Haters Unite! The Next VC-Backed Property Manager is Here with Doug Brien
Today, I’m talking with Doug Brien, the CEO and Co-Founder of Mynd, a venture-backed property management company that allows landlords and tenants access to real-time data about their properties. They’ve raised over $35 million and currently manage more than 2,100 doors across California.
Before founding Mynd, Doug was the Co-Founder and Managing Director of Waypoint Homes, the second largest public SFR REIT that managed over $3.5 billion in assets across the U.S.
Before that, Doug played 12 seasons in the NFL. Yes, really.
In today’s episode, you’ll learn how Mynd uses technology to reshape the industry and create a better experience for investors and renters and how you can use these lessons to improve your property management business.
- (01:27) – Background leading up to today
- (01:44) – Doug shares how he got started in the property management industry.
- (03:41) – Getting into the details of his very first deal.
- (05:55) – Doug discusses turning points in the trajectory of Starwood Homes.
- (07:19) – Building their own software systems.
- (08:28) – The importance of controlling their own data.
- (09:23) – Doug shares how Waypoint was able to generate large returns in the single-family housing market.
- (09:40) – Creating a vertically integrated company.
- (10:23) – Control of centralized data.
- (01:44) – Doug shares how he got started in the property management industry.
- (13:09) – Mynd
- (13:28) – The type of clientele that Mynd services today.
- (14:05) – Discussing financial performance and returns.
- (19:14) – Mynd’s fundamental brand promise.
- (20:41) – Discussing the inefficiencies in the single-family market and how Mynd aims to capitalize.
- (21:32) – The ability to control your own data.
- (22:28) – The ability to scale in the ‘small residential’ market.
- (23:35) – Inefficiencies in software.
- (24:28) – Discussing pushback when it comes to the ‘scale’ conversation.
- (20:41) – Discussing the inefficiencies in the single-family market and how Mynd aims to capitalize.
- (13:28) – The type of clientele that Mynd services today.
- (27:45) – Tech and the future of property management
- (28:03) – How Mynd is leveraging technology.
- (30:17) – Attracting great tenants.
- (30:25) – Self showings and streamlined leasing process.
- (32:08) – How Mynd handles their communications.
- (33:12) – Custom built case management software.
- (34:13) – Metrics.
- (35:15) – Using ‘Customer Health Scores’.
- (36:42) – Using customer satisfaction scores and net promoter scores.
- (37:33) – Doug shares potential innovations Mynd may have in the third-party maintenance space.
- (39:58) – Route and task optimization software.
- (30:17) – Attracting great tenants.
- (28:03) – How Mynd is leveraging technology.
- (41:29) – Tying it Together
- (41:37) – Doug shares his thoughts for property managers considering the question of client qualification.
- (42:52) – Pricing and task management.
- (41:37) – Doug shares his thoughts for property managers considering the question of client qualification.
- (45:39) – What podcasts do you listen to?
- (46:10) – What do you make of Roofstock buying Streetlane?
- (46:42) – How do you feel about the Waypoint brand gaining a second life as Starwood Waypoint Homes?
- (47:49) – What do you know to be true about property management that will be true a decade from now?
- (48:41) – Is Mynd a team or a family?
- (50:01) – Are entrepreneurs born or bred?
- PM Grow Summit (51:37) – Property management event where Doug will be speaking in April 2019.
Where to learn more:
If you want to follow Mynd as they continue to grow and innovate, head on over to their website: Mynd.Co
Jordan: 0:00:00.0 Welcome closers. Today we have another episode of The Profitable Property Management Podcast coming at you. This is Season Three on profit.
I’m your host, Jordan Muela, and every week I interview world-class property management entrepreneurs and industry experts who share actionable insights to help you grow your property management empire.
0:00:17.6 Whether you manage 100 units or 10,000, this broadcast is designed to help you see the big picture and to give you the tools and tactics that you need to get to the next level.
0:00:25.2 Today I’m talking with Doug Brien, the CEO and co-founder of Mynd, a venture-backed property management company that allows landlords and tenants access to real time data about their properties.
0:00:37.2 They’ve raised over 35 million dollars and currently manage more than 2000 doors across California.
0:00:44.1 Prior to founding Mynd, Doug was the co-founder of Waypoint Homes, the second largest public REIT, that managed over 3.5 billion dollars in assets all across the country.
0:00:55.8 And before that, Doug was an avid football player. Took it as far as you can get it. That’s right, he was an NFL kicker.
0:01:07.1 Wide depth of experience, all this coming together, hopefully, to build a really effective property management company to deliver greater results for your average single-family investor. 0:01:19.7 We’re going to dig into the details here.
0:01:21.3 Doug, thanks for coming on the show.
Doug: 0:01:24.1 Yeah, you’re welcome. Great to be on the show. Thanks for having me, Jordan.
Jordan: 0:01:27.8 So Doug, I want to start off by getting some background with Waypoint specifically.
So, let’s go ahead and go to the very, very beginning. 0:01:37.2 Like, take me back to the Maple Street and the days of Bill Katsaros 0:01:39.6 spitting on the homes – on the courthouse steps.
Doug: 0:01:44.2 Wow, you did your homework. So yeah, Maple was our first house and Bill was one of our bidders.
So, yeah, you know, I would say, you know, high level, like, I definitely consider myself a real estate investor first.
0:02:00.3 And in those days, I was kind of, like, just getting out of my NFL playing days. I retired in 2005 and really got into investing while playing.
0:02:10.6 But pre foreclosure crisis, what I was mostly focused on was kind of what other people were focused on in the multi-family residential rental world.
Which was, you know, buying bigger complexes and repositioning them, and holding them for cash flow. Raising money for that kind of stuff.
