Talking Business
by Emily Landes
As the founder of Allapartments.com, which later became Spring Street, John Helm had a front-row view for San Francisco’s go-go dot-com days. He worked out of a lofty SoMA office, where employees’ dogs were allowed to roam freely. His engineers became so sought after that one of the hardest parts of his job was simply holding on to them. At one point, he says, people became so “desperate for bodies” that he hired his chief technical officer’s mechanic (who learned HTML from a book) only to have the self-taught coder stolen away a few months later by a pet website offering more money and a better position. “In six months, this guy went from being a mechanic to running a production group,” recalls Helm. “That’s how crazy it was.”
So it’s no wonder that after Spring Street was bought out by Realtor.com (which later went public as Homestore.com) in 1999, Helm decided to take some much-needed time off. In his late 30s, he was already “semiretired”: taking on the occasional consulting gig and spending his winters in Lake Tahoe. He got married, traveled the world, and then settled back in his two-unit Marina building with his wife and new son.
But, eventually, Helm heard from several of his former clients that there was a need for a new pay-for-performance rental website. He began researching and raising capital for the company in 2005, eventually taking in $20 million from “typical Sand Hill Road” venture capitalists, two REITs and two private real-estate management companies. He opened this new venture—MyNewPlace—in a little office on Market Street above a McDonald’s with only a handful of employees, many from his Spring Street days.
The idea was to use the latest technological advances to make renting apartments easier for tenants and landlords nationwide. The website would have floor plans, a list of amenities, pet policies, mapping and tons of photos. Owners would pay a fee only if their MyNewPlace listing actually resulted in getting a new tenant, though the company also allowed owners to sign up with limited content for free when it was first getting started. Tenants would get $100 of the fee as a way to get them to check back in with the company, so MyNewPlace would know when it was owed the referral compensation.
Large, professionally managed properties loved the idea and put their units online hundreds at a time. By last summer, the company had 15 employees and more than a million units on its pages. Today they have 30 employees and more than six million listings (of which half are still free and half are on the pay-for-performance model), doing business with at least 40 of the country’s top 50 apartment companies. Helm believes MyNewPlace will have 45 employees by the end of the year and will have switched most of its clients to the pay-for-performance model by that time. He also says that more than half his start-up capital is still in the bank and that the company will not likely need any additional funding.
But it’s not just property owners who are driving the site’s success. Helm says many tenants are drawn to MyNewPlace due to its data richness (not to mention that $100 check). Because the site has so much information, tenants can quickly narrow down their options to the units that fit their parameters for price, location, amenities and aesthetics. “Literally what used to be an entire Saturday, we can do in 10 minutes,” he claims. And having highly directed and motivated tenants makes things easier for owners too, since they no longer have to waste time with potential renters who are unaware of critical decision-making factors, like the property’s pet policy and amenities.
Perhaps one of MyNewPlace’s most innovative functions is its ability to allow renters to “hold” a unit on its site for 24 hours. Many management companies will even ask renters to run an online credit report themselves when they reserve a unit so that the process moves that much quicker. “The properties love this because it effectively means the leasing office is open 24 hours a day,” says Helm. This anytime, anywhere leasing ability is especially attractive to young, tech-savvy people. Helm sites data that shows college students mostly sign up for student housing between midnight and 2 a.m. “In four years they’re going to graduate and move into apartments. So the industry is very quickly adopting these technologies,” he posits.
That’s one reason that many owners and management companies are also intrigued by MyNewPlace’s new venture, MyNewSite—a low-cost website creation and maintenance service that uses MyNewPlace’s technologies to allow rental professionals to have their own websites. “A lot of property owners have come to us and said, ‘I want my own website to show my buildings.’ There are a lot of solutions that are very expensive out there right now. We said, ‘Well look, we put all this time and energy into writing the code for this site, we’ll repurpose it and you can use it for your properties,’” Helm explains. Owners don’t have to sign up for MyNewPlace to use MyNewSite, but both sites use the same database, so its very easy to make the same information available on either site.
Of course, behind all of this technology there’s a lot of manual labor and long hours.
Many owners send in printed pictures and floor plans that have to be scanned and formatted. MyNewPlace staff also helps owners who don’t understand the company’s online management system. Plus, every listing is reviewed to assure that it meets fair housing standards before it is posted online. When explaining why such a time-consuming task is necessary, Helm brings up the recent controversy involving alleged fair housing improprieties on Craigslist.org. “If you see some of those postings, it’s like, yikes, I don’t want that on my website,” he says.
But Helm thinks that there’s still a place for free listings websites like Craigslist in the Web 2.0 world. “At this point, we’re complementary. If you went to the Houston Craigslist, you wouldn’t see a lot of the properties on our site. Craigslist would have more single-family rental homes,” he explains. In the not-too-distant future, however, Helm would like to see both large and small properties on his site. To get the business off the ground, the company focused on big properties, but Helm admits that there will always be people who want the small-apartment flat or the single-family home and he wants to help them in their rental search as well.
In Helm’s mind, no matter how many new listings and features MyNewPlace adds, it will never be “done.” Every three weeks, the company uploads a new version of the site based on its extensive tracking capabilities. After all, if there’s one thing that Helm learned from his dot-com days, it’s that you need to have good data to make good decisions. Back during the bubble, companies wasted tons of money just because they were guessing on their numbers, he recalls, and that lack of tracking “killed a lot of companies.”
But things are only looking up at MyNewPlace. Even though the company may not have the snazzy digs and excessive parties that exemplified the first dot-com era, it does have all the important characteristics for a longlasting, successful business: The latest technologies; a rising customer base; loyal, hardworking employees; rich data from which to make decisions; and, perhaps most importantly, more than half its start-up money still in the bank.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or SF Apartment Magazine. Emily Landes is the managing editor of SF Apartment Magazine and Rental Housing. Copyright © 2007 by SF Apartment Magazine. All rights reserved.