In this episode of the B2B SaaS podcast, host Upendra Varma sits down with Dana Dunford, the CEO of Hemlane, a property management platform. Dana sheds light on Hemlane’s unique approach to property management and the strategies that have propelled its growth, particularly focusing on the development of a robust affiliate program.
Here are the key takeaways:
Company Overview:
- Hemlane offers a hybrid property management platform catering to rental property owners seeking an alternative to traditional property management services.
- With a portfolio of 23,000 rental properties across all 50 states, Hemlane stands out in the market for targeting small mom-and-pop property owners.
Customer Acquisition:
- Dana emphasizes the challenge of creating a new category within an industry and discusses Hemlane’s early reliance on referrals for customer acquisition.
- The company leveraged its network and personal connections to initiate warm introductions and gather valuable feedback from potential customers.
- Dana shares insights into Hemlane’s affiliate program, which contributes to over 50% of customer acquisitions through strategic partnerships and referrals from satisfied customers.
Sales and Pricing:
- The average customer pays just over $79 per month, with an average portfolio size of eight rental properties.
- Hemlane’s sales approach is low-touch, with demos provided as needed, reflecting the self-service nature of its target market.
- The company maintains a churn rate of less than 1%, focusing on maximizing revenue retention and ancillary services to drive additional revenue streams.
Funding and Growth:
- Hemlane has raised over $12 million in funding through Series Seed and Series A rounds, positioning the company for continued expansion.
- The company’s strong performance has surpassed key milestones, with current projections well exceeding the $5-10 million ARR benchmark sought by investors for the Series B round.
Vision and Future Plans:
- Dana envisions Hemlane as a catalyst for eliminating the stigma associated with rental property ownership and empowering individuals to build passive income streams through real estate investments.
- The company aims to further scale its operations, enabling property owners to manage and expand their portfolios seamlessly from anywhere.
Transcript
Hello, everyone. Welcome to the B2B SaaS podcast. I'm your host Upendra Verma. Today we have Dana Dunford with us. Dana here is the co founder and CEO of a company called Hemlane. Hey, Dana. Welcome to the show.
Dana Dunford:Thanks so much for having me.
Upendra Varma:All right, Dana. So let's try to understand what Hemlane does, right? And why customers pay you money.
Dana Dunford:Yeah, so, uh, Hemline is a property management platform. So if you own a rental property, you can manage it through Hemline. The big differentiator, um, with Hemline is that before Hemline. There are basically two ways to manage your rental property. One is do everything yourself. Two is hire a full service traditional property manager. 72 percent of people self manage their properties. So they're not using a property manager, but they complain about it. They say, I don't want to have to drive out to do a showing. I don't want to repair call at 2 a. m. I actually wants to build wealth through real estate passive income. Um, and so we launched 10 lane, um, in order to make that more accessible, affordable property management. And so what we are is a hybrid model, a plug and play. Um, the software automates about 70 percent of the day to day management. And then we have tech enabled services such as 24 7 repair coordination, um, self guided tours for tenants to to go into our properties, all of that fun stuff as part of the product itself that you can opt into at any time and get the services you need.
Upendra Varma:Got it, right? That, that makes a lot of sense. So, so we'll understand, you know, how this is played, but just help me understand, right? So how many, you know, customers do you, like how many paying customers you've got on your platform as of today?
Dana Dunford:Yeah, we have 23, 000 rental properties across all 50 states. Um, so we're nationwide in the U S and, um, I'm pretty sure I haven't found another. property manager that goes after the, you know, small mom and pop that has, uh, that, that large of a portfolio today.
Upendra Varma:And so how many properties does a typical owner or, you know, customer, you know, own on average?
Dana Dunford:Ours. Yeah. So ours are, um, our average is eight. Our median is sex. But if you look at the industry itself, it, the average is, um, two. That folks own. So it's very, very small. Um, a lot of folks are accidental landlords, um, through, you know, properties being passed down, holding onto a property when they purchase a new one, et cetera.