0:02:26.4 And, you know, we saw what was happening with the foreclosure crisis and I started to ask myself, like, “Why am I chasing these apartment deals where I’m, you know, bidding on them and it’s a competitive process when they’re just giving away these houses?”
0:02:41.5 And from everything I could see, the economics looked to be far superior, you know, partly because nobody else was really bidding on them.
0:02:50.4 And so, that together with my partner Colin, who I knew through an Angel Investing Network, and we decided to experiment with our own money.
0:02:57.7 I mean, really, it was not to like, “Hey let’s start a company.” It’s like, “Wow, this looks really interesting, like, let’s do some due diligence and check it out.”
0:03:06.6 And so, we bought 26 homes together, sold some, you know, just to kind of see if we could actually get the values that we thought post-renovation.
0:03:17.5 And also rented some out to see what kind of yields we could get.
0:03:19.9 And we found it was compelling enough to go out and start raising high net-worth money. 0:03:26.4 And we ended up doing 11 different funds, a bunch of them were high net-worth.
And then we started raising institutional capital and ultimately, did a deal with Barry Sternlicht at Starwood Capital and turned it all into a REIT, which we ran for two years.
Jordan: 0:03:41.6 Alright. So, winding back to that first deal, because I just want to drive home and get clear on your experience.
0:03:49.3 You’re in the NFL, you realize the career’s going to wind down at some point and you’re finding the next thing.
0:03:52.5 You’re using your own money. Take me back to that first deal, just to really get visceral about what the economics were like at that point.
Doug: 0:04:01.4 Yeah. I mean, it was a really scary time to buy. You know, if you remember this was late 2008, late 2009.
I mean, in parts of the Bay Area, prices had fallen precipitously. 60%, 70%. All investors were sitting on the sidelines. 0:04:18.1 No one could even imagine why you’d buy something.
0:04:21.2 And, you know, we were looking at, like, “Wow, you know, Maple Street.” I mean, I remember, like, “I think we can get $1500, $1600 dollars a month. It’s a 3-bedroom, 2-bath house. Pittsburg, California. Not too far from BART, which makes, you know, San Francisco, Oakland, Dob Center, it was very accessible.
0:04:39.6 And this house had, I think, sold at four hundred thousand at the peak and we could potentially buy it for sixty-five or seventy thousand.
0:04:49.9 So, you know, do the math on the current yield plus, you know, the house was in disrepair, so we knew we’d have to put in, like, twenty grand, but, you know, we could come in, add the twenty thousand dollars of improvements, lease it for $1500, $1600 bucks and get, you know, a ten plus – 10% plus cash on cash return and be coming in at, you know, less than half of construction costs. You know. 30%, 30, 40% of what the prior peak value was.
And, you know, if you were a real estate investor and you were in a market like the Bay Area that, you know, you fundamentally believe in, it kind of turns into a little bit of a no-brainer.
0:05:34.9 Like, why wouldn’t you do that if you could get that, that, you know – you could lock in for awhile and, you know, basically ensure that you could hold for ten years.
0:05:42.2 Because, who knows how the timing’s going to work. But that was kind of how we thought about Maple. And really, all the houses we bought, and kind of what gave us the impetus and the courage to move forward with that business model.
Jordan: 0:05:55.2 So you’re in the Bay Area, which the unique, kind of magic dynamics of being there. Anytime you have a working model, because of access to capital, the dynamics of just living in that area, there’s a tendency to ask, “What if? What if we could scale this?”
0:06:12.2 So, you jump to some – basically raising some capital from some high net worth individuals, then some institutional money. 0:06:18.2 Eventually you do the deal with Barry Sternlicht.
0:06:20.5 Could you describe it? What was the inflection point of Starwood as you’re growing up to eventually somewhere around 550 people?
0:06:28.9 What was the inflection point where you knew that that was really going to turn into a large business with a lot of velocity? Was that obvious from day one? Or was there a moment that was like a real turning point?
Doug: 0:06:41.4 You know, I mean, it was a seven and a half year period that we’re talking about here. From kind of start to finish.
I can’t say there were, like, obvious, like, super obvious inflection points. You know, I think one was when we did the deal with Barry. 0:06:58.3 And all of a sudden, we had a public company. You know?
0:07:02.6 Prior to that, it was all private and, you know, how were we going to keep this company going by raising more capital to buy more houses.
0:07:10.3 Like, that was kind of, like, always in flux and a risk. 0:07:14.1 I think once we were public, it’s like, “Ok, you know, this is a real company. It’s not going anywhere.”
0:07:19.7 I think one of the other early realizations, and this sort of ties into what we’re doing now with Mynd is, the way we set Waypoint up was – and I guess an important point is, my partner’s background is as a software engineer, and so we kind of came into this thinking, “Ok, economics: really interesting. But how do you create scale?”
0:07:43.1 So, obviously building some technology and some systems are typically a part of that. 0:07:46.0 And so we built our own system that we call The Waypoint Compass.
0:07:51.9 And we use Yardy for accounting, but we built all of our workflow processes from, like, how we underwrote homes, to construction management tools, to a leasing system, to the way we did a lot of our property management activities.
0:08:06.1 We built our own software and, you know, building software’s not easy I would say. 0:08:11.5 You know, three, four years probably, a year, year and a half before we did the deal with Barry. But we had taken it.
0:08:20.2 So we raised money from the Columbia University endowment and GI Partners. And so, that was kind of like, you know, the big leagues.
0:08:28.0 And we just started to see that, like, this system we had built was like, actually giving us efficiencies.
And we could give reporting to institutional investors that would not have otherwise been available to us.
0:08:43.1 And that kind of clued us off to like, “Wow, you know, this different approach to building our own system and, you know, the system you build and how you use it can actually pay dividends.”
0:08:55.1 And so, that was kind of another big moment where we realized, “Wow, I think we’re on to something.”
