Break Your Golden Handcuffs
Andrew Borovsky is Disrupting Real Estate with Rent.App
Escape the seduction of "golden handcuffs" and step into a world where passion meets innovation. Join me, David McIlwaine, as I engage with Andrew Borovsky, CEO of Rent.App, in a dialogue that transcends the allure of comfort and security offered by corporate juggernauts. Andrew narrates his inspiring leap from a principal designer at Apple and Adobe to embracing the tumultuous path of entrepreneurship, a true testament to following one's dreams against the odds. We dissect the entrepreneurial mindset and the nuanced transition to executive leadership, laying out a roadmap for listeners who dream of forging their own paths.
Uncover the seismic shifts technology is making in the real estate sector as Andrew and I dissect the potential of blockchain in transforming property transactions, and how it's empowering small landlords and tenants through platforms like Rent.App. We address the struggle of expanding rental property portfolios, bringing to light strategies for accessing capital and the power of collective bargaining. As we discuss the disparities in financial resources, you'll gain insights into how leveling the playing field is not only possible but vital for market equity.
Cap off this episode with the profound value of experience and mentorship in the journey to success. We highlight the personal growth that springs from supportive leadership and coachings, such as the path taken with Rent.App, which is built on a foundation of love, respect, and a desire to impact lives positively. Join us for an episode that not only shares a story of breaking free but also offers practical advice and a beacon of hope for financial empowerment and achieving independence from the constraints that limit us.
More info @ http://rent.app
Follow David McIlwaine's Socials
YouTube | LinkedIn | Instagram | Facebook
Join my newsletter @ MAC Assets
Escape the seduction of "golden handcuffs" and step into a world where passion meets innovation. Join me, David McIlwaine, as I engage with Andrew Borovsky, CEO of Rent.App, in a dialogue that transcends the allure of comfort and security offered by corporate juggernauts. Andrew narrates his inspiring leap from a principal designer at Apple and Adobe to embracing the tumultuous path of entrepreneurship, a true testament to following one's dreams against the odds. We dissect the entrepreneurial mindset and the nuanced transition to executive leadership, laying out a roadmap for listeners who dream of forging their own paths.
Uncover the seismic shifts technology is making in the real estate sector as Andrew and I dissect the potential of blockchain in transforming property transactions, and how it's empowering small landlords and tenants through platforms like Rent.App. We address the struggle of expanding rental property portfolios, bringing to light strategies for accessing capital and the power of collective bargaining. As we discuss the disparities in financial resources, you'll gain insights into how leveling the playing field is not only possible but vital for market equity.
Cap off this episode with the profound value of experience and mentorship in the journey to success. We highlight the personal growth that springs from supportive leadership and coachings, such as the path taken with Rent.App, which is built on a foundation of love, respect, and a desire to impact lives positively. Join us for an episode that not only shares a story of breaking free but also offers practical advice and a beacon of hope for financial empowerment and achieving independence from the constraints that limit us.
More info @ http://rent.app
Follow David McIlwaine's Socials
YouTube | LinkedIn | Instagram | Facebook
Join my newsletter @ MAC Assets
Hey everybody, david McElwain, with another episode of Bricker Golden Handcuffs Today, I'm super excited to have with me the CEO of RentUp, andrew Boroski. Andrew is a veteran product designer and a serial entrepreneur with decades of experience building truly impactful products. He's held executive leadership roles at Cash App, cadre and Square, as well as co-founded 8020, which was acquired by Square. Before that, he was a principal designer at both Apple and Adobe. Andrew, welcome to the show, thanks for having me. Yeah, I'm super excited to talk with you today because I've run into a bunch of folks in my world who have early Apple experience and they're always fascinating to talk about the stories they have and Very special place. Yeah, it was. So tell me. This is called Bricker Golden Handcuffs, okay, and I assume that you have had golden handcuffs in the past.
Speaker 2:Yes, yes, I'm assuming you mean in terms of being tied down with equity.
Speaker 1:Tied down with either equity or with cash compensation or afraid of leaving, because you felt like if you left, you would destroy the golden goose.
Speaker 2:Yes, yes, I left Apple to start my own company in 2008, between the Bear Stearns, lehman Brothers and Collapses, so that was an interesting timing.
Speaker 1:Yeah, what a courageous move at that point. Right Because in 2008.
Speaker 2:We're stupid.
Speaker 1:Let's go with courageous. It feels better than stupid, right, absolutely. So what prompted you to leave in?
Speaker 2:2008?. Let's see. I mean, I wanted to do something. I had an idea for what I wanted to do and that idea was basically it exists outside of Apple, and I think that's always. I talked to a lot of people that sort of ask around these days, younger people like when do you know it's the right time to go do something, specifically in the context, of course, starting your own company, and there are a lot of people, surprisingly, that chase the idea of having a company, but not necessarily the why they want the company in the first place, and that's always, I find, a mistake. So in my case, there was a piece of hardware that I wanted to see in the world and I figured the best way to build that piece of hardware, to build this product, is to actually do it by myself. So I left Apple in pursuit of that product and the company happened along the way. Essentially, I think that's the right way to do it.
Speaker 1:Yeah, I used to work for a startup and the founder had a desire to cash out. She had a solution, but it wasn't what you talked about. The ethos wasn't around putting this product in the world. It was around cashing out, and I love what you said there about you wanted this hardware built.
Speaker 2:Yeah, it goes both ways. I mean I think it's also. I mean, first of all, it's truly like from the heart, a good that feels like a good reason to leave, but also that's you have a higher chance of success If you're obsessed with seeing something or product or service existing in the world. That's really, really important. It's very hard to go the other way around, where you're I built a company, now what I don't know, let's try this or that Like you have to be obsessed with seeing something exist.
Speaker 1:Yeah, and that obsession, to use your word, is what sets entrepreneurs apart from executives. I've always viewed executives as folks who are fine and improve, and entrepreneurs create.
Speaker 2:And there's a role to be played right by executives. I mean, I think there, yeah, those are, you know, it's personality types. It's funny. I think I've been a pretty good entrepreneur most of my life and this is my actually my first role as a CEO, so I'm learning to be an executive, which is hard, because it's hard, you know, it's very hard. I had to watch a lot of CEOs and learn before I felt that. You know, it actually took courage to try my hand at being an executive, because it comes with a different set of challenges.
