Managing Apartment Turnover: From launch to $10M Series A, with Rent Ready’s Jonathan Kite

Entrepreneurs are always looking for the next big idea, something that doesn’t exist yet.  The next Facebook. The next Uber. The next Netflix.  But the reality is that the next million dollar idea is a company that simply solves a problem that exists in the world.  And for Rent Ready CEO Jonathan Kite, he saw that turnover at apartment complexes was too complicated – the painting, the carpeting, the deep cleans – and he set out to solve that one problem.  With a recent Series A round of $10M, he’s well on his way.

Transcript

Trevor Schmidt: Hey everyone, I wanted to hop on real quick to tell you about a special giveaway that Hutchison PLLC is putting on for listeners of this podcast. A few episodes back, Robbie Hardy shared the unbelievable story about how she used a magic 8-ball to help her decide whether or not to sell her company. All signs pointed to yes for her, and she had a successful exit. Well, we all have major decisions to make every day, so Hutchison thought it would be fun to give away one magic 8-ball each month in a drawing. And to enter the drawing, all you need to do is write a review on Apple Podcasts or wherever you listen – and let us know by sending an email to podcast@hutchlaw.com

Trevor Schmidt:Hello, and welcome to the Founder Shares Podcast. We’re so happy that you’ve chosen to spend some time with us. I’m your host, Trevor Schmidt. I’m an attorney at Hutchison law firm in Raleigh, North Carolina. We work with founders and entrepreneurs as they fight, grind, stress and push to bring their visions to reality. We are inspired by their incredible stories of success, failure, reworking and trying again.

Today’s guest is Jonathan Kite, Co-Founder and CEO of Rent Ready, a technology designed to make apartment turnover easy and efficient for apartment complexes. 

Here’s the problem. Apartments will turn over 50-55% of their units every single year. With the average apartment complex having 200-250 units, that’s about 100 times a year that the apartment managers need to coordinate carpet cleaning, painting, deep cleans, and maintenance, everything that comes with moving in new tenants. 

Jonathan Kite: And when you think about having to schedule, you know, three to five different vendors, a hundred times over in a year, and all of the touch points, like, just think about in your own personal life, when you work with any kind of contractor, like a handyman or an electrician or a plumber. That process of finding them, vetting them, scheduling them, handling that invoice I’m going to guess is likely not a 10 out of 10 experience for you.

Trevor Schmidt: So Jonathan, along with his two cofounders, saw this as a problem that they could solve. And the market potential – well, they estimate that turnover spend is about $10 billion throughout the country.

Trevor Schmidt: So, what led you to this industry?

Jonathan Kite: Yeah. So, the, the origin story is interesting. So, my background is more in technology, and we have a really diverse and strong co-founding team. So, there are three co-founders at Rent Ready.

one of them I grew up with, his name is Will Brew. We both grew up here in Charlotte, interestingly enough, which I know is rare, to come back and then start a company where you grew up, but three co-founders very different backgrounds. Our third co-founder Ryan McMillan, the origin of the idea really came from him.

So, he worked in the multi-family industry, both onsite and as a regional manager at various stages in his career and more corporate roles. So, he really saw firsthand how big of a problem this was, what the challenge was finding, building those networks of providers. The fact that there was really no technology or automated process applied to this.

And this was really about the same time that you started to see a lot of other online marketplaces emerge more focused on consumers, so companies like Uber and DoorDash and Handy, and he thought, you know, that business model is genius, and if it could be applied to the multifamily industry, that would just be a really powerful solution to a problem that is really underserved.

I mean, most technology in the multifamily industry is focused on residents, resident portals, leasing management platforms, and very little was applied to this maintenance problem, and the turn problem more specifically.  so he had this like very visionary intuition around what needed to happen to really help solve this problem.

He approached Will, all three of us went to Carolina together, and they had become friends after college, and started to talk to them about this problem and Will has a background in business and investment banking. And so, he was totally zeroed in on this as an evaluation of the market opportunity and realized there’s little to no competition.

That’s really thinking about this as a national problem, and certainly nobody that’s thinking about applying technology to this to really approach this problem at scale. So great, you know, vision and founding idea, excellent business background that the missing piece for them was really technology, because that was really the unlock to really building this company.

At the time I was working at Microsoft, I was out in Seattle. And, you know, they kind of innocently called me and asked the question, well, what do you know about scheduling software, which I fell for hook line and sinker. And it was a slow sales process, kind of over a seven-to-nine-month period where we kept talking about this problem and how we would approach it.

And I kind of started to work on what was initially our launching platform on nights and over the weekends, and kind of hit that inflection point where it stopped becoming work and just started to become a lot of fun. And I realized like this is just an enormously huge opportunity, again, totally underserved space.

Like now’s the time to do this. And so, always wanted to start a company, and again, well, and I kind of grew up together here in Charlotte. We always want to start a company, never realized it would be focused in the apartment industry, or specifically around this problem. But that’s kind of what led us into this particular industry.

Technology aside, like I’ve got a whole story of how I got into that. but that’s, that’s really the origin story of the company and its foundation. 

Trevor Schmidt: So, you and Will, growing up had talked about the possibility that someday you guys wanted to do a business together? 