Jordan: 0:09:00.3 So the promise of the asset class, they really defined the play of what you were doing, was being able to drive the same kind of returns from SFH, as historically people have expected from multi-family.
0:09:13.6 You’re in this critical window where there’s the rise of things like cloud computing. There’s the rise of a deeper level of analysis, etc.
0:09:23.6 If you were going to distill down what the secret sauce was of you being able to drive the same kind of returns without the large economies of scale you get from multi-family, what was really at the core of your ability to pull that off?
Doug: 0:09:40.1 Yeah, so I think, you know, I wish it was, like, one simple thing. I think it’s a bunch of different things.
I think, at a high level, you know – what we ultimately ended up creating was a vertically integrated operating company.
0:09:54.6 Meaning, we hired our own employees to do everything. Like, we tried to outsource certain things, including property management, and at the end of the day, our teams were doing everything. 0:10:06.6 From buying, to construction management.
0:10:08.1 The only thing we didn’t take on was a third-party GC part.
0:10:12.3 So, what that offers you is the – is more control. Right? Cost control, quality control, just general execution control. 0:10:20.8 That was a big part of it.
0:10:23.9 The other part of it too, was just like, and this was a central thesis, was have all the data in one system.
0:10:30.4 I think that’s one of the things today that’s challenging with real estate.
0:10:34.4 It’s very hard to do the amount of analysis that you would want to do to, you know, make better investment decisions, or try to figure out how to optimize something within your operation if you have to pull data from lots of different sources.
0:10:48.6 So, you know, we ended up having all the data – I mean, really, it was in two sources. And this was one of our big challenges – it was in Yardy, and encompassed – like every day we had to tie the two together and had a whole team that did that.
0:11:02.7 So – but I would say, you know, generally, the data we had and the way we used it.
0:11:08.9 And then I would say, kind of as a third piece, is – and this is a saying that I really – like, is – I guess I sort of bring it from my sports background, is if you can’t measure it you can’t improve it.
0:11:23.6 And so, we really embrace that.
And, you know, I think technology can be something that a lot of people misinterpret it.
0:11:31.1 And one of the ways that we use technology was just to really systematize everything we were doing so that people did it across the organization in a very consistent manner.
0:11:43.8 And what that offered us – the ability to do was kind of – measure how we were doing.
0:11:48.4 And then use our system to make the results transparent.
0:11:51.6 So, we could look at, you know, average days to lease, or whatever metric we wanted to. Like, we could say, “Hey why is the Dallas team doing it in, you know, 23 days, when it’s taking 31 in Orlando?”
0:12:08.0 So, we basically were able to gameify the business across regions, because we set up a system of measurement and made that data transparent across the organization.
And then got smart, committed people focused on, like, iteratively improving and refining processes, etc..
0:12:28.8 And that was a big part of what, you know – frankly it’s the statistic that I’m the most proud of from the whole business, because it was the biggest one in question.
0:12:37.0 At the end, with 17,000 plus units in 13 markets, we were running it roughly 62% to 63% NOI margins.
0:12:47.3 Which is what you’d typically see in a large multi-family business.
0:12:49.9 So what that means was, we were able to take a lot of the operational and logistical challenges associated with managing a bunch of disparate units, and creating enough efficiency to have compelling margins that, you know, investors can get behind.
Jordan: 0:13:09.8 So we’ve laid some of the groundwork here.
Eventually you exit Waypoint, you found Mynd. You have a wealth of context. You have a new mission though.
Previously, with Waypoint, fair to say that Wall St. was the primary beneficiary of the work that you were doing there?
0:13:28.0 Whereas with Mynd, you’ve pivoted to serve the small – maybe up until some mid-sized investors, but in large part, most of your clients currently are somewhere in between the mom and pop and the non-professional investor that owns ten or less properties.
Is that fair to say what the clientele looks like?
Doug: 0:13:48.0 Yeah, we have a couple that I would – I mean, one for sure that we’d call institutional. It’s the biggest landlord in San Fransisco. We manage their non San Fransisco stuff. They’re for sure the biggest. 0:14:00.2 And yeah, full spectrum down to a guy with a house.
Jordan: 0:14:05.2 So, what gains will cross apply from all the background with Waypoint?
Now that you’ve been in the business for a couple of years, what’s different? What points of leverage have cross applied? What points of leverage have not?
For example, the focus on financial performance and return. 0:14:23.4 Objectively, that would seem like that would be universally appealing.
Do you find though, that there’s any forms of resistance relative to the persona or the customer profile of dealing with moms and pops?
0:14:35.5 Or do you feel that that financial performance pretty universally applies in terms of being attractive to the end consumer?
Doug: 0:14:44.5 Yeah. So, a few – a number of great questions embedded there.
I would – guess I would say, first and foremost, like – and I said this earlier, like, I consider myself an investor. And Colin considers himself an investor.
0:14:59.9 And, kind of the realization that a company like Mynd should exist was really when, you know, we both left Waypoint.
Like, Waypoint managed – you know, we had bought a bunch of houses and Waypoint was managing them all for me.
0:15:14.4 Like, Waypoint didn’t do third-party management, but because, you know, we’re the founders, we get to have our company do it.
0:15:21.3 And so, it was really nice. Like, I had, you know, real time access through Compass on exactly what was happening with my property, reporting, giving me tons of information.
It was just, you know, what I would call, like, proactive, you know, professional calibre management. It was great.
0:15:38.8 And then when I left, all of a sudden, it was, like, “Hey Doug, by the way, sorry we’ve got to off board your properties.”
0:15:45.4 And I’m like, “Ok.” Like, “What am I going to do now?” Like, you know?
I interviewed every property manager in the east Bay when we were trying to do Waypoint, and couldn’t find any that I really felt comfortable with.
0:16:02.0 And I also know that, like, while I really value what property management does for an investment, like, I don’t want to be the property manager, so, you know, what are we going to do?