Speaker 1:It most certainly does, and to be an executive, you have to look at the world through a set of lenses that is different from an employee or a founder, and I think that fits really well into the idea of breaking our handcuffs, because our handcuffs really are about empowerment and agency and sovereignty. And so that leads me to ask a question why did you go out and build Rintap?
Speaker 2:Yeah, so this is the third company that you know I co-founded, the first one where I'm CEO, as I mentioned, and yeah, I mean I through COVID. Actually I was at Square twice. So first Square acquired my company in 2012. I was there for a couple of years, worked for Jack Dorsey one of the great CEOs definitely of our time and then actually came back to Square around COVID to focus more on Cash App. So Cash App is now basically half of Square and so Cash App was a it actually returned because you know, cash App is already a product that's quite mature and it has a kind of a life of its own and so it actually needs executives at this stage. And so I came back in an executive role as a head of product design and my goal was basically to build a team to hire, to create structure right essentially in the company. And you know I fulfilled that role. I was there for about two years. We grew a team from 10 people to about 100 people on the product design, sort of branding, branding side.
Speaker 2:And then I got the itch again and the itch was I want to see something exist in the world, and so I was kind of obsessed. You know my career was spent five years in payments and five years in real estate, was obsessed with this idea that you know, you know, owning real estate it's like the top, the number one asset class in the world, right, bigger than stocks and bonds. And yet you know when is the last time you bought a house or you sold a house or you borrowed against your house? And that was a pleasant experience. Right, hasn't really changed since the 50s, and so it felt like, okay, I've now been in this space, I've been doing real estate, I've been doing payments technology for 10 years. I have something to offer to the world, and so I founded a company called Visible, really focused on kind of building this next generation of you know real estate, adjacent products and services, and rent app is our first product.
Speaker 1:So it's a FinTech real estate adjacent organization. And what do you mean by real estate adjacent?
Speaker 2:Well, yeah, maybe, maybe, maybe it's a, it's a. It's a wrong way of putting it, but I guess it's a. You know, we're focused on products and services that are adjacent to real estate. So you own a house, right, but there's all sorts of transactions that happen around your house, right, you have to probably get financing in order to buy it, right. Then then you, you, you, you, you know, put some money in, presumably, and you may have to borrow money to put, put the money in and that appreciate value, and so on.
Speaker 2:You have more equity and maybe you borrowed against that equity in order to buy a second house that's maybe a rental property. So now you're collecting rent, right, and now you have multiple properties. And then you know, maybe you're interested in, you know, doing something abroad, or getting, you know, investing in a piece of land that's like in another country, or you know, a vacation property, and so we you know what I've just described. You know a lot of Americans, you know more, more than half of all real estate in the United States is owned by individuals. You know, effectively, like you and me, right? Every one of us, you know, goes through these workflows and they're all pretty crappy, right.
Speaker 1:They're all slow.
Speaker 2:They're very complicated and they're very expensive and largely because, you know, in the United States an amazing place for real estate, it's, you know, safe haven. Everyone buys right People around the world buy real estate in the United States because it's a wonderful, safe asset class, you know here. And yet all of our services, all of our kind of sorry, all of our workflows around real estate and moving money adjacent to real estate haven't changed since the fifties. It's crazy. I mean title insurance, you know I can talk about that for hours.
Speaker 1:Yeah, Title insurance people view as the biggest scam on a mankind. It totally depends on your point of view right Literally is a scam.
Speaker 2:Yeah, it's a scam. We all subscribe, subscribe to yeah.
Speaker 1:Right, and then we have a random one off where it actually saves your high knee is very rare.
Speaker 2:Yeah, I mean, it's one of those things where there was a time and a place, like everything else, right, I mean, all a lot of processes, anything related related to the government tends to be this right, where there's just time and a place where it was yeah, it was a time and a place where it was. You know it, you, you understood, you know it's. It's rare that the government put processes in place because they're trying to, like, do something bad. They always have the, they always have good intentions, but then some of these systems they kind of outlive their usefulness eventually. And, of course, so much has happened in a world of real estate, you know, which has become completely digital just in the last, you know, 20 years, that a lot, of, a lot of these older processes basically are kind of a reviv, vestiges of a of a world that no longer exists. But you know, like parasites are so many people that you know rely on the, on generating revenue from, you know, maintaining these processes. It changes very hard, you know you have to incentivize people to change.
Speaker 2:Yeah.
Speaker 1:This is the promise of tech from 2000 to 2008 to 2024. Right, I mean in the dot com bubble of 2001, was the idea that tech was going to change the world instantly. What really happened in my chair is that COVID changed tech, because COVID brought tech to the forebrain and it created work from home. It created the digital marketplace. It really did create connectivity that have been promised 20 years earlier.
Speaker 2:Yeah, and you need a solution.
Speaker 1:You did. You did black swan force right and definitely that that epidemic and then pandemic created that in so many ways. And so now we're working through the realization of this promise of of what the internet can truly do and what tech can do as an automation structure. So talk to me about how, how you're fulfilling part of that.
Speaker 2:Yeah, I mean, you know it's so it's. You know, I like to start from first principles, which is effectively right. Just how do you think things should work? Right, essentially, that is the ideal way to start anywhere, not not like being reactive to what exists, but really trying to start from scratch and say, if I was building this all over again, how would you do it? And so you know, for me, the North Star and this is, you know, north Star being that it's going to take us some time to get there.
Speaker 2:But I think, fundamentally, like, let's take real estate as an example. Right, you know, like, when you buy a home, right, obviously you pay your mortgage and it has an interest rate. Makes sense. You borrowed money, you pay interest it, sometimes it's higher, sometimes it's lower, but fundamentally you paying somebody else to use their money in order to acquire a piece of real estate. So that feels fair to me. But everything else, right, the three to 5% people pay in fees. Right, we all know that moment where we go into that room and you meet six people you've never met before and they're moving a lot of paper around and you end up with a bill, you know, with a lot of light items for all the things that that needed to happen in order for you to acquire, you know, this property. That doesn't make a lot of sense to me, right? So that that's kind of what I'm really focused on, and a lot of it is. Again, it's not just like people being evil, it's just there is a lot of processes that are legacy processes, that are sort of unnecessary, that cause both friction and cost money, and we work one by one to eliminate them. Again, title is one of them. You know we at visible are really focused on, no, you know, making sure that you can identify what is title, insurance or what is title right, is it's just in order to transact you, to verify that the person selling you the house actually owns it. It's a very simple concept. So then, going back to first principles, why do we have a problem where we can't identify really easily who owns a, you know a property and dates back to, you know, america?