Jonathan Kite: Yeah, we’ve both always been very entrepreneurial in our mindset. Always wanting to, to build something together, always kind of kept in touch throughout our careers, kind of tossing ideas back and forth, but never really settled on one that ultimately was, was worth kind of taking that risk.  until we met Ryan who kind of lit the fire under us and made us realize now was the time.

Trevor Schmidt: So, when Will and Ryan made that first call, did they at least imagine that this is where it would end up? Or was it more of a, hey, just bouncing ideas off of you at that time? 

Jonathan Kite: I think they always knew. They had a vision that this was not a small problem. This was a huge problem.  and our ambition was, and always will be to kind of build this as a national platform.

Like we want to be the disruptors of this industry, to be the de facto solution to how apartments approached this turn process. You know, they were pitching it as, look, this is a national opportunity and there’s a huge need for technology to build a platform to scale this business concept across the whole country.

Trevor Schmidt: Yeah. And so, you talked a little bit about that. I’m always curious as kind of when you realize, yes, I can leave my position here with an established company with Microsoft and, you know, and make that jump. And you talked about it being kind of at that point where it realized that this was, this was fun and it wasn’t really work.

How did you get over kind of, I guess the hurdle of leaving an established position to something that might be a little bit more uncertain?

Jonathan Kite: Yeah. I mean, I think a lot of it had to do with kind of the experience that I had at Microsoft. I had kind of three very distinct and different careers there.  so I started really an account services, kind of working with a subset of clients in the Southeast, kind of focused on advising them on how to use product, how to support that product. Moved into a different role after a period of time, kind of more focused on consulting.

So, living out of a suitcase, working with companies across the country every day, kind of seeing how they apply technology to problems, helping them build systems, process and strategy. But I think for me, it was my last role at Microsoft, where I was working as a program manager on a team that was really tasked with taking this very legacy piece of software that 10, 15 years ago, Microsoft engineers used to go onsite and install this, you know, very heavyweight application, on the enterprise servers. And our job on this team was really to convert that into a modern cloud service. Now, this was kind of pre-AWS pre-Azure, and we were using kind of advanced versions of that software that were given really only to Microsoft employees.

And I was just really blown away at the power that the cloud enabled businesses to kind of take this idea from a concept to execution so rapidly. You know, that used to take years to really build systems like that. And so, for me, I think it was seeing that application of cloud technology that gave me the confidence to say, I can do this myself.

Like, you know, the, there are the tools that are in place to really Take this concept and build it into something that can scale across the country. And, you know, that’s one of the reasons I love technology in general is just the speed of evolution. You know, the technology we use at rent ready today didn’t even exist when we started the company, which is kind of mind blowing.

And so, I think for me, it was just that experience of seeing what could be done, and how technology could be applied to a problem that gave me the confidence to say, now’s the time to do this. Like the technology is there to build a company around this concept. 

Trevor Schmidt: Yeah. So, it sounds like, you know, that your experiences and your history with Microsoft was pretty helpful for, for your current role. Would you agree with that? 

Jonathan Kite: Yeah, absolutely. I mean, foundation of understanding what customer service means, and how to interact and deal with customers and really difficult situations, to seeing how different companies approached application of technology to business models and helping them problem solve through issues and build strategy, again, all the way to actual hands-on use of technology and application of that technology to a business problem.

Like all of that to me was foundational. And, you know, I learned something very specific in each one of those roles at Microsoft that I think really have been foundational to helping build this company into what it is today. So, could not replace that experience at all.

Trevor Schmidt: I always wonder about that because I talked to folks who, you know, talk about joining a startup right out of college, or joining a corporate group out of college and getting some experience there.

Do you think, from your experience, that you would recommend folks go out and get some of that bigger experience before jumping into a startup? Or is it just personal to you? 

Jonathan Kite: It could be personal to me. I don’t think that big company experience is really relevant so much as some company experience is relevant.

So, I mean, in some cases, you know, the experiences you have at big companies are things that are great when you’re already at scale, but not when you’re starting a company and you’re never going to replicate the things that you see at a big company when you found a company. But I do think that the diversity of work experience that you get being exposed to how different companies approach, problem solving is key.

I mean, for me, I was fortunate in my time there working in consulting that in many ways I kind of had this almost speed dating type relationship with working with so many different companies. And to me, I think that’s critical, but again, some company experience, definitely helpful. I don’t think it needs to be a big technology company or a big company in general.

Trevor Schmidt: Yeah, no, that’s interesting. And it does sound like, again, getting exposed to multiple different businesses and how they implement their technology also provides it. Just a good view into what other companies are doing. 

Jonathan Kite: Yeah, absolutely. Things to do and things not to do. So, a lot of interesting stories and learnings from those experiences.

Trevor Schmidt: So, what were some of the initial challenges for Rent Ready? 

Jonathan Kite: One of the hardest challenges when we started the company is really getting over the, the chicken egg dilemma, right. Which is a really, you know, we need providers on the supply side of our marketplace, and we also need customers on the demand side of our marketplace.