0:16:11.5 And, so we kind of had this idea of, like, you know, we helped Wall St. investors and institutional investors make a bunch of money – we each individually had a personal problem that, like, we felt like we were uniquely qualified to solve.
0:16:28.9 Like, we had learned a lot from the Waypoint journey, and we said to ourselves, like, “Hey why don’t we like take all of our learnings, and some of the key people from our team, and go create a service platform?”
0:16:42.2 So instead of trying to buy everything, like, “Let’s not own anything and just service it.”
0:16:49.0 Because – it’s interesting – truly, like, we felt like what we had built at Waypoint, we got up to 17,000, but we felt, like, “This could be managing hundreds of thousands of units across the US.”
Like, each incremental unit in a market where we already had a presence. You know, teams of people and data.
Like, it just got, like, cheaper and cheaper every incremental unit.
0:17:11.3 So we’re, like, “Hey what if we set up a new company that didn’t have to buy everything and let’s do apartments too.”
0:17:18.9 So we do single-family rental and small apartments. Because the secret to this business, like, making it a successful business is geographic density. Right?
0:17:29.5 So we were in, like, ten markets. We had over 1000 units in ten different markets. You want to be in markets where you have a deep presence. 0:17:38.3 There’s a lot of reasons why that creates efficiency.
0:17:42.6 And so, we decided that, you know, this was a worthwhile project that we were all excited about.
0:17:50.9 But yeah, there are challenges, and I think that, you know, one of the things that has been the most difficult is, like, we think very much like institutional and investors and, you know – optimizing for vacancy versus the rent you get, versus, you know, the amount of money you put into a turn.
0:18:12.2 And I think in some cases we’ve tried to be, you know, overly scientific, and maybe in some cases assume that everybody was on the same page.
0:18:21.6 And so, I think, fundamentally, for us, you know, one of the biggest challenges has been, you know, managing for lots of individual investors who have different priorities and different perspectives.
0:18:34.4 So, I mean, sure, anyone listening to this can appreciate that.
0:18:38.5 I mean, there’s people who, you know, when it comes to turning a unit, they’re just solving for occupancy. 0:18:44.6 That’s all they care about. Right?
So that’s a different way – approach than we would take and so, there’s, you know, a hundred different examples of how people will choose to, you know, make decisions or run their properties.
0:18:59.5 And so, we’ve had to – you know, I think learn to be more flexible and figure out how to communicate better with our owners so that we can ultimately, you know, provide them the service that they want to the best of our abilities.
Jordan: 0:19:14.0 So what is the fundamental brand promise though, Doug?
I mean, what crosscuts across mom and pop versus a middling investor?
What is the fundamental brand promise that Mynd represents that represents meaningful differentiation in the market to the end consumer?
Doug: 0:19:30.2 Yeah. So, we want to be your investment partner.
And so, when you – when we look at our target customer – I mean, there’s a huge range around this.
Like, you know, it’s someone who owns five to seven units and owns it in an LLC. 0:19:47.5 And that doesn’t mean that they have to have an LLC, but someone who has an LLC, like they’re thinking of it as an investment.
0:19:54.2 And if someone’s thinking of it as an investment versus – you know, I think there’s real estate investors and there’s real estate collectors.
0:20:02.6 And we want to work with investors. People who are looking to, you know, optimize for risk and return and, you know, use as much data as possible to make better investment decisions so they can have a better return and ultimately grow their portfolio.
0:20:20.1 And so, you know, we’ve created tools and processes and access to information so that we can, you know, fulfill that promise and, you know, there’s obviously lots of ways to drive revenue and minimize costs and some of these things can be helped by technology.
Jordan: 0:20:41.0 So I’d love to hear kind of riff more on the problem.
The nature of the inefficiencies in the market related to traditional to single-family property management that you think Mynd is capitalizing upon.
0:20:54.2 Tell me some more about what you think is broken and more specifically, why it’s broken.
0:21:01.2 We live in a capitalistic society that’s always looking for greater efficiency, picking up slack and profiting off of it.
0:21:08.7 And maybe broken is an overly strong word, but certainly fragmented. The single-family market continues to be regional and local by definition.
0:21:19.2 We see a couple of rollup players that the market has seemed to resist this, for the most part, up until this point. Up until the last few years.
0:21:29.8 Why do you think that is and what’s changing now?
Doug: 0:21:32.0 Yeah. Super good, complicated question.
I would say that there’s a saying, you know, you and many of your listeners may have heard, which is, “Data is the new oil.”
So, you know, in past generations, it’s been the companies and the countries that had the oil, had the power and the wealth, and I think, in today – in this day and age, it’s the companies with data that have the power.
0:22:06.0 Like, this data, if you’ve – I mean, I heard someone else phrase it differently, where data is the oil well, you still need to figure out how to extract the data and get value out of it.
0:22:15.6 Which is a whole separate thing. And I agree with that.
0:22:19.3 But, I think, fundamentally, you know, data – in controlling data and being able to use data to help make better decisions is a huge part of it.
0:22:28.1 I also think this was one of the things that no one believed was possible, was that scale, in this – what we call, ‘small residential’.
So, kind of our defined market space is 50 units and less. 0:22:43.6 There are buildings that don’t – that really can’t support full time property management people onsite, which means there’s a whole logistics component to it.
0:22:53.3 I think, in the past – I mean, nobody thought that we would ever get up to thousands of units, let alone 17,000. And today you have Invitation Homes with 83,000 homes.
0:23:03.2 So, the fact that you can – I think one of the things that we helped prove was that property management companies can operate at scale and that there’s a lot of benefits to that scale.
0:23:16.7 And so, you know, that leads you down some different paths.
0:23:21.0 And so, I agree with what you’re saying that property management’s broken. I don’t necessarily think that’s the case, I just think there’s a bigger opportunity.
