other stuff. There's a tendency to find excuses not to sell: “The product isn't ready yet,” or “It's okay, they've told me they would buy so it's as good as sold.” It's not. Receiving cash in your hand is the only true test of your business idea.