And those two are so intricately linked that you can’t really sell a customer to work with Rent Ready until you have a provider to actually deliver that service. And then conversely, you also can’t sell a provider on the opportunity to work at Rent Ready unless you have the demand to actually give them jobs. 

And that’s always a very difficult thing to get by. And, you know, when we started, you’re wearing every single hat in the company, you know, it was just the three of us, you know, we’re manning the phones, providing customer service. In between calls, like building features into the platform that you kind of realized during the middle of a call, oh, crap. I wish, you know, the system did X, Y, or Z. 

And it was not rare early, early founding days for us to take an order from a customer where, you know, we would actually have to figure out how to recruit and vet and bring somebody on to deliver that work on the day that that job was scheduled, which is, you know, absolutely nuts.

And it was not rare for us to kind of find ourselves in a pinch where we had nobody to do the work. And, you know, those were moments where you just had to turn to each other and say, the buck stops with us. Let’s rush home, get all the cleaning stuff out of our kitchen cabinets and go to the job site and actually do the work ourselves.

You know, I think that’s foundational at the same time, cause it’s a humbling experience and it’s important to understand, you know, what we’re asking our providers to do. It helps build that empathy for what they’re doing and appreciation for how hard they work on a daily basis. But you know, early days, kind of building the momentum of that chicken egg problem. It’s tough, to kind of get past that. 

Trevor Schmidt: And is that a challenge that you think will have to be replicated kind of as you move into each new market? Or do you have enough kind of as a nationwide platform of providers? It’s going to be a less of an issue?

Jonathan Kite: Yeah, I think it’s always going to be a challenge when you launch a new market because you’re going to be faced with that same dilemma. One of the nice things that has happened though, is as we’ve grown and scaled in the markets we operate in, some of those problems in that chicken egg equation start to go away, where we’ve got great relationships with apartment communities in Charlotte and Raleigh.

And we can leverage those relationships to kind of feed off of those in the new markets where they might have sister properties and market X or Y, 

where really that word of mouth referral will allow us to enter that market with sort of a preceded amount of demand where we can say, hey, we’re going to launch in your market in, you know, the month of October, we’ve worked with communities that you’re related to in Raleigh and Charlotte, like, let, let us deliver that same experience to you in your city, which makes it much easier for us to then recruit against an expected or known set of demand. 

Jonathan Kite: So, a lot of those problems will start to kind of disappear as we continue to grow. But early, early times, you know, when you’re launching a market that problem always did exist, and is a difficult one to overcome. 

Trevor Schmidt: So how long have you the process, I guess before it was less you and the co-founders going out and doing the turnover before you had those, you know, relationships in place? I mean, was that an ongoing process or just kind of, how did that work out?

Jonathan Kite: It, it took time. I would say it took a couple months for us to really get to the point where we felt at, you know, a strong base of providers to go and do that work. I think for us, it was always critical to know that again, at the end of the day, like if something fell through the cracks, like we would go and do that. But it probably takes, you know, two to three months to hit that critical mass of having a supplier network that is big enough stable enough and reliable enough to really service a market. 

Trevor Schmidt: And talk a little bit about how you go about kind of building that, I guess stable of providers. I mean, it seems like a huge channel, you know, even as individuals who go out to look for, you know, even one service provider to vet them and know that the work is trustworthy and then to manage the job, how do you do that at that scale?

Jonathan Kite: Yeah. Recruiting, attracting talent is a top priority for us, and I think we identified that really early on. and I think part of that is our responsibility is really to make sure that that supply side of our marketplace is, is healthy and thriving. And that means that we really need to be experts, and building process around assessing quality. We’ve done that through, you know, a multi-step quality assessment process and really built our technology and tools around allowing us to take a large influx of people who want to work at Rent Ready, automatically assessing them for viability and fit, providing, you know, human quality assessment on top of that. 

But it really, you know, for us has provided a focus from a product perspective and the realization that ultimately, because we are a marketplace, we have two customers: we have apartment communities, which, you know, most people would say, Hey, that’s your customer. But our service providers are customers too. And so, making sure that we invest equal amounts of time into product development, to focus on service providers as customers is huge, which means we have to ask the question, like, what do pros really want, and balancing the things that they want, in terms of flexibility and independence working with us, quicker payments to them. 

Building tools that don’t require them to go into an office to get a paper job print out for what they need to do to really push technology interaction so that it’s all through an application.  so that communication notification of job assignments is all digital, which is an experience that many service providers in this industry don’t have. They’re kind of used to the traditional go into the office, get your job print out, go to the job site, at the end of the day, take that job printout back to validate that you’ve done the work.

So, we’ve invested in trying to provide a differentiated experience that makes this really one of the best places for a service provider to work through a combination of technology, the way that we pay, when we pay, the tools that we give them to really manage their business and understand what they need to run a business.

Trevor Schmidt: Can you speak to some of the difficulties, I guess, cause a couple of times you’ve mentioned now that, you know, Rent Ready is really introducing technology into the space where it really hasn’t existed before. So how do you get that adoption from both the apartment side and from the service providers, where they’re used to either working on whiteboards or just with paper, how do you make that transition or help them to make that transition?