Like, this is an industry that should have scale players.
0:23:35.5 But, none of the software out there is really designed for scale in this industry. It’s why, you know, Yardy did not work well for us.
0:23:45.2 You know, I know others that have struggled with other platforms trying to really scale with them. 0:23:51.8 And have access to all the data. 0:23:53.0 And, frankly, connecting different pieces.
For example, you know, we’re big proponents of smart locks and self showings. Like, not easy to plug all that into a different system.
0:24:04.6 There’s lots of examples of disparate systems that are difficult to connect.
0:24:09.3 And so, I just – I guess I would say I think there’s a way to execute the business in a more efficient way at scale, and ultimately collect and control more data. Which allows us to add more value to owners and for us to also create a successful company ourselves.
Jordan: 0:24:28.9 So let’s talk about what’s lost and gained there, Doug.
As you say that, I’m sure you can think of the landlord, for example, that says, “Hey Doug, it’s great that you have some predictive algorithm related to tenant screening, but, you know, my personal preference is: There’s really nothing that replaces looking someone in the eye and shaking their hands,” etc.
0:24:50.0 There’s always going to be that push back. What is lost with scale?
0:24:55.8 In your mind, what is the argument in favor of the mom and pop that knows the neighborhood, lived there for 30 years and, I’m using air-quotes here, but “manages their property like it’s their own”?
Doug: 0:25:11.1 Yeah, so look, there’s roughly, call it 35 million units in, like, our addressable market of buildings 50 units and smaller.
Like, we’re never going to manage all of them. We don’t want to manage them all. We couldn’t do it well.
0:25:28.9 And I think there’s all different kinds of owners who want different things. 0:25:33.5 And, you know, we come across them all the time.
I think there’s owners who really want that, like, highly, highly personable, customized, you know, boutique approach, where, you know, you meet with your, you know – a specific person every week and go over everything with them.
0:25:51.6 And, you know, we might not be the best fit for that.
0:25:57.1 Having said that, you know, one of the core philosophies that we brought from Waypoint is: This is a people business.
0:26:04.1 It’s operationally intensive, labor intensive. It always will be. The whole point of the technology is not to make it impersonal or make all the interactions go away. 0:26:17.9 It’s really built to, like, make our team more efficient.
And so, if you think about something as basic as, like, what we call, ‘Owner Services’.
0:26:28.8 So, in every market, we have a high-calibre property manager in the market, who’s the point of contact for an owner. 0:26:37.6 So an owner has a point of contact.
That doesn’t mean that other people on the Mynd team wouldn’t answer their questions and could get to it faster. But they have a point of contact in the market that they can sit down and talk to.
0:26:48.6 And we tried to set this roll up and support them with, you know, technology and data so that they can spend more time adding value to owner’s properties than doing, you know, what I would call some of the very important but more rote activities such as, you know, collecting rent or posting notices.
0:27:13.5 Like, these are all super important things, like, the trains need to run on time, but you don’t necessarily want the high calibre person who’s capable of, like, you know, sitting down with an owner, walking a property and figuring out how to, like, asset manage and help them make more money, to be doing those types of activities.
0:27:32.8 So we’re really focused on specialization to make sure things are getting done, but make sure that owners do have that high quality local relationship that they can deal with.
Jordan: 0:27:45.2 I love that.
So, the answer is that tech – in your vision, tech is about enablement rather than replacement.
It’s about actually elevating that human being and the service that they can offer by getting rid of the lower value tasks. Makes a ton of sense. A general trend towards this across businesses across the board.
0:28:03.6 But in your case, let’s talk further about the leverage that you’re getting out of the technology.
0:28:09.3 Particularly with the background that you have of doing a lot of analysis at scale to generate returns for institutional, highly demanding investors.
0:28:18.9 Talk to me a little bit about revenue management, rent optimization, and maybe how the conversation at Mynd may be a little different or a little more nuanced on those specific points. As opposed to how your average landlord would think through the same issues.
Doug: 0:28:34.2 Yeah, so there’s a lot to talk about there.
0:28:37.9 I’d say one place to start would be, you know, we have built a base property management system, including our own accounting system of record. 0:28:49.1 And that’s kind of the core system.
And then, you know, similar to what I had described around smart locks, you know, we use Payly as our payment portal.
0:28:58.2 We use TransUnion to screen tenants. Well, one of the nice things about TransUnion is, there’s a proprietary algorithm that, you know, we can tweak.
And we’ve always been very focused on – and so this is actually a classic example of, like, where sometimes our approach is not necessarily what one of our clients would do on their own.
0:29:23.2 So, people get very caught up in, like, how fast you lease a unit. How many days is it going to lease?
0:29:30.2 And, you know, part of the conversation needs to also be, like, well, what’s the lease rate you’re getting. Right?
0:29:35.9 And so, then – there’s a way for you to lease it fast, lease it a high rate but still lose. Like, who are you actually putting in to your property?
And so, we look at it holistically.
0:29:48.3 And one of the things that we’re really proud of is – and I actually met with our representative from TransUnion a couple weeks ago, and they were looking at our data.
0:29:57.5 So they basically looked at what our resident score was compared to all of their other resident scores in the Bay Area. And we’re also in San Diego, so they looked at our score relative to the market.
0:30:10.1 And it was something like, in the Bay Area we were 50 points higher, and I think we’re, like, 35 points higher in San Diego.
0:30:17.8 And so, one of the things that we’re very proud of and focus on is, you know, attracting great residents that are going to perform.
0:30:25.9 So, we’ve never had an eviction on someone we put in and we have very, very low delinquency.
