Guest: Nathan Miller
Episode Transcript (Click to expand)
Ramesh: Hello everyone. Welcome to one more episode of the agile entrepreneur podcast and video cast. So today I'm going to talk to a gentleman who is in the real estate industry. Both from a technology side as well as the investor in developer side. So Nathan Miller is the president and CEO of Rentec direct, a popular property management software that helps property managers and landlords with their day to day tasks. Nathan is also a real estate investor and developer and proud husband and father. So I'm very eager to meet Nate. Hey Nathan, do you go by Nate or Nathan?
Nathan: Nathan is great. Thank you.
Ramesh: Fantastic. Nathan, welcome to the agile entrepreneurial podcast.
Nathan: Thanks for having me.
Ramesh: Great. So I introduce you and Nathan, but if you could tell in your own words what is when tech direct and what do you do with that?
Nathan: Yeah, well Rentec direct is a, it's a project that I started as a more or less a hobby because I was a and still am a landlord and needed technology to help me be more efficient. As I started gaining properties and managing properties on my own, I realized there's a, there's a lot of stuff that goes into it. You have a lot of things to keep track of. Not just, you know, accounting records or taxes, but you got maintenance and you got, you know, who's late and you have tenant communication and all this stuff. Once I had five or six rentals, I was managing became a little, a little excessive, but it took a lot of brain power and the time to think about and to maintain. And I also had a full-time job. So part of my background is I'm a software developer and I'm self-taught and I understand how technology can help people be more efficient. So I went out on a journey to make my landlord activities more efficient through software and created an application to help me with all those tasks, anything that could be automated, I automate it. And that was the beginning of Rentec direct. It was not necessarily intended to be a business or what it turned into today, but what that ended up morphing into is a
software application that now helps about 15,000 property managers and landlords. And we've added a lot of stuff in the last 10 years to make the life of property managers easy and kind of cool. Because you know, being a property manager isn't sound a that glamorous but we can provide them tools that make things better for their tenants and so your tenants can pay online so they can select the best tenants. So anyways, in a nutshell we provide software to property managers. It's you can kind of think of it like a we are the QuickBooks for the property management industry, but we add in all the various special stuff that property managers need in order to Excel in their market.
Ramesh: Excellent. Nathan. So now that we have a very good background about your company, so let's trace the journey of your company. So you were a landlord first, and then at what point did you actually take the first steps to write the application?
Nathan: This is, we're probably about 2007 when I did this and let's see I had, I believe about five of units I was managing and that's where it became too much work to do it on the side without help. So I had to at that point make a decision, you know, do I focus less on this or focus more on it? And it was right at that point where I decided that, you know what, I'm going to, I was actually very excited about the prospect of creating an application and I decided, you know, I'm just going to set my alarm early and I'm going to wake up early and I'm going to work on this before work. And I got so excited about the prospects of what this could become and how much it could help me in a few other landlords. I didn't need the alarm anymore. My mind was racing it, you know, three or four in the morning, I'd wake up wide eyed and would be racing because I was so excited to go do it.
Ramesh: Yeah. So then you are building the application in the morning then in the evenings, how long did it take for you to feel comfortable with application?
Nathan: I initially was just building it with myself in mind and so I didn't have very high expectations of, like what it's going to look like or how well it's going to function because I just, you know, I had these, I had a few things that I wanted it to do and so I was really focused on those and my initial idea wasn't to create a company out of it. But I did want to make the software available to any other landlord that was like me that could also use the help. And my plan was just give it
away. Like anyone, anyone can use it. It's going to take me, you know, a few months to make this and I'm just going to give it away. Let anyone else use it. Just to help. So anyways, let's see, I think I forgot your question. Where we started with that.
Ramesh: How long did it take for you to actually start using the application?
Nathan: Okay, so probably six months before I got a true value out of it and was able to put my properties into it.
Ramesh: And then, so you are your first customer even though not paying. So then once you got it, then you were wanting to give it away. And then did you give away to other property managers?
Nathan: Well just landlords at first. So it started out as an application specifically for private landlords. And I did. You know, I bought the domain www.Rentecdirect.com. And I went and found a template. I think it was like a template from some German template creator, which I thought looked neat. In retrospect it was hideous, but I liked it. So I just like to use this template and put a little bit of information about the program up there and created a form so anyone else could sign up and use it right away. They didn't have to contact me or anything. They can just sign up and use it and get the same value out of it that I did.
Ramesh: So is this a web application or is it something that they need to download onto the computer?
Nathan: It's a fully web based. So cloud hosted service.