Jonathan Kite: Yeah. I mean, I think it’s about demonstrating value beyond the core benefit of just being a single source provider, right. That in and of itself is already a huge differentiator, but really making sure that the technology interaction from a product perspective adds value beyond just that. So, a classic example, like you referenced, apartment communities today, they manage this process on a whiteboard, so they will list the units that they need to turn on the Y access, the services that are needed on the X access, and they will build a matrix where they call a provider on their cell phone, validate that they can do the work on a specific day, and they’ll pencil that in on the whiteboard. 

Well, that’s great for the person who’s managing that whiteboard if they can remember to keep that up to date, but there are multiple people on site who need to know that information.  so providing, you know, full transparency into that process is one of those examples of providing value to customers where, you know, we provide a digital make-ready interface where as our service providers are completing work, the digital equivalent of that whiteboard experience that, you know, they know and are familiar with today is updating in real time. So, if there’s a painter onsite, they see that in progress. They don’t have to wait on the maintenance manager to go look at the unit, cross it off, and then, you know, send them a text message in the front office and say, hey, that work is done. There’s full insight, and so we’re kind of eliminating that triangle of feedback where multiple people on site don’t really know what’s happening.

 Another great example we know, because we keep detailed records of communities around what their preferences are, what sequence do they want those services delivered in? You know, what is their goal in terms of the number of days they want to turn that particular unit so that when they go to schedule that we’re automatically laying out a sequence that fits the exact timeline that they want without them having to input that information, go back and forth between multiple vendors to kind of manage the logistics of sequencing. And we’re just providing real time, instant confirmation that the work’s going to get done. And as the work is getting done, updating that turn board in real time for them, and really adding value to a point where it almost becomes a no brainer that this is just an easier way to do it because they’re removing so much friction from the process.

Like that’s kind of where we put our focus from a product perspective in order to kind of push that adoption of technology. Same thing on the provider side, making sure that there’s full transparency into when I’m getting get paid, how much am I going to get paid? You know, where are my jobs? What, you know, what is my estimated earning, you know, based on a relationship I have with the community. How do we make it as easy as possible for them to, to see that work into the future so that, again, they’re not going into a, you know, an office every single day, having to see that and really just eliminating the frustrations that they would have managing their own business, so that they can really focus on what they enjoy doing, which is the actual trade itself, like focus on being a painter and we’ll handle all of those back-office pieces around marketing, invoicing, sales, so that you can just focus on what you do best. And so, I think for us, it’s all about understanding the customer and building product that adds value into their experience. 

Trevor Schmidt: And how much of the product was kind of in place before you launch it? Cause I’m thinking about how, you know, how you go out and pitch that first apartment complex, that this is the tool that you need, how much of that product was in place kind of before you made that pitch, and how much have you kind of iterated on it as you’ve added more communities? 

Jonathan Kite: Yeah. Well, when we launched a company, absolutely none of that product was there quite frankly, it was really all an idea. You know, we focused our technology first and foremost around solving the problem of actually delivering on that core value proposition of being a single service provider, which meant, you know, building technology that allowed us to manage multiple service lines in a sequence, you know, delivering tens of thousands of services. Every year.

But I’m a firm believer of do it manually first and build good process first before you automate it. You know, Bill Gates has this great quote about automation applied to bad process only further magnifies how bad that process is. And that’s always been super ingrained in me. And so, we very much focused on building technology to keep us, you know, organized and on track, but doing things manually, as we learned the intricacies of running this business in a single market, the intricacies of running this business in multiple markets, and then layered automation on top of that over the years.

And again, that was really primarily focused on solving our own internal challenges around operating the business first and foremost. And then we kind of turned attention to differentiating experiences for both sets of those customers on top of that. But you’ve got to have that strong foundation first and foremost.

Trevor Schmidt: Yeah, no, that makes a whole lot of sense. What were some of the mistakes that Rent Ready made early on in the process and how were you able to overcome those mistakes? 

Jonathan Kite: Yeah, I mean, it’s, it’s a nice dovetail based on kind of what I just walked through. I think, you know, in hindsight, maybe we didn’t invest enough in technology initially. But again, that was very intentional. We wanted to learn what the right process was prior to building anything on top of it.

It probably, you know, was a mistake to focus exclusively on our own problems first and foremost, as opposed to customer problems, but that’s a, you know, an intentional decision that we made because frankly, what we’re trying to do is very complicated. We’re trying to automate a sequence service delivery and remove as much manual input as possible from that process. and so, we focused really on ourselves as a customer first and foremost. 

Right or wrong, in hindsight I wish we had spent more time building, you know, direct customer facing tools and direct service provider facing tools really in parallel. That’s a mistake, you know, I would advise anybody else starting a company to avoid is to not focus on your own problems, focus on the problems of your customers first and foremost, because if you can solve those problems that will drive you to the outcome that you ultimately want.

Trevor Schmidt: Yeah, it’s an interesting point because it really requires having those conversations with your customers and hearing their responses and being able to implement that back into the product and back into the service that’s being provided. And so, I guess, how do you, how have you done that as a team, you know, kind of get that feedback from customers? Is it, you know, feedback from those who were providing the services? Is it direct conversations that you’re having with the apartment complexes? 