Speaker 2:The way that we, we we manage ownership is through the counties. There's 3600 counties in the United States. They're varying degrees of digitalization from county to county, because, I mean, think about it, think about how many differences are between states right now, and as in, there's 50 of them now, add counties to it. There's a lot of different differences and and so we've we've built, you know, ways for us to interact with all of these counties digitally and we have a, you know, a database that we've built that allows us to. You know, if you give me an address, I can tell you, you know, does this give me an address and an ID and I can tell you that you know you own this property.
Speaker 2:And if you solve that problem, all of a sudden all these other things kind of start to fix themselves. All of a sudden, you don't need title insurance. All of a sudden you're not paying, like lawyers or banks fees to do the title search for you. So that's kind of how we're approaching it. We're looking at the processes, trying to eliminate all the processes that are like hyper analog and require people to be in there and and you having to require you needed to pay people to be in that process, and we're trying to eliminate them as much as possible, ideally, also, like I going going in this, this, this is really, I mean money in general. You have all this, obviously, people talking about Bitcoin and and and, and you know crypto in general. There's a lot of noise, but fundamentally, what does it come down to? I think the promise of technology is two individuals should be able to come together and transact without any third party having to. You know, arbiter Right, and so that's a whole promise of blockchain right.
Speaker 2:That is what blockchain is yeah, you don't need a bank, yeah, you don't need a bank, and ideally, ideally, you know the ideal world, you don't. You don't need to. At the very least, you don't need people in the process to tell you that the county you know approves this transaction. Right, you should be able to read from the county computer the fact that I own this piece of property, and you need to be able to update that record digitally and say now, this person owns this piece of property and and and, if, if that system existed, then you and I could exchange real estate, you know, via text, right? So that's the space that I'm kind of really interested in is is is you know? At the end of the day, reduce fees, reduce friction, enable as many of these transactions to happen peer to peer so that they're quick and delightful at the end of the day.
Speaker 1:You know it's fascinating I actually own three companies. One of them is an executive coaching company, One of them is a real estate brokerage firm and one of them is a private private equity capital raising firm.
Speaker 1:So, I agree with you in principle on so many of these things. And the rent app, where you can collect rent directly, and you you basically are disrupting part of the echo system and the cash flow change that requires me, when I'm a landlord, to go visit my tenant directly to get their check, to look at them in the face every day, and you're taking out that personal relationship. And I get that and you're not necessarily taking it away, you're just changing it. Maybe that's a better way to describe it right.
Speaker 2:Yeah, so with rent app. Thanks for asking about that specifically, because it's an interesting set of problems. So what this? This may actually, I hope this surprises you because then I'm being interesting. But so among the sort of what I call a small owner landlord so half of all rentals in the United States, there's about 23 million units that are owned by essentially individuals, right, Somebody that owns two or three units max.
Speaker 1:So within that pro. Yeah, no, this call the managers.
Speaker 2:Yeah, or you know they refer to some of them and pop, mom and pop landlords. That's a half of America. Okay, so that? So half of all rent paid in the United States is mom and pop landlords, overwhelmingly in cash. The second most popular way to collect rent is checks. The third most popular way to collect rent is money orders.
Speaker 1:And now as a. As a previous landlord, I collected a lot of rent and money orders because my tenants were unbanked. Yes, and that's a huge problem that we never talk about.
Speaker 2:Yes, yes, that's true, yes, and a cash up. A cash up that was a big focus of ours as well is giving a bank to folks that are underbanked. Yeah, so, that happens.
Speaker 2:But that actually isn't that. Actually, you know, yes, there's, there's a segment of that that's, you know, paid in cash because, yes, that's the only way that renter can pay cash. But but the vast majority I mean, you know, I tell the story a lot around. You know real customers that we have where the tenant goes to Bank of America, withdraws the rent, you know, walks over to the landlord. The landlord takes the cash, walks back to the same branch, to the same ATM machine and deposits the money back right. Or the stories around, yeah, those stories around collect, you know, you get the check on the first. On the fifth, you find out it bounced right. So there's, those are the types of problems that we're trying trying to solve there.
Speaker 2:But it's more than just convenience. You know the problem with analog payments is you don't get credit for them, whether you're a renter or landlord, keeping things off the book, yes, there's some advantages to it. You know, in some situations of what we found out to be like absolutely minimal, but generally you're doing as a renter, you're doing yourself a disservice because you're not building credit with the largest payment you make right, which is crazy, it's half your paycheck, right and then you're doing the largest monthly payment you make and no one counts. And especially a big problem with young people, right where they should be building credit to the stage of their lives, and then landlords that are not collecting, you know, rent digitally. They're doing themselves a disservice because when they go to buy that next property, well, the bank's going to ask them for cash flows and then they're going to have to reconcile all that. So there's an interesting element where both parties, you know, to a rent transaction. If you're doing it not digitally, it really stumps your growth.
Speaker 1:It definitely creates more paperwork for the landlord.
Speaker 2:In different ways. Yeah, like the landlord's going to have a hard time building the real estate empire, the renter's going to have a hard time buying their first house, and so this, I think again thematically is these are things that are very dear to me, and I love solving these types of problems.
Speaker 1:So then that brings up a whole slew of things. Obviously, a lot of people pay in cash. A lot of landlords want money in cash so they can keep their books smaller than they might actually be, which you can't obviously handle. You can't work with a fraud issue. That's not your world. So you laid out the benefits to the tenant as building credit and the benefit to the landlord as having cash flow documented, right? So what's the difference between what you do and, let's just say, an automatic ACH which can be built into a lease as well, right, all these things. What's the benefit of this versus that? Is that a fair question?
Speaker 2:Yeah, absolutely. We are ACH based, so it's a very simple, straightforward product that you know how to work. So ACH move money directly from bank to bank count. So you connect one bank on one end, one bank on the other end and the money is transferred directly. With RentApp it's very easy. So the tenant just goes types in the address, types in your landlord's email address, you get a payment. You type in routing account number, you create that connection once and the money just streams into your account from there on. Very, very simple. It's literally the easiest product in the world to use. So then what's like that? The problem with ACH? It's a bank API Like ACH network is not meant to be used by consumers, it's meant to be used by banks, and so you don't.