0:30:25.9 So, part of that, I believe, is the mousetrap that we’ve set. We have a leasing process that’s centered around self showings and trying to create a very streamlined – and we’re not there all the way to it yet, but the vision is a seamless, mobile enabled leasing process where you can literally find the property you want, go so far as to see an online tour, self schedule a showing, and go through a quick process to validate your identification.
0:31:06.5 You know, put down a deposit, sign a lease, all through a mobile phone.
0:31:11.9 And I’m convinced that just the way that we – our whole leasing process works – attracts a certain type of resident, which is allowing us to get, you know, much higher and better tenant profiles in the form of income and FICO score.
0:31:27.1 So, that’s just one example of how we think about placing tenants and, you know, trying to get the right person in at the right price and the right time frame.
Jordan: 0:31:36.8 Totally makes sense. I mean, tenant screening seems like a classic example of the opportunity, or technology, in terms of having a deeper analytical model to look beyond just FICO. To look at the composition of the FICO score.
All the nuance there seems like it’s ripe for exploiting a lot of opportunity for landlords that could pretty readily recognize that as being a demonstrable, tangible benefit as opposed to non-differentiated points of specialization.
0:32:07.1 “We’re #1.” “We’ve been in the business,” etc.
0:32:08.4 Let’s talk more about some of the inherent struggles of running a property management business that maybe has lent itself towards resisting some of the scale that we now see the market moving towards.
0:32:23.6 Specifically on the communication piece. Communication is the backbone of this business.
0:32:32.5 How do you guys handle communications?
How do you deal with – do you take more of a case management approach? What systems, processes do you use? How do you be both efficient as well as bullet proof in the event that litigation ever comes up?
Doug: 0:32:46.9 Yeah. Fantastic question.
I think one of the – I mean, maybe most overlooked aspects of the business when it comes to technology build out, which has been a little bit of a head scratcher to me.
So, you know, there’s great, what I would call 21st century communications platforms out there like Zendesk.
0:33:07.7 And, like, we tried to figure out how to use it for property management, it’s just not set up for it.
0:33:12.5 So, you know, we built our own. We have a case management system.
0:33:18.0 So, we philosophically believe in meeting our clients where they are.
So, if somebody wants a phone call, text, email, you know, we can do all of it, but our team is trained to log calls and data if it’s done through – I mean, actually, we’re getting to where techs show up in our cases too, 0:33:37.9 [inaudible] phone calls, but even if someone wants to send us an email, it shows up as a case for us.
0:33:44.5 And so, that – having a case management system is a very powerful thing. It – to your last point, it allows us to document and track every single conversation that’s happening.
It allows us to connect threads and share threads with other people on the team who may have an answer.
0:34:01.6 And this is sort of behind the scenes. The client may not even know that we’re bringing in other resources to get a question asked. 0:34:13.3 We can measure everything.
So, as a company, we are looking at time to first response, phone, cases, you know, open to close.
0:34:24.5 These are all metrics we’re using and we hold our teams accountable, and we’re always trying to figure out, like how can we get faster.
0:34:33.0 Another example would be – and to me, this is one of like the just biggest conundrums in property management that we’re – in third-party property management that we’re trying to solve is – you know, you could be getting it 98% right, but that 2% that it’s not going right for can be extremely loud and extremely distracting. 0:34:54.1
0:34:54.3 And so, as an intelligent business person, you would say, “Hey, I would love to put disproportionate resources on that 2% to, like, get that taken care of, because my business will just run more smoothly.
0:35:09.0 But then the question becomes, like, well how do you know who the 2% are? Or what the tasks are.
0:35:15.9 And so, we actually just built this and I’m super excited about it. We call it our ‘Customer Health Score’.
0:35:25.5 So, Amazon – I think Google and Amazon have this. It’s basically a sentiment analysis algorithm where you can flow any document or communication through their algorithm, and by looking at the language in the – like whatever language is used – if the person’s happy, neutral or sad.
0:35:47.8 And so, we believe, when it comes to property management, this is really powerful.
0:35:51.9 So literally, in our case management system right now, every case either has a green smiley face, a yellow neutral face or a red frowny face.
0:36:00.8 And, this is not something we invented. We’re just, like, this is the power of having your own system and technology.
Our team can now look at a list of 20 different cases and immediately scan down at number 18 which is the one with the frowny face and get on it faster because this third-party algorithm helped us look at the language in the case and get on it faster so we can get ahead of the problem.
0:36:32.2 And so, that’s just another example of how we approaching customer service and communication.
0:36:42.2 The other basics, and this is a key – you know, it’s interesting, because I think players of scale – scale companies are often criticized for this, but I know that we are looking to measure everything, and so we do customer satisfaction scores on everything we do, and we do quarterly net promoter scores with our owners.
0:36:59.9 So we’re trying to be as data driven as we can. And do we make mistakes? Absolutely.
0:37:03.7 But the key is, like, looking at that customer feedback and having the feedback loop so we can go back to our team and coach in terms of improving in certain things where we may be off.
0:37:19.5 And I think that just helps us continue to up our communications and level of customer service over time.
Jordan: 0:37:25.0 So at the end of the day, property management is a very labor intensive business. The compounding complexity, in large part, comes from managing third-party labor.
0:37:33.9 Any insights or observations about the potential organization of the handyman labor market?
Third-party maintenance coordination is kind of the Achilles heal of the industry. Do you have any light at the end of the tunnel? Or any thought that maybe you guys are going to have an innovative solution in that area?
Doug: 0:37:57.5 Yes. I can tell you that it’s an extremely – like you said, Achilles heal. But I also think, you know, with those types of challenges, there is always an opportunity.
0:38:10.2 So, I can say that it is a little bit dependent on the market.
0:38:14.8 Like, we saw this at Waypoint. Like, every market’s a little bit different. 0:38:17.6 Right now is a very tough construction market. It’s very, very hard in California.
0:38:23.8 So, we feel like we have to control our labor sources so we can get more reliable, high-quality service. Control the resident experience and the cost.