Ramesh: Okay. So now you gave it away. At what point did it become like did you turn that into getting paying customers?
Nathan: Okay. So I gave it away and for probably almost two years and yeah, and I kept improving it because you know, I needed more stuff and I also was supporting it via email only at that point. You know, and it would have to have to be at night because I had a day job. So and I would take the feedback that I would get from folks that were using it. And if it made sense, it would have, where it helped me and it would help everyone else, you know, using the software. And if I had the time to develop it, then I would go ahead and do it and write it in there. So it was about two years of that time just supporting at, via email, adding little stuff.
Ramesh: Nathan, if I can ask you a question, how many people are you talking about in the two years’ timeframe? Is it five? 10? Because it's work supporting these people.
Nathan: It is, and that's partly why we ended up creating a company out of it, but in that two-year period we probably had about 300 or 400 people using the software.
Ramesh: No kidding.
Nathan: I know, blew me away.
Ramesh: And then you were not even charging for them. Wow. Good. Please keep going.
Nathan: Well, so that's what actually ended up creating a company is that, you know, we had a few hundred people using the software. They were using it completely free and they were wanting support. So even though, you know, you go use the application on the internet, you find people still have questions they need, you know, they want to get training and they want new features maybe that you don't have in it. And these are, you know, some of these features might've been things that would do me or anyone else, you know, no good. So not something I could just jump on and do for free. So at that point, with the demand for support and the demand for additional features decided, Hey, we've got a lot of people using the software. Let's go ahead, let's go ahead and incorporate it. Let's make,
make a company out of this and I'm going to hire my first person because I still have a full-time job and I need someone to be able to the phone. So it was at that point, it was around 2009 that we hired our first employee. She's still here today. She's awesome. And then it was, that got the ball rolling. Now we are an official corporation and we started charging a very small nominal amount for the software at that point.
Ramesh: Okay. So now we talked about incorporating the business. I mean, you took a long time to incorporate your business. Unlike the other entrepreneurs I talk to all the time. So then how did you come up with the pricing?
Nathan: You know, I looked at what we needed to pay our employees and to add some additional development and then looked at what the market would bear and you know, what other software applications were out there that might be similar to ours and priced it accordingly. I would say we've generally remained, however, probably remain 20% to 30% less than most other comparable software’s out there though.
Ramesh: Okay. So then afterwards did it organically grow or were you putting some marketing efforts advertising and sales to really get new customers.
Nathan: I feel like we started off in the beginning with a lot of word of mouth. It was landlord telling landlord and a buddy telling buddy like, Hey, I'm using the software. It's helped me out a lot. Go check it out. And at the beginning it was free. And then later on, you know, I mean I feel like we are charging like 20 or 30 cents a unit at the beginning. So really it was, it cost hardly nothing for a landlord with, you know, 10 or 20 units to use the software. So tons of word of mouth. And then we actually branched into servicing property managers and that's, its similar, property manager is very similar to a landlord with the exception that they're managing properties on behalf of others. So there's the whole trust accounting aspect and it's a little more complex as far as the accounting stuff. But we kept getting asked by property managers saying, Hey, you have this cool software that, you know, this owner I just signed is using and does it work for us? And for, you know, a while we, you know, we said, no, sorry, we don't have trust account in there, but you know, we've got enough of those requests that we decided, Hey, let's
add on these features the property managers need and then we branched into adding property management support in there.
Ramesh: Okay. So 2009 onwards started you know, you became a business. So if you could explain the growth, how did it grow? Like 2000, how many more customers you're getting and was there like a hockey stick growth that happened at some point of time?
Nathan: We've actually had very steady growth. If I look at our charts, we look at having about 30%. It's a very steady line. It looks almost exactly like that 30% year over year over year. Now, of course, each year that 30% gets a little bit harder cause you're building on the previous year. So we do more and more every year to keep maintaining that 30%, but we're 11 years in continuing to do that same 30%. And I feel like we don't have that hockey stick that you see in some corporations because we didn't have that point where you're cruising along growing organically and then you get, you know, $10 million to like to throw it into a big giant marketing campaign. We never excepted investors or anything. So we based on our organic growth, I feel like it's been a much more steady incline for us.
Ramesh: Excellent. So now you brought up another topic that I wanted to get into the investors, right. So let's talk about the cost piece of it. So first two years, I mean, it's your time, effort, and then your anyway, you are a landlord. So you're using it for your purpose, so you're getting benefit out of it. And then, but afterwards you got the employee on the price stand up so that there is some amount of profit for you. Did the cost keep going up as you kept building the business? Or you always had, if you could talk a little bit on the cost side?