Speaker 2:Actually, in the United States there's not a lot of protocol, there's not a lot of ways to access the ACH network. Typically it's a very big bank. By bank there's different limits on it, but in almost all cases you find that it's for fee, right, so you're paying three. I mean, I think Bank of America lets me do this it's like $3 for same, sorry, $3 for three-day transfer, $10 for one-day transfer and on the same day it's a wire. So then I have to pay 25 bucks. So we use the same network. It's free, right.
Speaker 1:So then, where do you guys make your money if it's free?
Speaker 2:Because obviously you're not altruistic it's not McReveny right.
Speaker 2:Well, of course not. So we think the baseline transaction, what we're competing with is not so much banks or even ACH, we're competing with cash and check, and so we're trying to create something that's as simple as cash and check but as much more reliable, as digital helps you build credit but and of course, it has to be free. So we knew from the very beginning we can't monetize the transaction because the expectation is we're competing with cash. But there are ways to monetize things down the line and we haven't right now. The product's very free. There's no kind of paid tier. But we're looking at, for example, right now money settles in two days. We can offer instant transactions so like it appears in the bank account in three minutes and it's a paid we pay, we may charge for that feature Down the line. We're looking at adding on the landlord side, for example, maybe something like a tenant screening tool. So there's products that you can offer beyond the core payment right that for landlords that are looking for more functionality they're willing to pay for. So that's kind of how we think about it. We're gonna build a suite of real estate products, but the entry level products are always free, and that's kind of dates back to again our days at Square. Fundamentally, a lot, a lot, most products were free.
Speaker 2:Cash app is a free to use product, right, it's a bank. It's a full-on bank. You can get a debit card, everything else. But then there are things you can do within cash app that will cost you money. One of them is actually instantly moving money, right, if you wanna move money to a different bank account overnight, it's free. If you wanna do it same day, you pay, I think, 1% of that transaction. So that's how I think about it as well. Power features power paid features are coming later.
Speaker 1:Okay, so talk to me a little bit more about what else is in the vision for rent.
Speaker 2:For rent app in particular. Yeah, I mean, I think what's really interesting is just more stuff for owner landlords. So you start using the product because your rent is sent to your rent check, okay, cool. You link your bank account. It's free. Money is now streaming into your bank account. Maybe you're on board and we're seeing this right People that use rent app with one tenant. They're bringing all the other tenants on board, which is a great thing to see happen kind of organically, and so now you're running your quote unquote business, your three rental properties on rent app.
Speaker 2:So we ask those owners, those landlords, what do they want, like, what do they wanna do next? And every one of them says the same thing they wanna grow. Operating two to three rental properties is no different than operating a small business, and so you kind of have the same needs, like, if you're successfully operating a small business, you wanna grow, you wanna get bigger, right, you wanna open another location, and so I think income properties is very similar dynamic. And so we asked them like, what's the number one problem? Number one problem is access to capital. So if you are again a small landlord and you have three units, getting that fourth unit is very tough. You're not gonna go to a regular bank. You have to look for alternative financing, what we call hard money loans right, high interest, short duration loans. In order to finance it, you're rushing to renovate it. Then you can raise the rent and stabilize the property and once you have that, you can actually now increase the income on that property. You can get a proper bank loan.
Speaker 1:So you can go and refi it after owning it for a year or less and do those things In that great space.
Speaker 2:Yeah, in that bridge capital space there's a lot of bad actors. You know, the interest rates are just out of this world. It's not very transparent.
Speaker 1:I recently pressed one that was at 16, 18%. I was looking at a hard money loan for something I was doing personally. It was, yeah, useless.
Speaker 2:Yes, and, by the way, some of that is they're trying to offer. It's not always bad actors, but sometimes it's just like that's the cost of risk. And so, for example, for us, we're in the transaction, we see your cash flows from your other tenants and actually we're very well positioned to underwrite you. Right. The bank doesn't know how much money you're making. You have to give them some records. We actually have your records because we're the ones moving money for you, and so that's-.
Speaker 1:But you wanna see the income side. You're not seeing the debit side of the ledger right.
Speaker 2:Again, it's like it's one of those things where if you want a loan, you know, okay, cool, like there's a couple of things we need to fill out, right. So we asked like three more questions Actually, a lot of the debit side you can get with a soft credit check these days, right, you gotta get the person's live bill. So we basically would say like hey, you know, we'd like to. You know, we feel like you're a great candidate for a loan because you've proven yourself to be a great operator. Let's give you access to more capital. We need you to give us last four of your social to confirm sort of what it looks like, what your credit score is right, and so it's very easy. But it could be quite a magical experience. It certainly is. You know levels above. You know you going to some you know sketchy strip mall to talk to. You know a capital partner that you've never met and sign crazy documents that you will never read.
Speaker 1:So I think there's a tremendous opportunity. Yeah, it's not a partnership.
Speaker 2:Yeah, it's a tremendous opportunity to just like again, create a transparent, a modern, fair product. Right, where you're again leaning on the technology piece right In this case, like the money movement in order to ultimately give you access to cheaper capital, right? So you know, the cost of capital is directly tied to risk, and so we are in a position to lower risk and therefore give you that lower. So I'm really, you know, bullish on this. I think this is going to be spectacular and I like the mission of it. Right, because you know, you've heard those I'm sure you've read the headlines Wall Street is buying single family homes and renting it back to you, right?
Speaker 1:Oh, they, definitely they own what 35% of all rental property right now is by hedge funds?
Speaker 2:And they're looking for an 8% arbitrage.
Speaker 1:They're looking for 10% arbitrage.
Speaker 2:That's right, that's right. And so, what do they have? What do they have Like? Why are they more successful at acquiring real estate, you know, than individuals?
Speaker 1:right, I actually worked at a brokerage that did this. I worked at one where we actually bought for one of the hedge funds and the answer? Is one word it's cap capital, Thank you, it's cash. We would go out and we would buy every foreclosed property at the share of auction in cash, because the risk point was not existent and the biggest challenge was what's the renovation budget going to be? That was the biggest risk point, no matter what you were buying it 40 to 60% below market or, at worst case, 30% below market.