Jonathan Kite: Yeah, it’s a bit of both. I mean, if you have good customers, they will not be shy about providing you feedback. And you know, feedback is obviously a gift. You know, I think at least for us initially, that experience of going and doing the work ourselves, you know, I cannot harp on that enough in terms of when you go in and actually do the job yourself, you clearly know what the problems are in terms of what needs to be built for you to do the best work you can. And so that direct experience I think is critical. But we’ve also, you know, spent a lot of time just kind of white boarding ideas and concepts with customers. Like what is it that you want to see? 

And, you know, it’s interesting thinking back on that last comment I made about, you know, not focusing on customers sooner and instead focusing on us, I think it ties into that adoption question you asked. One thing that’s interesting is, you know, many of our customers did not express an acute desire to interact with a service provider in a technology driven manner.

Again, this is not a very technology driven industry, and if it is, it’s all focused on resident experience, not back-end maintenance experiences. And so, for an onsite maintenance manager or property manager they’re very used to, and in some circumstances even prefer communication, it just person to person, whether that’s over text message, phone call. 

And so, we did not focus initially on that, that product for customers, but when we realized that, you know, sometimes you have to suggest the great idea to them, and they’re not always going to give you exactly, you know, where you need to go.  when we started to put, you know, concepts around what a technology-driven model would look like for apartment communities, suddenly for them, like the light bulb went off, like this is so much easier than calling or emailing. I get instant notification, full transparency reporting. 

And, you know, we spend a lot of time working with the people who actually are going to use this, sort of the, the NVP customer segments where, you know, they, they use us frequently. They’re great customers. They’re always providing feedback and spending time with them walking through initial design concepts, wire frames, that is critical experience in terms of making sure that, we’re really focused on, on the right problem. And that’s for both sides. You know, both the apartment communities and also our service providers as well. 

Trevor Schmidt: I want to ask you a bit too, because as you’re talking about some of these challenges, you know, we’re all coming out of, you know, this past year of 2020 and what COVID did, and effects of quarantine.

I imagine for your industry where you’ve got service providers on site, you’ve got, you know, apartment living and all of those issues. How did COVID impact Rent Ready, and how did you respond to that issue? 

Jonathan Kite: It was scary. I’ll say that, it was a scary year. I think, you know, when you reflect back and it’s hard to believe it’s already been a year since this really started and what along year it’s been, you know, when the new an impact first started here in America, I think, you know, everybody was kind of dealing with the ambiguity of not really fully understanding, you know, what the impacts were.

And, you know, I think the initial response in the industry, was a very psychologically driven response. Our business follows a very predictable pattern, you know, that 50 to 55% of, you know, residents moving out on an annual basis is very consistent, easy to track. And so, for us, we were able to immediately quantify what the impact was and we saw anywhere from a 25 to 30% drop in the number of people moving out of apartment units. 

Meaning people were just staying put? 

Yeah, people were just staying put. And you know, whether that was due to safety reasons or just, you know, a psychological, I don’t feel comfortable moving at this point in time, you know, onsite teams were getting really creative about extending leases and providing promotions to keep people in units since they didn’t feel comfortable moving.

And so there certainly was a very immediate short-term impacts, you know, apartment communities closed their doors. I think one thing we were super fortunate in then is if you really think about the nature of the work that we’re doing, we’re turning units that are empty. So, nobody’s in these apartment units.

And so, while there was an initial pause really across the board in all markets around move-outs really, after about a month, two months, we started to see that open back up where, you know, there was a realization that, you know, these units are typically, well, not typically, they’re always unoccupied.

It’s usually just one of our service providers in there working at a time. There are very easy ways through technology like smart locks to really give access to those units without any face-to-face interaction between our staff and their staff. And so, we were very quickly and creatively able to kind of overcome the barriers of actually performing work.

And so that was, you know, a huge benefit to us, but we also took that opportunity to really think about how the multifamily industry was really responding to this pandemic. And one thing that we clued in on was this industry was very underserved from a safety perspective.

And so, we took this as an opportunity to really launch a new service offering for our company. So, we started to provide disinfectant services directly to apartment communities for both common area spaces like clubhouses, gyms, pool areas, but also vacant units as well, whenever a resident would move out.

So, we would go in and actually apply disinfectant with electrostatic sprayers to kind of help the spread of communicable diseases, and for us, that was a really interesting experience because it’s an idea that we kind of took right when the pandemic hit, and we’re able to kind of quickly build relationships with providers, really even outside of the core markets that we serve in Raleigh, Charlotte, and Atlanta, and launched this as a service offering nationwide. 

And it was really only something that was possible because of the use of technology, where we were able to go from zero community, serve to hundreds of communities served in 20 plus markets in a matter of 45 days a week, which was huge for us and, and was, you know, obviously a super impactful, you know, increase in revenue for us to kind of offset what we saw as a result of the impact of the pandemic to our, our normal kind of core turned business. 

That was one of the ways that we adapted. Fortunately, over time, you know, we’ve seen things kind of return to normal after like that initial five-to-six-month period where, as of today, like things are, are fairly back on track, which I think is both great for us, but also just great for the country and the industry in general.