Upendra Varma:Got it. And on an average, like how much do they typically pay you? I could see a lot of plans on your website, right? But how does it typically work? Right. So strictly from a software perspective, how much do they pay you on an average?
Dana Dunford:Yeah, our average customer pays us just over 79 a month.
Upendra Varma:Got something like around a hundred dollars a month, something like that.
Dana Dunford:Yeah, around 100. You could round up
Upendra Varma:Yeah. All right. All right. So let's, let's move on. Right. So, uh, So I just want to get a sense of like where you're getting all of these, you know, property owners to, you know, like, how are they discovering you in the first place? Like what's really working for you today? Like, what's that growth channel that's driving all of these leads to you?
Dana Dunford:Yeah. Good question. Um, so at the beginning, it was all referrals. When you think about creating a new category in an industry, um, what basically happens is people aren't searching for you. People are searching for like free landlord software, or I want a Uh, local property manager. And so it's hard because Google, people won't find you, you know, through searching you on Google from that perspective. It's very similar to the Airbnb model of like no one searching to like live on someone's couch, right? And so when you create a new category in space, um, you have to find other ways to grow. Our, um, source is through referrals. So referrals of, um, of other, um, Rental owners, so real estate investors on the platform all the way to communities. So what I mean and define as a community is like a real estate agent referred business to us. Those people are really happy with us. They continue to refer business to us. Um, so it's a lot of affiliates as well as referrals that continue to help with that flywheel and growth.
Upendra Varma:So I just want to take you to the beginning, right? So, I mean, for it all to make work, it's got to start somewhere, right? So how did it all start for you? Like how did you manage to sort of get those first 100 odd customers, right? So where did they discover you strictly from a top of funnel perspective?
Dana Dunford:Yeah, that's a great question. Um, so the first 100 customers, what I did was, I don't know if LinkedIn still has this. I went to my LinkedIn and I have about, I think it's like 6, 000 connections on LinkedIn. And most of them, you know, I know. Um, And so I went through and there's a CSV export in Excel, uh, that is or that exports from LinkedIn to Excel and I exported it and it has everything from who the contact is to what their email address is to what their even phone number is if they put it in there, what their job title is everything and I created another column at the end of my spreadsheet. And it was a variable that said, you know, hi, and then it would say, like, first name and would concatenate the first name. And then I would always put something personal in there. I'd have, like, another column that just says something personal, like, you know, haven't seen you since college, um, hope you're doing well, or whatever. And I would kind of lump them into that, so I'd filter for, like, hey, I used to work at Apple, so anyone at Apple, I have this, this personal template, this and that. And then it would just concatenate together. And I emailed, I think the first, uh, the first would say 900 people in that 5, 000 list. And my goal was not to say like, um, use Hemline. It was just to build, rebuild the connection of, Hey, started this company called Hemline. We work with rental owners looking to get feedback from people who own rental properties. Do you own rental properties or know anyone who does? And what that did was basically get me warm introductions to a ton of people. And then some, it was really interesting. Some people I worked with, I had no idea. They're like, yeah, you own six rental properties. I was like, wait, what? And they're like, yeah, I'd love to try your product. Let me go ahead and get started on it. And so that really helped. And that actually helped build from a product perspective, um, us wanting to make sure the product worked really well. Because when you go to your personal network, you know, you want to make sure you have a good reputation. It's really pushing that level. And then the biggest thing or the, the, the thing I just have to warn others, if they do that and go through their LinkedIn to get those first 100 customers. Um, the biggest thing I have to warn you about is you have to tell these customers, to be honest with you, because sometimes if it's a personal connection, They'll say like, Oh, I love your product. It's amazing. Cause they don't want to let you down. Like you guys went to college together or something. So what I did make sure to tell them is, Hey, I want your honest feedback. I want you to tell me, I might not move forward with that. So like, I want your totally honest feedback of would you use this or not? And I felt like then that helped us build an even better product.