Speaker 2:Yeah, and it's interesting because solving the capital thing solves the scale thing.
Speaker 2:Yeah, and so what I'd like to do here and this is really kind of again, the mission that sort of drives us is okay, can we actually in aggregate, when we combine all of our rent app landlords, right, we can be bigger than any one real estate private equity player on the institutional side. And so when we have that scale, it's almost like a credit union, right, or like an association. We could be a union of small landlords and then all of a sudden we get really, really great access to capital because collectively we're bigger than the biggest players, right, and that's where that scale is, what gives you that access to cheaper capital. So I'm really kind of I love this idea that we're all going to group together and have a kind of collective bargaining power. Well, this is fascinating.
Speaker 1:So the grouping together collective bargaining power concept is absolutely against the idea of individual liberty as a real estate owner operator in some ways, because most of the people that I know that are in the individual world even in the small commercial side, like I am, where we have less than 10,000 units under our management we're not institutions. We're not institutions yet and all of us that I've met are very individualized. So talk to me more about this idea, this collective negotiation structure.
Speaker 2:What is this vision, that's fascinating to me. Sure, yeah, I mean, I absolutely have a libertarian streak in me. So by all means, yeah, I'm not suggesting, I'm not suggesting a communion of any kind.
Speaker 1:I don't think you are Right. I'm not saying that you are. I just this is how my brain looks right.
Speaker 2:It's just really, when it comes down to you, think of it this way right, if we want to offer, if we want to offer our favorite customers, which in this case is the small owner landlord, right, really great terms on financing, well, at the end of the day, we have to get that capital from somewhere else, and so what I'm talking about is if a single owner landlord today that has three units goes to a capital partner of some kind, right.
Speaker 1:Bank credit union local lender.
Speaker 2:Or a pension fund, right, like, they love to buy this stuff, right, but you can't go to a pension fund and say, hey, I need some money to buy it. Yeah, but guess what? Like, if there's like 100,000 of us, if I can go on behalf of 100,000 individuals and say, look, there's a group of people right over here and they're all interested in the same thing and we've found a way to underwrite them that reflects them in a more accurate way than any kind of old bank would Give us the facility. Right, so I can get access to capital on behalf of these users, right, these customers, and then offer it back to them, right, and that's basically together. We're in a much stronger position to approach large capital partners or even pension funds than any one individual.
Speaker 1:And so, as I jump through this, I've already gotten the division. I love it. So you're talking about getting capital one to three points cheaper than from a traditional yes, capital source. Would that be about what I'm thinking?
Speaker 2:Yeah, I mean, at the end of the day, right like products. I mean, I'm a designer by trade. I started my career in product design, so there was a brief moment in my life where I believed that all problems are solved with design. Then I realized that they're not. And at the end of the day, you know, yeah, at the end of the day, a lot of things blow down to capital and really a lot of things blow down to cheaper capital. So, yeah, fundamentally, the whole thing has to work, because we're faster and we're cheaper, so you get that through scale, because that's how, again, the big PE funds are doing it, and so I'd like to create some of the same dynamics without having to buy people's homes from underneath them.
Speaker 1:Yes, and what you mean by that last sentence, if I hear it right, is that a lot of the institutions go in and do rescue capital and they do the stress purchasing Exactly and, like I said earlier, they buy when the consumer is at its most vulnerable.
Speaker 2:Yes, absolutely.
Speaker 1:Fascinating. So I could go one and on, and on, and we can have five sessions about this.
Speaker 1:Yeah, and part of me is debating going on and cutting this into two different episodes and my question, before I go down that word, is this is a fascinating conversation, because what you're talking about is a disruption of real estate technology in a way that I haven't heard here before, because everybody wants to break up the real estate agent tech prop piece. All the iBuyers, all the companies out there are trying to break the commission mold in single family real estate and what you're trying to do doesn't touch that yet. I'm sure it goes there. I'm sure you've got that vision.
Speaker 1:But, what you're trying to do right now is break the capital conundrum, and the proof point that I see different is that you become eligible to break the capital point conundrum as an owner operator when I see verified income streams. That's really what you're doing different, if I hear this correctly, is that a good bull down?
Speaker 2:Yeah, and I want to say that this exists. So, going back 12 years to Square, presumably you know Square right, this company kind of became. They always want to yeah. My co-founder here at Visible. We both worked at Square together. He designed that screen, so blame him. Touch him in the teeth, will you?
Speaker 1:Just tell him that David said here.
Speaker 2:It's a running joke, To be fair to us and to him in particular, that we were designing that for coffee shops and we did not expect to see that at like I mean pretty much everywhere, right like at self-serve kiosks.
Speaker 1:Yeah, yeah, oh cool. But God, do I have to pay a tip to the Wendy's operator?
Speaker 2:Yeah, I mean it's, and actually it's the product of a victim of its own success. Square became bigger and more and more types of businesses adopted the iPads sort of point a sale. That screen became very prevalent. But my point sorry, going back to Square really quickly is that at Square, Square invented the credit card reader. Right, that was the first product which allowed what happened. It allowed small merchants to take credit cards. So many apparels to rent out.
Speaker 2:Before that, if you were a what's called micro merchant or a company of one and a very typical one would be somebody. You see, I'm sure you remember, like some years back, when if you go to a green market, your local farmers market, you have to bring cash right, Because all the farmers they would take cash. Why? Because they were so small that if they went to their local bank and they said, hey, I'm a business and that was the only way to get a credit card machine, he's like I'm a small business, Can you give it to me? It was a huge process. First of all, you have to prove you're like a business and you're qualified to take credit card payments. You fill out all these forms and you have to pay $300 for this terminal, and then you were big enough to be able to do this, and usually that terminal wouldn't require it.
Speaker 1:You had to pay 3% of gross sales. Plus you had to pay a guaranteed volume margin. Plus, plus, plus.
Speaker 2:That's right. Actually, I think around the time when Square introduced the reader, the typical fee was like 3.75. Because Square innovated, being the first one at 2.75%.
Speaker 1:I dated myself.