0:38:33.2 So, we’re actively building out our own repairs and maintenance service right now. You know, I don’t think – it’s challenging and risky to build a team to do every single work order you have.
So I think, you know, looking to staff to maybe do, call it 60-70% of all your work internally. I think is not only a great opportunity in terms of controlling executional outcomes, but also customer service.
0:39:00.4 But frankly, it’s a revenue generating opportunity. 0:39:05.6 There are margins there.
0:39:07.7 And I think one of the things we’re really excited about, in terms of how you use technology and data is, you know, you end up with all these different tasks over a geography. You know, wherever a said property manager is – is operating in.
0:39:22.3 You know, these tasks sometimes require a certified specialist. 0:39:26.6 Sometimes it’s a really simple thing. 0:39:29.7 A lot of times the resident has to be home. And, you know, they’re only home certain hours. And, you know, there’s various traffic patterns.
And so, like, what I see generally happening in this business, and frankly, we ended up getting a little bit more efficient at Waypoint, but you know, you own a repair and maintenance tech who gets a list of things to do at the beginning of the day and then they go on Google Maps and they just start plugging in addresses and looking around.
0:39:58.6 But, what we’ve just recently built is a route and task optimization, where our system can look at a long list of tasks. Look at certain criteria, like, you know, when the resident’s home, the skill level needed to perform the task, traffic patterns.
0:40:20.4 And our system can actually tell our tech, “This is the ultimate – this is the most optimal order to do this work.”
0:40:30.0 And, you know, so if we can get seven work orders done in a day instead of five or six, like that’s a huge win for our clients. It’s a huge win for us, and so, I agree with you, it’s really challenging.
But I also think there’s a big opportunity to earn margins as a management company to provide better service.
0:40:48.3 And this is an opportunity where I think technology is ripe to add efficiencies to just how this really logistics operation functions.
Jordan: 0:40:57.8 I love that last piece. I’m reminded of the internal UPS program that was rolled out that would basically dictate to the driver how to run their route.
0:41:08.1 The drivers were really resistant. “How dare corporate think that this machine is going to tell us to do a better job of how to deliver packages in my city where I’ve had this route for a decade plus.”
0:41:17.5 And so, internally, the challenge became to beat the algorithm. 0:41:20.2 If you could do it – if you could make your own route faster than the algorithm, hats off. But nine out of ten times, drivers couldn’t, so eventually, the efficiency won.
0:41:29.0 As we talk about this high-level analysis, I’m inclined to ask you about client qualification.
0:41:37.4 Having really thought hard about what it looks like to be profitable in various aspects of the business, what encouragement would you have to listeners of this show that are running a management company, somewhere between 500 and 1000 doors and they’re kind of working through this question of knowing what client it makes sense to service?
0:41:59.5 Even as you scale, you potentially get a little more efficient, a little more capable of moving, being more flexible making money up market and down market.
0:42:08.1 What’s your basic approach to qualifying who you will and will not manage for? In terms of the owner as well as the property.
Doug: 0:42:15.4 Yeah, so great question. I think one of the huge puzzles to put together for the industry.
So I would say we will not manage in areas where, you know, we don’t feel safe sending our team after dark.
0:42:30.9 So, if it turns into a no-fly zone after dark, like, we’re going to be very resistant to putting our team at risk.
0:42:40.3 We also will not deal with owners who are not respectful. So, if an owner is not respectful, and it happens more than once, like we’re just going to cut off ties and say, “Look, you’re not the person for us.”
0:42:52.2 Having said that, you know, I think where one of the real interesting opportunities in this industry lies, is around pricing.
0:43:00.8 So, we have not put this puzzle together, but I can tell you part of the reason we’re building the system we’re building, which is fundamentally a task management system – that’s all property management is, it’s a bunch of tasks.
0:43:13.9 Where we want to get, and we think by Q2 of next year, we will know what every one of our tasks costs.
0:43:20.8 And so, if we can start to attribute task loads, or task frequency, or types of tasks to specific types of properties, we can understand how to price them differently.
0:43:32.3 So, you know, I always say, like, you know, you might look at some owners and some properties and say, “This is too much of a headache.”
0:43:39.8 And, you know, we might say, “Well, there’s a price.” Right? There’s a price at which you would manage it.
And I think the secret sauce in – the secret sauce is knowing what’s that price.
0:43:51.5 So, again, we haven’t put the puzzle together, but I think fundamentally, we are planning to be in a position by mid next year to know what tasks cost us.
0:44:00.8 Like, literally to every task – what does it cost us to do it.
0:44:05.7 And so, we can think about innovating around price. And, you know, how do we service more owners and properties, but do it in a way that’s profitable for us.
0:44:15.6 So I think, you know, simplistically just, you know, thinking about, like, you’ve got to have some basic parameters around types of properties, neighborhoods, owners you’re not going to deal with.
0:44:24.8 But, like, it may be more challenging, but, like, how much more challenging? Is it 50% more challenging? Like, say you’ll do it for 50% higher price, and maybe they say no. But if they say yes, like, in theory, you should be indifferent.
Jordan: 0:44:42.4 Love it. That’s juicy, Doug. Because there’s a big opportunity wrapped up in that. What’s interesting to me is that this is a fantastic use case for making this over the top statement that data is the new oil.
0:44:56.7 It was Gary Keller, just the other day that was saying – quoted as saying, “Property management is the holy grail of data.”
Specifically, it said, “If you use off the shelf property management software, who owns that data? They do, you don’t.”
And what was interesting, was his follow up commentary in saying, “That’s why the property management software companies are trading at massive multiples. Not because of the money they make off just the software, but because of the underlying data that they own.”
0:45:23.7 What you just talked about is an exciting opportunity. But if you don’t own your own data, if you can’t massage it, if you can’t mine it, what’s the point in even talking about it.