Nathan: Yeah, so with a, we're a software as a service. It's a SAAS business and our cost, our initial cost of goods was servers. You've got you know, first we provided our own. We quickly grew out of that and started using like Amazon and Google servers. But as we scale the number of clients that we have, the number of servers and the amount of resources we use up their scale however it's, that's really easy. It's been very easy for us to maintain that because if we get a hundred new clients, you know, we have to add maybe 10% more capacity and it's very easy to follow that. And the tools that are available through those services these days make it really easy to either even do it automatically these days. So aside from that,
we've, you know, we had to scale with employees and our cost of our employees have gone up. And as we've added new products like tenant screening products and stuff, we have a true cost of goods with every one of those that we sell. So those I'd say all those expenses have risen. You know, while our entire growth is 30%, all those are rising, you know, 10% to 20% on their own.
Ramesh: I see. So did it ever happen where you thought you needed an outside investment or whatever?
Nathan: I’ve never thought so. And you know, not that we haven't had offers. I, you know, delete probably three to 10 emails a day, you know, from various VCs that, you know, wanting to get involved in the business. It's just not, it's something I’ve never really been interested in for this business. I feel like we've had a very, very sustainable organic growth pattern and I'm really happy with that. And I'm also happy with the amount of market that's available to us and I feel like we can continue approach in that in a very steady method without funding.
Ramesh: Oh, excellent. So this is a very interesting story Nathan, that you'll have here with respect to how you grew your business. You almost, I mean, never of getting into business, you're just using it for your own purposes and then you saw the success of it and then you made a business off it. What are the next steps for the business?
Nathan: You know, I'd like to say we're going to we're going to keep doing what we're doing. And you know what I mean by that is we're going to continue servicing our market really, really well. There's a, you know, if you look a nationwide, which is our, you know, the United States as our primary market we've got about 300,000 potential clients out there. We have 15,000 of them right now. So they're, I mean, the sky's the limit. We could, you know, go crazy and help as many of those as we can. We also have fairly limited competition in the market. There's not, most of our competitors are larger, big funded companies and they're going after the big fish and we're going after, you know, what they would call the small fish, which would be a landlord or a property manager with less than a thousand units. You know, they waive those off and we're like, Oh, yes, we love you. You know, we would love to help you. So we have a giant market to go after.
And we're going to, I'd say we're going to stay laser focused on improving that market and making those property managers have the same cool technology, maybe even better cooler technology than the big guys out there so they can Excel and grow.
Ramesh: Okay, great. Nathan. That's good. So again, one of the things that I suppose you know, very passionately is something going to agile entrepreneurship, which is, you know, don't wait for the perfection, you know, start doing it right away and you know, keep doing something every day. And then if things fail, you learn from it and then not pick up from what you've learned and then keep building the business. Right. So from that concept or anything that comes and all across from your business concepts of agile entrepreneurship that you might have implemented?
Nathan: Well, you know, I would say we take things day by day no matter what. We don't have a anyone behind us telling us, you know, here's the path that you have to take. So we get to make those decisions. And you know, some of the things we've done over the years just to keep things lively around here and growing is a lot of stuff for our employees. And so this was you know a quick decision, you know, was made years and years ago, but we decided, you know, that this environment, people spend eight hours a day here. And we want everybody to enjoy coming here because I want to enjoy coming to work. And I want all of our employees to enjoy coming to work. So what we've done with that is we've created an enjoyable environment for people to come to, involves lots of games, lots of coffee, lots of fun and lots of camaraderie I would say. Aside from that, we take a lot of feature requests in from our clients. There are, you know, every day we probably get 50, you know, like, Hey, can you make the software do this, can you make the software do that? And we keep track of every single one. Our clients may not recognize we do that cause it's so many and sometimes seems like things can get lost, but we do pay attention to every single one. And when something amazing, you know, when something that sounds like it's going to help a lot of people comes through, we do. And we've got the flexibility to jump right on it. And like an example of that in the property management industry is property managers need to know how much their tenants make to make sure that they can afford the property they're renting. So when we were presented by a company up in Seattle to automate that process and be able to instantly confirm the income of a tenant, we saw that as very valuable to our clients and it was less than two weeks after seeing that, that we're able to deliver that to our clients. So that's pretty agile.