Speaker 2:Yeah, I mean it was going to complete in insane time, but what essentially happened is Square identified that there's a lot of Americans that are actually running businesses, but the banks don't see them as that. They see them as I don't know side hustles, and it was only when Square aggregated 5 million of them, right and collectively. By the way, this is also a lot of parallels there. Collectively, I remember right before IPO and it's a much bigger business now but right before IPO and it was still a private company at some point, square was the 20th largest merchant. I remember that was an insane milestone for us. So, collectively, all of these small merchants, all of these small businesses, individuals doing their little hustle on the side were representing the 20th largest merchant, as big as Target in aggregate.
Speaker 1:And that was really powerful. You know what that really reinforces? That reinforces that the number one employer in America. Do you know who the number one employer in America is? It's ourselves, small business. And I have a career. I spent the first 20 plus years of my life working in corporate America where if I didn't touch an enterprise, business, it wasn't important to me. And the hubris that we have as an organization, as a culture, that the small business guy is secondary or tertiary is just obscene.
Speaker 2:I have a number. I think the latest numbers are there are 22 million businesses in America right now with one employee. That is an insane amount, but it's amazing what's.
Speaker 1:Amazon employee. What's a US government employee? That's bigger than those guys. The US government is not employed 22 million people? I don't think.
Speaker 2:Exactly. It's insane.
Speaker 1:That's literally the fifth of the workforce. Yeah, yeah, the workforce is between 100 and 120 million or so, I think.
Speaker 2:And it's a uniquely American thing too. And again, this is where the strength of this country I say this is an immigrant, this is what's so incredible is, yeah, you could be a successful business of one here like you cannot anywhere else in the world.
Speaker 1:So you're talking about Square changing the model and they were one of the top 20 merchants in the United States a decade ago and that your vision is that Rent-Out App will do a similar thing A similar thing to capital.
Speaker 2:Yeah, I think, by the way, I don't know it's much higher. I wouldn't be surprised if it's more like in the low teens. Now for Square, we should look at what the volume is. I mean, look, let's put it this way, Cash App, which didn't exist at that time, but Cash App, which aggregated a lot of people who are underbanked, was one of the original sort of new banks. Cash App right now has 55 million customers. Depending on how you count it, it is actually the largest bank by individuals. Largest bank in the United States is bigger than JP Morgan, which it plays on some of the same dynamics, which is that the long tail of Americans are completely ignored by the banking system.
Speaker 1:Whether they're small business or whether they're individuals. I go off on this all the time. I call it the Tina effect. At one point, when I was making seven figures and the world was coming at me, my broker said to me well, you're in, tina. You weren't yet, because the definition of that time of an accredited investor was different. You weren't yet an accredited investor. It was much more stringent than it is today.
Speaker 2:It's like a type of like Henry writes the other one high earner, not like it's a high earner, not rich yet, yeah, yes.
Speaker 1:Yes, henry and Tina I hadn't heard Henry. I love it, tina is there is no alternative. In other words, you must buy a stock. You can only buy stock, because you can't go into private equities and you can't go into hedge fund business. The Wall Street clocked us and limited us into what we could do. What you're trying to and that's one of the reasons I have this Breaker Golden Handcuffs podcast is Tina taught me to invest an alternative investments, which here before the 2012 Jobs Act was nowhere near as ubiquitous as it is today. Yes, and so what you're posturing is that we can do the same thing as a small entrepreneur in the real estate world to then take more wealth disparity from the institutional hedge funds back into Main Street USA.
Speaker 2:Absolutely, and technology is the answer. I mean, that is the true power, right, and the altruistic power of technology, right, it can be that that it can even the playing field. And in fact, what's really interesting is right, you know this too like the bigger the corporation, the heavier the technology load is on that corporation. It's interesting at the very large scale the corporation is actually weighed down by a lot of their technology. But technology that targets the individual can actually be unbelievably empowering, right, and it lets the individual project, you know, a much bigger punch than the otherwise would. And that's the space that I love to plan. I mean, that's been really. You ask me, why do I leave companies like this has been a consistent, a consistently interesting space for me. Yeah, both people. From a mission standpoint, it's amazing to build things that empower the individual, but guess what, it's also great business.
Speaker 1:So let's pivot here a little bit. I think I am going to cut this into two different episodes. As you talk about the mission of empowering the individual as a small one to three door owner, what do they need to know that they don't know today?
Speaker 2:Yeah, it's a great question. So there's basically three things. So I spent a lot of time on this in prior companies, but also have actually delved into it as part of RentApp, and RentApp has only been around for three months. We're a brand new product, but I'm already spending the bulk of my time talking to this cohort of landlords that are now using us, and it's very interesting.
Speaker 2:Three things the first one is education, or just knowledge, however you want to call it. Most people in this space, they just don't know what to do. Next, what's really interesting is the forums. Right, like you know, facebook's not being used for a lot of things these days, you know. But Facebook groups, you know, and message boards, are still very popular with landlords and there's huge, highly localized landlords. There'll be, you know, a group of landlords in whatever Seattle that are all in this one Facebook group. It's a real, real example. And why are they there? They're all like, hey, like this is my first property or it's my second property, how do I do? How do I deal this? You know everything from obviously screening your tenant to, you know, sometimes evictions, to fixing your roof and plumbing, and and and doing taxes. You know and, and and and managing maintenance requests and, of course, with you know, the ultimate question being how do I buy my next property. So there's an incredible thirst for knowledge and it's it's it's not readily available. So people are like going around try to find, you know, these forms and, yeah, it's crowdsourced information. And now you're seeing a lot of individuals I mean, instagram is full of them and we partner actually with this.
Speaker 2:I'll name drop a partner with this amazing real life couple landlords. They're called fi couple, the fi couple. They're on Twitter and and on Instagram. Wonderful couple in upstate New York. They, between them, you know, manage, I think now 11 rental properties and their journey is very typical. They, you know, came from low income or social workers, low income jobs, got their, you know like, struggled, saved money, got their first rental property, you know, renovated it, you know, then second, third, fourth, et cetera, and then they learn. They went through this journey. They learned how to buy properties, they learned how to get access to capital, they learned how to deal with, you know, tenants that don't pay their rent, and so they went from looking for that knowledge, finding it in these crowdsourced communities, and then now what they're doing is they're actually teaching people. So one of the big, their big, you know their Instagram account is all about training.
Speaker 1:Yeah, it's a very common curve.
Speaker 2:Yes.