Upendra Varma:So, so the first hundred customers, right. Were they like, were a majority of them, your first level connections, or I'm assuming they're like intros that your first level connections gave you.
Dana Dunford:Yeah. So of those, the first like 900 emails that I sent out and I did them each individually, so it wasn't like a mass one. Um, I would say that there was probably of their 10 percent who had rental properties and would talk to me and then, um, everyone else was, Hey, my next door neighbor has properties. My sister has properties. And then I would just take all of those. Um, I also use something called boomerang. I'm obsessed with it in Google. So every time I send an email, I say like boomerang me in two days if they don't respond. And so that was just kind of my project management to make sure I stayed on top of everything.
Upendra Varma:So like, so talk about the generation of a hundred to let's say three or three, 4, 000 customers that you have today. Right. So like. I'm struggling to understand. It's just referrals. I mean, you, you must have done something there, right. Do you know, let this affiliates, you know, go and spread the word. Like, what have you been doing? Is it more than just referrals and affiliates? Do you have any other channels going on?
Dana Dunford:Yeah. Great question. Affiliates are big. And how affiliates came was through referrals. So it was customers who were like, Hey, I own the largest real estate investing group or something like that. Can I refer customers to you? And at the beginning we were like, great. Yeah. Refer customers to us. And then we were like, Ooh, we should probably build out an affiliate referral like program that is specific for them.
Upendra Varma:So then the, can you, can you just quantify this year? Right. So over the past 12 months, right. Let's say you've got a number of customers, right. How many of them actually came through this, you know, affiliate program of yours that you've just explained us.
Dana Dunford:Yeah, good question. It's over 50 percent um, that are affiliate and we do an affiliate and partner. Um, and then that's through some of like the, um, landing pages, content they help write about us, all of that kind of stuff. Um, but a lot comes through that. And the other thing is on the real estate, um, uh, association side, working with associations, working with others. Like we consider all of that as part of our affiliates and partners. Um, so that's been super helpful. And then organic is another interesting one for us that I didn't put too much emphasis and time into. But we're definitely doing more. I remember like I wrote an article in the early days called like Venmo for rent collection. And I was like, it's terrible way to collect rent as a landlord, this and that. It was really interesting as we'd randomly get calls. And back then, you know, we didn't have a sales team. So I would pick it up and I'd be like, how did you hear about us? They're like, Oh, I read one of your articles on Venmo for rent collection. And then I Google search. I was like, wait, we got to the top for that. And because people were thinking about Collecting rent through Venmo. And of course, Venmo is not going to like worry about that minute detail. And so, um, certain things like that of like being out there, I think is really important as well. I'm just like, you know, being here today. I think being out there and letting people know what your vision and passion is and what makes you different, um, is really important as a founder.
Upendra Varma:So like, then I talk about what it takes to close a typical deal of yours, right? So like, like, do you have any salesperson in your team who's, you know, hand holding these, you know, property owners to close a deal or is it just happening? Can you just walk us through that sales cycle?
Dana Dunford:Yeah, that was something we should have built earlier. So we basically have always a sales person there for you. Now, there's some customers who say I can self, um, I can self onboard. I do not myself needed all any handholding. But we do have someone there because the second that a customer gets to us, they're so valuable. That we would hate because they didn't understand the new model and how Hemley works that they didn't convert. And so we do have someone there sends them an automated email. Just as a heads up, if you have any questions, feel free to reach out to us.
Upendra Varma:But it's, it's low touch, right? So it's not somebody in your team, you know, sitting and, you know, trying to walk, walk them through a couple, for a couple of weeks and, you know, getting the deal closed because it's just a thousand dollar deal, you can't afford to have your people, you know, just doing that.
Dana Dunford:Yeah, I mean, they do demos. They definitely do demos. Um, but you're right. Like as far as like every day going on zoom or meeting in person, no, they don't do that. And usually our customers don't want that. The customers are very much of, hey, tell me about these five different questions I have and a five minute call will change something so much.