Trevor Schmidt: Yeah. Well, it sounds like you must have been a successful in the response during the time. Cause I understand you recently closed your series a funding. So, congratulations on that, but it just, it just, I think speaks to the fact that despite those challenges, you’ve been able to demonstrate value to potential investors to your customers and continue to grow the business.

Jonathan Kite: Yeah, that was huge. And I think that response, the speed of the response, the maturity of the response, the actions that we took to do that, I think for both current investors and obviously future investors, built a lot of confidence in what we were doing.

And I think also just for learning lessons and launching that new service line kind of was a light bulb moment for us in terms of how we could apply similar concepts in terms of, you know, building and expanding our provider networks to apply that to our core turn. You know, it’s interesting as like one of the toughest years, I think for all companies across the country, to really be able to pivot that into what we felt was a strength put us in a strong position to raise that series a round. 

And of course, like fundraising is not something you just turn on and do. It’s something that we have been working on for a long time. I mean, over the last several years, we’ve been building relationships with numerous funds in anticipation of really raising this round of capital.

We ended up getting to know Don Rainey at Grotech, who led the series a round for us, and really felt like they were just perfect partners for us in terms of helping us in our next phase or stage of kind of growth and scaling. We were really looking for investors who really had experience in a couple of areas, helping companies build marketplaces since that is, you know, the core of what we’re trying to do. You know, investors that had experience working in multifamily and also investors who had experience in in product expertise and, you know, Grotech kind of fit, you know, all of those requirements for us in terms of their portfolio of companies that they have helped in the past.

And then we were able to kind of attract a really strong round of well-known venture funds in the Southeast, some here in Charlotte, you know, with experience in real estate and prop tech and also saw our current investors really step into this round in a meaningful way, which, you know, for us was really validating in terms of, you know, what we had gone through in the last year and really was a signal of faith and confidence and in what we were doing and how we responded as a company.

Trevor Schmidt: So, you had mentioned the fact that fundraising doesn’t happen the day before you closed the deal. So, when did you first start having that conversation with Grotech and some of these other investors? 

Jonathan Kite: Yeah, we started really in the fourth quarter of last year. I mean, obviously we had been in touch with many of them for the last several years.

I mean, it’s always good to stay in touch, always be networking, talking to folks like that because even if you don’t have like an imminent or immediate need to fundraise, there’s just such a wealth of knowledge in many of these institutional investors that you can really lean on.

Incredible connections can be made, you know, in any industry that you’re in, like for us, we were fortunate that many of our current investors and now future investors, you know, had a lot of great connections in the multi-family industry that could be made. And it’s always super helpful to talk to decision makers in your industry to understand, you know, do you have product market fit? What are the things we need to be focused on? 

And so, you know, even if you’re not intentionally fundraising, staying connected is really powerful in terms of building relationships, whether you need to rely on those relationships for fundraising in the future, or if it’s really just about improving your product and improving your company.

Trevor Schmidt: Yeah. It’s such an important point that I don’t know that a lot of young companies realize it. You know, those relationships are not just about who’s going to write you the check today, but it’s about the network. It’s about the experience. It’s about what they can tell you about your product or about your customers.

And it’s so important to have those conversations, just an ongoing basis, whether they’re the right fit for this product, right fit for this company, or the right fit for this round. It’s just good to have those conversations continually. 

Jonathan Kite: Yeah, and, you know, even when you are looking for somebody to write a check, I think it’s really critical to not view them as someone who’s just writing a check. It’s important to make sure that you’re finding someone who’s ultimately going to be a strategic partner for you, which again is like why Grotech was such a perfect partner for us. Just as much as they’re evaluating you, you should be evaluating them in terms of how they’re going to make your company stronger, how they’re going to partner with you and really push you to be better both as a company, but also as a founder and a leader within the company.

Trevor Schmidt: Yeah, it’s a great point. So, what do you hope to accomplish with this investment? I mean, what’s the next step?

Jonathan Kite: Yeah. So, we really view use of funds in three categories, and the first is really continued investment in technology. We’re focused on product as it is today for customers to interact with Rent Ready as a platform, but there’s so much more that we want to do and automating the workflow of the make ready process and to remove as much friction as possible.

And that technology is important in terms of adding value to customers and how they work with us, but also in terms of how we build platforms that can scale that can remove as much overhead, out of running this company as possible. So that we’re automating as much as, as we can. So, technology investment is really first and foremost, but secondarily it’s also about growing the business.

Growth can come in multiple ways. It’s about continuing to penetrate the existing markets that we’re in and hiring to support the markets that we’re in as we grow into them, but also about launching new markets and hiring to, you know, find folks to join our team, to help us launch new markets. So really those three vectors technology, growing the team, and growing into new markets were really the primary purpose and intent behind raising this round.

Trevor Schmidt: And so, as you kind of speak to those three different categories, what do you see as kind of the biggest challenge for rent ready in each of those categories? 

Jonathan Kite: Yeah, I think, you know, from a technology perspective, it’s really building a balance and not losing sight of customer. So, I talk about trying to remove friction from the process, trying to automate as much of this workflow as possible. Making sure that that’s balanced with, you know, not losing focus on the provider or the apartment community. I mean, this is a very people driven industry. It’s a very relationship heavy driven industry. 