Speaker 1:It's a very common curve and in the real estate brokerage education is supposed to be king, right. And one of the challenges that I see is that people assume and I'm so guilty of this, I assume that because I know it, you know it Right. And one of the things that I'm really into my brain thinking about, I'm going to kind of pivot you a little bit from the FI couple. Fi obviously stands for financially independent or financial independence. Yes, I don't know how you do it.
Speaker 1:Yes, but breaking your golden handcuffs is about creating a plan to create your own financial independence. Did you know that I saw a stat recently that said something like two thirds of Americans aren't able to retire on their terms, that they lose their job in their late fifties and they can't get another one, or they lose a job in their early sixties and that's a limp and two retirement. And that's the Henry you're talking about.
Speaker 2:Yeah.
Speaker 1:And that's what the FI couple is trying to educate against.
Speaker 2:And if I?
Speaker 1:understand this right. What you're saying is the rent app is trying to bridge some of this educational gap.
Speaker 2:I think that's the opportunity. So you asked about what are the big opportunities, right?
Speaker 2:So I said three, right. So I always say the first one is education, the third one is capital, as you mentioned. I'd say the second one that's really important, where the individual can have an outsized advantage, given the right tools, is data. So, if I go back to those three things again, what does a real estate private equity have? Makes it so successful? Right, and allows it to invest in not only residential but also all these off market properties. In large part, they have knowledgeable people, people with business degrees and sometimes people who have spent a lot of time in real estate, and then what they have. The second thing they have is like this capital thing, and the most important ones, they have data. And the data it's a very simple thing is anyone can buy real estate. I learned in real estate private equity my previous company, where it's like everything is a great deal in real estate at the right price, everything is a great deal.
Speaker 2:Yeah.
Speaker 1:So then Not the right price, and there's the magic sentence.
Speaker 2:Yeah, so how do you? That's the problem, and the way you determine the right price is data, and so what the big guys have is data, access to data so you have to have this paid data, like things you actually have to acquire. There's lots of companies built in this space.
Speaker 1:CREXI, CoStar, all the MLSs. Yeah, it comes to mind.
Speaker 2:Yeah, you can go on it they're expensive. They're very expensive.
Speaker 1:Yes, a CoStar subscription is $17,000 for the nation.
Speaker 2:Yeah, so Sam, exactly. So I can assure you every private equity firm has that subscription. I can assure you every individual does not. So I think there's an opportunity for us also to expose some of that data to folks on our platform. And the way I see it I guess as a designer I think that we use their experience right away, right? So for me it's like what I want our landlords right now, when they log into the portal, what they see is their property and it's a map, and it's a map of their neighborhood, right. And when they add additional properties now you have three a lot of them tend to manage properties in the same neighborhood, right, Because you know it and you can move around, et cetera.
Speaker 2:So imagine, like this neighborhood and there's three properties, and what we do is we're going to build a button and you press this button and it zooms out a little bit and it says here's all the other properties around you. That kind of meet that same profile, Because we know generally what it costs to operate yours, We've seen that track record, We've seen the rent income and we've seen the profile of a property where you've proven to be a great operator at, and we can give you all of those other ones, and that's a really huge problem, because not every property that's out there for sale you should necessarily buy. And I'd like to deliver some of that intelligence. And, of course, you know, for me again, it's not all altruism. If I can participate in that transaction, there's another source of revenue for us. Certainly If I can help you buy that next property, great, I'll make money. And to help you buy the right property, I'll give you access to the data. So I think that's really exciting.
Speaker 1:Yeah, and I, as a guy wearing a couple hats here, yeah.
Speaker 2:That's. That's dangerous. You should literally do this podcast in a couple of hats.
Speaker 1:Oh, I hung it on the other hook. That's funny. Yeah, my hair wouldn't look good. But so what you're really talking about is creating the rental database, I imagine, so that the landlord can know what the rent market is at any given time in real time.
Speaker 2:Yeah, because you know it's about it's about. You know it's about spotting opportunities and it's sourcing. You know what they call it. You know sourcing, sourcing, real estate, you know, and private equity. They'll have an acquisitions team right, who are you know, have spent 10 years right looking at every possible a great acquisition. I've worked with some amazing real estate private equity acquisitions guys like and you can tell them any. Literally you can ask them any address in America and they'll tell you all of the drivers right of people either moving in or out of that area and they'll tell you that they pretty much will answer right off the bat whether they'd invest there or not. And that type of knowledge is how the big, the big guys, get bigger and that is the time of knowledge that you don't.
Speaker 2:Yeah.
Speaker 1:You don't get as an individual.
Speaker 2:By the way, you know what's really interesting. We know what's really interesting in this, too is some of the areas where we play right Because we target these individual owner, the mom and pops, right. So that's our customer. So where they are today, if you look at the geography kind of the United States, it tends to be right in sort of 13 or cities, right.
Speaker 1:Territory markets.
Speaker 2:Yeah, most of it tends to be in the south. Actually, you know southern United States College towns, places with a lot of military bases. You know it's a transient workforce and so what's really interesting is they have those markets to themselves. It's another kind of powerful thing I wish more people knew.
Speaker 2:The big real estate private equity firms are really good at kind of the top markets and they you know the model works where they're looking for alpha in markets that tend to, in bad times don't really dump too much and in good times really grow a lot and the opportunity for the individual actually is to be in these places, which are much more. They tend to be more volatile, right, they're the tertiary cities, but if you live there, if you're a local, I mean no private equity guy is going to move from Wall Street over to you know Ithaca, new York, right, but Ithaca, new York is an amazing market If you're there, if you're on the ground, if you're able to spot the opportunities, get the off market deals, if you can manage those properties in a hands-on way, without a big kind of, you know, without a little, a lot of overhead, and that's a huge opportunity and I love being able to enable these kind of local markets because the private equity guys are too scared to go there.
Speaker 1:You know, I've done a lot of talk with these private equity guys and the checks aren't big enough. The risk is outsized to their alpha. They specialize in certain geos, right, so there's a whole bunch to this. That's fascinating.
Speaker 2:They don't manage this stuff. There are several people away. They don't manage it, they don't touch it.
Speaker 1:And they hire a third party to manage it and their hands aren't dirty. It's all math. Real estate is 100% math and as soon as you learn that, your life gets better.
Speaker 2:Yeah, I could just build on. The other topic we can talk about in next podcast is wine. I've recently learned that all wine is real estate. Separate topics Makes perfect sense.