Ramesh: That's very agile. So Nathan, if I could get into a little bit in this segment, the final segment, the operations of your business and share what you can and things that you can’t share that's confidential, I am perfectly okay. So some of the things in the software development side of the world is project management. You said you keep taking lots of feature requests and 50 a day and things like that. So are there any tools that were very beneficial to you in this operational aspects with respect to project management and tracking of the bugs, the tracking of the features and things like that.
Nathan: Well we love a program called GitHub. It's a version management system and they also have some project capabilities in it and bug tracking and issue reporting capabilities. We use the heck out of that program, and it keeps getting better all the time. So if you're, no matter what.
Ramesh: GitHub is the one that's bought by Microsoft.
Nathan: Did they, I think I remember hearing that. Yeah, they did. Yeah, it wasn't too long ago, right? Yes. So it's a terrific tool for any development language. We used to use subversion prior to that. And subversion has, you know, this many features and GitHub has this many features. So we're really happy with that move. And then the other thing that I think has been, it's a very analog method of keeping track of features. But one thing we do is everyone on our team, whether they're in our customer service department or our sales department, if they hear something more than five times, they need to report it. And that's the trigger. If you hear the same thing five times, get it in the system. So, and then we keep track of it. So once it's on someone's mind five times then we keep track specifically how many times it's been requested and once we hit a certain threshold, that's when we go to work and start working on it.
Ramesh: Hey, Nathan, I heard of this other tools called Asana, Trello or Slack, some of those things that I'm hearing a lot more. Do you use any of them in your enterprise?
Nathan: I’ve looked at a couple of those project management tools, and I find that they can be useful, but we haven't executed on any of those. We do use Slack, doesn't everybody nowadays? But we use that for office communication, and it integrates with GitHub and a few other tools we use as well.
Ramesh: Okay. So, fantastic. So the last segment so Nathan, if you could talk a little bit about yourself, what kind of a person are you? I mean, you're definitely an investor. You really want to create a good environment and I think you are proud to say you're a proud husband and a father. So is your personality come across from what you already talked about a little bit, if you could say who you are and what drives you.
Nathan: Thanks. Well, yeah, like you said I am a proud husband. I'm a father of two boys, a 10-year-old and a six-month-old. They're amazing. I love getting home to them. That's why we do all this is to create a wonderful life for them. Let's see aside from that, I really enjoy developing. And I joke with my wife about or actually she jokes with me more often. Like, what are you inventing today? And you know, cause it's like, you know, it's, you know, just like in the old days, you'd invent, you know, a Spyglass or you know, a telescope or something. These days, a lot of inventions happen in code. And so I kind of like thinking about it that way. I get to be a little inventor when I get to work on a project. So and then you know, I love what I do. I'm well I’ve been doing this for 12 years. Everyone else around you hear about 10. And I still enjoy coming in and doing it. So I enjoy being an entrepreneur. I enjoy being an inventor and I enjoy being a father and a husband.
Ramesh: Okay. So is this your full time now?
Nathan: It is, yes. Yeah.
Ramesh: Okay. So finally, at one point did you quit?
Nathan: So I was involved in another business. It was an internet service and I slowly transitioned out of that kind of went to part time and then zero time after about four years.
Ramesh: Okay. So 2011, something like that.
Nathan: It was right. Yeah, it was probably right in there.
Ramesh: Okay, good. So the final segment. So Nathan, based on your experience for aspiring entrepreneurs, what advice would you give and things that you wish you could have done differently in a combination of all of that in this final question.
Nathan: Well, for aspiring entrepreneurs I would say if you are going to create a company, be excited about it. You have to love what you're doing. If you're creating something that sounds boring or monotonous, you're probably not going to be as successful as if you're creating something that you're passionate about. So look for that. And then what I like to remind people of that are interested in not, you know, and moving from their day job to a company of their own is all these companies, be it Rentec direct, be it Google, be it you know, Microsoft, all these companies, those giant ones and the small ones, they all came from an idea. An idea that someone had to create something that didn't exist or create, improve something that does exist. And as much as we like to think today, like, well, everything that's has been invented, you know, everything's been invented, there's nothing left. Not true. There's tons of things. There's new ideas floating around all the time. So if you see something that doesn't exist that would benefit you, very likely it's going to benefit other people, you might be able to create a company out of it.
Ramesh: Fantastic Nathan. Www.Rentecdirect.com. Nathan Miller is the CEO and founder, so fantastic journey. It's a very unusual journey to be an entrepreneur in terms of, so you started giving away and then that's how you got a lot out of it. Still mind boggling to me that you had 300, 400 customers and before you actually started charging. So great story Nathan, thank you very much for coming on board today.
Nathan: I appreciate you having me. Thank you