And so, I think one challenge that we have is making sure that as we introduce these tools, we don’t lose sight of the human connection that’s really critical to growing this business and to providing outstanding customer service to our customers and to our pros. I think, you know, a lot of companies become overly reliant on technology and think technology is the answer to every question. You know, I think we’ve always had this approach of, we want to provide, you know, the benefit of working with a bigger company, but also maintain the experience of working with a smaller company.

Because that’s what this industry expects, they expect relationship-driven interactions. And so, making sure that, you know, we don’t push too hard on use of technology to the point where we alienate customers, I think is a big challenge for us and one that we’re, you know, we’re going to be acutely aware of as we approach expansion of our technical capabilities.

Growing the team and growing into new markets is always a challenge, making sure that we’re selecting the right market, where we have existing relationships, getting over that chicken egg problem that I always refer to as you launch a market that that will certainly be a big challenge for us moving forward.

And really that’s because building these provider networks is difficult, and that is really one of the core value props that many of our customers look to us for. We’re doing that legwork for them of building these provider networks and ensuring quality, and continuing to look at how we can scale that concept and leaning into the learnings that we developed by launching that sanitization service by working with larger providers on our platform, I think really are the, the keys to kind of unlocking how we do that at scale.

But certainly, that will, that will be a lot of work and we’re excited to do it and excited about kind of taking those concepts that we learned last year and really trying to apply those to our core business, really across the whole country. 

Trevor Schmidt: Now, as you look to expand across to these different markets, I mean, is it key to have somebody who’s present in that market who’s familiar with kind of those individual spaces and the providers there already, or is that something that you can, as the existing Rent Ready team kind of, I don’t want to say fly into that market and start to implement yourself there, but how important is it to have that local relationship? 

Jonathan Kite: Yeah, I think it’s very important. You know, we have kind of a distributed team where. Some of it is centralized, but a lot of it is de-centralized, and so, you know, having somebody actually in the market from the market, I think is critical. They usually come with built-in relationships with the community that already exists there through associations, through, you know, their professional background, the network, just familiarity with the geography.

It’s super easy for, you know, a product manager at Rent Ready to kind of design a service territory based off, you know, statistical input. It’s very different to then take that model of like, hey, here’s where a service territory should be and say, actually, no, there’s a highway running right through that part of the city.

 that’s never going to work. And so, I think, you know, the combination of, you know, a decentralized and centralized strategy is critical to making sure that, kind of what I just said, like you provide that small company feel there’s someone physically in the market that you can talk to. While at the same time providing the benefit of scale of a larger company that, you know, is trying to optimize through centralizing, you know, resources like customer service and technical support. I think that’s kind of the key to our success. 

Trevor Schmidt: Yeah. I mean, it’s fascinating to me to think about kind of the number of, there’s got to be some consistencies across the different markets, but there’s got to be just unique challenges for each of them. So, it sounds like a big hurdle that you guys get to get across, as you go forward.

Jonathan Kite: Yeah. Every market is similar and every market is a little bit different and it’s really interesting. Like, you know, I reflect on, you know, the differences between like Raleigh, Durham and Charlotte, you know, Charlotte is a larger market by a hair, you know, probably 20, 30,000 more units in Charlotte than there, there are in Raleigh and Durham.

And even just geographically, the difference between, or the distance between Raleigh and Durham, pretty similar, in terms of, you know, North Charlotte to South Charlotte, but they act like totally different cities, like they’re on totally different islands. And so, it’s not fair to really think about every market as being the same.

And I think you’re exactly right. There are kind of unique differences that are really, really important, both culturally and also in terms of how you actually operate that market, which is why we’re, I think we’ll always going to invest in roles in the market to serve customers and our providers.

Trevor Schmidt: Now, this is a bit of a curve ball question, but have you had any unique stories from your service providers as they go into do a turnover for an apartment, any sort of, you know, just drastic cases that somebody would have to deal with or is it all pretty standard? 

Jonathan Kite: I would say 99% of the time it’s fairly standard. But you’re right, you never know what you’re going to walk in on, like the number of children’s stickers on the wall, you know, ranging from like two or three to like 5,000 stickers. Or, you know, like the strange colors that people might paint their walls before they move out the things they leave behind.

So, we’ve got a war chest of stories of crazy things we’ve seen. Again, 9 times out of 10, it’s pretty standard, but you do see some, some weird stuff, for sure. 

Trevor Schmidt: Yeah, so, if you were a service provider on a daily basis, rather than kind of running Rent Ready, what’s your favorite side of the service business? Are you a painter or a cleaner? A remodeler? 

Jonathan Kite: Yeah. I think, you know, there is a process for reapplying enamel to both countertops and tubs, just called resurfacing kind of generically speaking. I find that fascinating to take this like really old, dirty tub and make it look brand new, is just like one of the coolest things.

And, you know, when we started the company again, just like the transformation of, you know, an apartment that’s been lived in for five years to it looking almost brand new is almost magical. But I feel like the resurfacing of countertops and tubs to me is just like the best example of that, where it truly looks brand new.