Speaker 1:Makes perfect sense, because it's all about where the culture of the grape is harvested.
Speaker 2:Just the price of the land. It's just that. That's all it is. Yeah.
Speaker 1:Price of the land, price of the, actually the growing ecosystem right, because Napa land is much more valuable than parts of Tuscany.
Speaker 2:Yeah, napa is a giant real estate play. I've learned that recently. It's a side hobby of mine Drinking.
Speaker 1:Yes, that's funny. So we've been talking for about an hour. Let me ask a couple summary questions. Sure, knowing what you know today, what's one thing you wish you had known a decade ago, that you now know?
Speaker 2:I have an answer to this question, but hopefully it's not too unsatisfying. I think about this a lot. I have three kids right and I'm close to my parents, and so I think about this kind of cross-generational knowledge sharing. That happens. The problem, the problem is that all of the advice that I was given when I was younger even if I was myself given myself advice, I don't think I like, I don't think I would listen.
Speaker 2:The problem is not like access to advice. You actually get tremendous. I've gotten amazing advice. I realize now in my 20s I just never listened and I think that's a cycle that just cannot be broken. It's made my relationship with my children much better, I'll say this, and my parents, by the way, because I just like assume that whatever I tell them, they won't really listen to. And it's a great and we now have a perfect relationship. A lot of people spend a lot of their energy trying to convince, like a younger person to you know of some unbelievably valuable piece of advice that the young person just can't appreciate until they get there to where you are.
Speaker 1:So yeah, I understand that as a parent of two kids and two stepchildren, who were 23, 22, 21, and 20.
Speaker 2:You're living it. You're living it.
Speaker 1:And I just got back from Europe where my son goes to college, and the fascinating thing is that what I had told him he's learned the real estate lessons because I took them through them. He did it with me and I didn't teach it to him verbally, I taught it to him exponentially.
Speaker 2:You know hey.
Speaker 1:I've got this question Do I charge a late fever to this person or do I not? And if I don't charge a late fee, what does this mean to our family? Yeah, so he learned those lessons experientially at the age appropriate time right, or my daughter or my stepkids.
Speaker 2:You just have to live through it. I've learned it myself. It's just like I realized now things that obviously there's a lot of things I love being older, because you're like ah, every day I'm like, oh, now I get it.
Speaker 1:Lived experiences is incredible.
Speaker 2:It's the only way, yeah.
Speaker 1:So, as we go down, then, what advice did you hear that you wish you had ignored, that you followed?
Speaker 2:I guess it's also a little bit of an unsatisfying answer because the problem is I got a lot of great advice. I don't think I've ever had like necessarily bad advice. I thought I knew you were going to ask me this so I thought about it for some time. But yeah, it's more about just.
Speaker 1:The problem was always me not listening and I don't think I could fix that and I'm going to throw a curveball at you here because I mentioned I have three businesses and one of them is an executive coaching business and I've had a lot of people say, well, who needs a coach? And so I started asking my guests have you ever had a coach in your career or somebody that really impacted you in that way?
Speaker 2:I've had a coach actually an executive coach at two different jobs, again going back to when I was playing more of an executive role. I definitely found it to be valuable. But you know, so it's great if you have. It's expensive, right. So if you have access to it, somebody's offering that opportunity, do it for sure, especially what's on the company's dime.
Speaker 2:But of course, I've just had amazing mentors. I've had just from my very first boss quote unquote when I was 18 years old, my first kind of real job onwards, I've always been very fortunate to work for people that deeply care about my well-being, which is maybe I'll turn that into a piece of advice that I think is valuable is when you pick who you work for. If you have to work for someone I think this is on point here. If you know we all sometimes we have a choice, sometimes we don't have a choice, but when you're considering, okay, my next job I will be working up for someone, definitely evaluate directly who you're working for. If you do not think it could be the most amazing job in the world, who is your manager, and talk to that person extensively. And if that person does not inspire confidence in you, if you don't think that person is going to go too bad for you and help you grow, don't take the job.
Speaker 1:What an amazing discussion because I was going to ask you how do you pick a mentor question? What do you look up in the mentor? What you just said was I pick mentors by looking at my next boss. If the next boss is not and still confidence in me, I don't go.
Speaker 2:Yeah, you can't control anything else, but that's the one thing you can kind of control. Who knows what's going to happen to you at the next job. It's very difficult to pick. I always go, just go for it. But yeah, I evaluate the person.
Speaker 1:So tell me what's the best way to? If we love what we've heard today and we want to follow Andrew, we want to learn more about Rintapp and we want to learn all these things, what's the best way to keep in touch with you?
Speaker 2:Sure, I think I mean I'm on Twitter X, where you know sometimes it's bad for your health, but I am on there because it is a great platform to sort of connect with folks. So you can find me there, I mean just kind of Google. My name, andrew Borovsky. I've been around long enough and my name is weird enough that I kind of come up. Also, you know, to the extent that you're interested in getting in touch directly, I actually I'll tell you my email. My email is very simple it's Andrew at Rintapp, and so it solves two problems for you. First of all, if you have, if anyone wants to kind of chat about anything, I'm. My door proverbial door is open to the extent that I have time. I always kind of respond to people and so feel free to email me. But also Andrew at Rintapp.
Speaker 2:Rintapp is where you go to try the product. So whether you're paying Rint, check it out. You know, if you're paying Rint in the United States, if you landlord, you know accepts checks or cash or Zell, you can switch to Rint app and it'll be a better experience. You'll build a credit with it. If you are a landlord and you're collecting rent payments right now and you don't love the way you do it and maybe you do it again using cash or checks. Check out, actually you can go to Rintapp and click on landlord up in the corner, or you can actually go to Rintapp forward, slash landlord and kind of learn about what makes us special. But yeah, it's a product built with a lot of love, with a lot of respect for both sides of the equation. We love the renters, we love the owners, and so I think, you know, I believe that you will love it too.
Speaker 1:Awesome. Well, thank you so much for this wonderful conversation, or conversations Likewise, I love how we went all over the place.
Speaker 2:It's great. It's the kind of conversations I love to have.
Speaker 1:Thank, you for the opportunity.
Speaker 2:I'm glad you joined us and you've been listening to another episode of Bricker Golden Handcuffs.