Upendra Varma:Got it. So then talk about your go to market team, right? So who's in there and what are they doing?
Dana Dunford:Yeah. So our go to market team, um, it's, it's very interesting. We're very collaborative, cross collaborative, uh, company. So a lot on the go to market side is thinking about product as well and, um, product helping support and aid and facilitate that of getting to customers at the right time. Um, then we have a marketing team and then a sales team that work together that roll up under an org called revenue. And so revenue is like the, the org that both sales and, um, marketing report to.
Upendra Varma:Got it. Uh, all right. So like, talk about the whole, you know, retention, right? So, I mean, you've got tons of customers here, right? So, and like, how does retention work? Like, do they churn out typically? Like, how does those numbers look like and what are you doing there?
Dana Dunford:Yeah, we, um, target and we also have a hundred percent MRR retention. So even if a customer sells their rental property, we have others who are upgrading, um, adding more rentals to basically keep it there. I think with SMB, like we're SMB, we're small mom and pop, right. That we go after. I think, you know, getting to 130 percent MRR retention is much more difficult to do because you're not growing your employee headcount like, like enterprise does or whatever it is to increase that. But on the SMB side, it's like, if you think about how often someone buys a property. It's like, maybe once every four years, maybe never. Right. And so, um, for us, we try to aim to keep that 100 percent MRR retention, um, rather than, and then we have add on ancillary separate another 20 to 30 percent in revenue, um, just based on, hey, you need, um, uh, you need insurance, you need background and credit check, all this other stuff that goes into it.
Upendra Varma:just to interpret this correctly, you've got no churn. Is that what you're saying?
Dana Dunford:No, we do have churn. Um, but our, our MRR,
Upendra Varma:Okay. You're talking about revenue retention as such overall.
Dana Dunford:Yeah, our MRR retention
Upendra Varma:So what's, what's the logo churn here typically, like for every, like say a thousand customers you have, right? How many of them stick for
Dana Dunford:Oh, our, our, yeah, our churn is less than one percent. Like, we're always, from that perspective, making sure that churn is controllable, in other words. Like, that a customer is not churning because they hate the product or
Upendra Varma:That's 1 percent per month, right? Something like that.
Dana Dunford:Yeah,
Upendra Varma:Yeah, that's, that's very healthy. And just talk, like, talk, talk about your funding, right? Have you raised any external funding so far to build your company?
Dana Dunford:Yeah, we have. So we raised, um, series seed and series a, um, and we did those in 2019 and then 2021.
Upendra Varma:And how much in total did you raise to build the company so far?
Dana Dunford:We raised just over 12 million.
Upendra Varma:Got it. And, and just what, what's the vision here? Like, Dana, so where you see a company going in next, next, let's say three to four years,
Dana Dunford:Yeah, great question. I think, um, there's a lot of folks who are in jobs who say, how do I get out of this 40 or something like that. Um, and real estate is the best way to do it. If you can buy real estate and build up a portfolio, then you have passive income every single month. And, um, a lot of people don't know how to do that. And so for us, it's one, um, eliminating the stigma associated with renting or owning rental properties. And then just providing the ability not only to, um, manage but eventually be able to purchase rental properties anywhere and then manage them from anywhere.
Upendra Varma:that makes a lot of sense. And one question I missed, like, where are you in terms of company as you know, your overall ARR approximately?
Dana Dunford:Yeah, so we're, um, just help and we're very healthy. Like, when we raised our series a, we were over, I think there's a 1M dollar marker and we were well over that. And then for series B, where we're going, you know, they're wanting 5 to 10M in ARR and, um, we're already, we're already projected to be, uh, well over well over that. So
Upendra Varma:Okay, that sounds wonderful. Thanks Dina. Thanks for taking the time to talk to me. Hope you scale Hemline to much much greater heights.
Dana Dunford:great. Thanks so much for having me.