And the process is just, it’s kind of a cool one, in terms of how you sand it down, how you reapply the enamel.  so if I had to choose any one of the skilled trades in the turn that I would be a resurfacer. 

Trevor Schmidt: That’s good to know. So, you know, from talking to you, it just seems like you’re, you’re very passionate about this business and excited about it and, you know, I don’t get the sense that, you know, you miss your old corporate job, but what did, what is it that wakes you up each morning, excited to do more work with Rent Ready? 

Jonathan Kite: You know, there, there are days you miss, you know, the big company perks. Microsoft is a fantastic place to work and, you know, fantastic people certainly, but zero regrets. I think waking up and realizing that you are the master of your own destiny is really powerful.

Being able to realize that you can see an immediate impact from the decisions you make and the problems you solve. You know, in a bigger company, you know, you can work for years on a problem and never see the impact, never get the recognition for that impact, you know, when you’re building a company and you make a decision, you see immediate impact sometimes the next hour.

And to me, that’s super invigorating to like constantly be faced with these challenges, to go through a decision-making process, to think creatively, and really control the outcome of that problem, is really powerful to observe. And just the feedback loop of seeing progress iteratively is incredible to see the building blocks.

And sometimes you do have to take a step back and think, you know, remember how we used to do this two years ago and look at where we are now. Like, that’s amazing. And that’s just not something you always get at a big company. And so, for me, that’s kind of what gets me up every morning, like thinking about solving these problems and the challenges, and seeing that impact, is really what gets me going.

Trevor Schmidt: So, what about the flip side, you know, what is the hardest part about being a CEO of a, of a startup or entrepreneurial company? 

Jonathan Kite: Probably very similarly, the same answer, like being the master of your own destiny. There’s nobody looking over your shoulder to tell you know you shouldn’t do that or you should do this.

And it’s really incumbent on you to kind of build a network of mentors and connections in your industry. Whether that’s, you know, in this case, the multifamily industry, or for me, you know, people in the technology industry that I used to work with, to really kind of bounce ideas off of, because ultimately nobody’s going to tell you what to do.

That can be stressful. you know, I’m super fortunate to have founded the business with two other people, and I think for anybody who’s thinking about founding a company on their own, my advice would be don’t. Get somebody else to help you with that to share that burden, to go through that experience together.

Because it’s helpful to really be able to rely on somebody else to help you go through many of those problems that you’re inevitably going to face when you start a company. 

Trevor Schmidt: Well, Jonathan, you may have touched on it just here, but we are the Founders Shares Podcast. And so, I like to ask all of our guests, you know, if there, if there was one piece of advice that you would offer to somebody who was starting a business or already running a business and was, you know, thinking about how to improve it, you know, what’s that piece of advice that you would share with them?

Jonathan Kite: Yeah. I mean, beyond don’t do it on your own and finding someone who can complement your skill sets, I’d say it’s not really about the idea. You know, I think a lot of founders or would be founders they have incredible ideas, like it’s not about your idea or the uniqueness of your idea. It’s really about the dedication and determination that you have to turn that idea into a reality.

And then ultimately being able to operate that. I mean, coming up with the ideas, the fun part, that’s the easy part, but learning how to build it, scale it and operate it, I think that’s the differentiator. And your willingness to kind of grind it out, make tons of mistakes, learn along the way, like that’s part of the process.

But I think the difference between success and failure is not the idea. It’s really your perseverance to never give up in that process, you know, which kind of speaks to, you know, what I talked about earlier, like do it manually do it manually, as long as it takes, get the process right. And put in that hard work and the rest will take care of itself.

Trevor Schmidt: Yeah, that’s just great advice and a good pointer for anybody who’s out there listening. So, if there’s somebody who wants to reach out to you or learn more about Rent Ready what’s the best way for them to get in touch? 

Jonathan Kite: Yeah. Visit our website, rentready.com. Easy to get in touch with us there. You can follow us on social media, on LinkedIn. I’m happy to accept any request and be in touch with anybody who’s looking for help or potentially even wants to join our company.

Trevor Schmidt: That’s fantastic. Jonathan, thank you so much for coming on today and for sharing your story. I really appreciate you taking the time.

Jonathan Kite: Yeah, absolutely. It was a pleasure Trevor, and I appreciate your time as well.

Trevor Schmidt:That was Jonathan Kite, CEO of RentReady, and you can find more by connecting with Jonathan on Linkedin or visiting RentReady.com

Full Episode Transcript

GIVEAWAY: A few episodes back, Robbie Hardy shared the unbelievable story about how she used a magic 8-ball to help her decide whether or not to sell her company. All signs pointed to yes for her, and she had a successful exit. Well, we all have major decisions to make every day, so Hutchison thought it would be fun to give away one magic 8-ball each month in a drawing. And to enter the drawing, all you need to do is write a review on Apple Podcasts or wherever you listen – and let us know by sending an email to podcast@hutchlaw.com.

Hosted by Trevor Schmidt, Founder Shares is brought to you by Hutchison PLLC, and is edited and produced by Earfluence.

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