0:45:31.7 I do want to move on to the hot seat section to close up our interview. I have a series of questions. I want quick, guttural answers. 0:45:39.3 Doug, the first question is this: What podcast do you listen to?
Doug: 0:45:44.9 I don’t listen to very many podcasts. I don’t.
Jordan: 0:45:49.2 Not a podcast guy.
Doug: 0:45:51.1 I’m not a podcast guy. I’m a little bit embarrassed to say it, but it’s true.
Jordan: 0:45:53.7 Audiobooks?
Doug: 0:45:57.2 No. I don’t drive that much, so I don’t have time. I like to read at the end of the day. So I read, but I don’t do many audiobooks.
Jordan: 0:46:08.1 Ok. To each his own. Fair enough. 0:46:10.4 Doug, what do you make of Roofstock buying Streetlane?
Doug: 0:46:16.0 Gosh. Garry, the CEO of Roofstock was my Co-Ceo at Waypoint, so I should have a better answer.
I think there’s a bunch of different reasons. I think one of them we just talked about. Like, property management’s where all the data is. And they were not in the property management business, now they are.
Jordan: 0:46:33.7 But it would be interesting to see how that develops and whether or not they go full-blown third-party management, or if that was a one-off experiment. But it’s one to keep eyes on.
0:46:42.9 How do you feel about the Waypoint brand gaining a second life as Colin rebrands as Starwood Waypoint Homes?
Doug: 0:46:48.7 Well, it had a second life and then it died when Colin merged with Invitation Homes. So, all of our houses are now a part of the 83,000 home – Invitation Home umbrella.
Jordan: 0:47:00.4 Wow, I was late to the game on that one. Man. That is amazing. Invitation is becoming an absolute monster.
Doug: 0:47:07.0 Here’s what I’m proud of though. Like, the COO of that company, Charles Young, like, he’s our guy. Like, he ran Chicago, he was our SVP of the west and then COO of Waypoint.
0:47:20.0 And, to me, that was a statement that, like, the Waypoint guys figured out how to use technology to enable operations.
0:47:29.2 And, you know, we walked that thought leadership running this – I mean, it’s the 14th biggest REIT in America. 0:47:33.9 83,000 homes. It’s pretty amazing.
Jordan: 0:47:37.3 Wow, amazing. Doug, you’re familiar with the concept of first principle thinking. Elon Musk talks about this.
The whole notion of, kind of skate to where the puck is going, not where it’s at now.
0:47:47.6 Focusing on things that you know to be true. 0:47:49.5 My question to you is: What do you know to be true about property management that will be true a decade from now?
Doug: 0:47:58.8 That data tells a much more detailed story than anybody appreciates today.
And so, when in doubt, we are trying to set up mechanisms to collect more data, spend more on a team of data scientists that can, you know, use that data to add value for our clients.
0:48:25.4 And so, exactly where this will take us? Not sure. I just – I’m convinced. I know it to be fact that this industry will be surprised by how much leverage we will ultimately gain out of it. 0:48:37.3 And it will tie into pricing.
Jordan: 0:48:40.5 Absolutely. Couldn’t agree more.
0:48:41.5 This last question is a little bit of a softball. You played for some of the best NFL coaches in the game, Ditka, Seifert, Dungy. As you look to business, tell me this, is Mynd a team or a family?
Doug: 0:48:58.7 You know what? We use the term team all the time.
In fact, one of our company values is play like an A-team. So, we’re a team. We’re not related, but we are a group of people working together towards a common mission with a lot of passion.
0:49:18.9 And, you know, we are hard on each other, we give each other feedback. We push each other, we support each other.
0:49:26.9 I mean, I think that, you know, if there’s one thing I took from all my years of playing and all those different coaches that you mentioned – I mean, they all had a different approach of building and managing a team, but like, I think really approaching it like a team and building it as if it’s a team is probably the core thing that you can do as a founder. As a CEO.
0:49:48.2 Or any business owner, I think the more you can build a team. You get a lot of leverage in the 1 + 1 = 3 scenario, if you can build it.
Jordan: 0:49:57.8 Love that. So to close the interview, I’m going to ask you the same question I ask every single guest.
0:50:01.6 And that is this, Doug Brien, in your opinion, are entrepreneurs born or bred?
Doug: 0:50:09.3 Nature versus nurture. I kind of feel like they’re born that way. But that does not mean that they’re not heavily influenced and educated by others around them.
0:50:25.9 So, I mean, I do think there is a personality type that, you know, makes you more independent. Makes you a little more headstrong.
0:50:35.6 Makes you want to, you know, kind of create your own destiny and, you know, if it doesn’t work out, you’ve got no one else to point the finger at than yourself. 0:50:45.4 Other than yourself.
So, I tend to think people come into the world like that, but whether they ultimately become an entrepreneur is probably about support from family, friends and mentors.
Jordan: 0:50:57.8 One of the few in the born category. There is no right or wrong answer.
Doug, I appreciate you coming on the show. 0:51:03.4 For those that want to learn more about Mynd, follow the story, what’s the best place for them to go?
Doug: 0:51:08.6 Yeah, come to Mynd. M-Y-N-D dot C O. Check us out.
You know, we don’t have all the answers. We’re building an A-team. We’re not – like we want to be a national company at some point.
0:51:23.3 We just launched in Seattle. We’re looking in the next three to five years to be a national company, so looking for partners who want to join forces with us and, you know, help us reinvent the industry and ultimately make it a better business.
Jordan: 0:51:37.3 Hey, if you want to hear Doug speak in person, come to the PM Grow Summit next April in Austin. Doug’s going to be speaking there. Doug, thanks again for coming on the show, see you in Austin.
Doug: 0:51:47.7 Yeah, thanks Jordan.