Believe it or not, midVentures was not my first company. In fact midVentures is likely my 4th business I incorporated. That goes all the way back to starting the UChicago bike store and a brief jaunt as a potential Ning.com competitor during senior year of college. However Enproperty did consume about 1.5 years of my life, and is worth reflecting on.

I started Enproperty with my business partner Justin Savage, a UChicago student and Rhode Island native. The business started as Checksense.com which was a simple app that let you pay your rent online. I funded the first version of Checksense using $2000 in credit card debt until Justin came on board. We started selling Checksense to property managers, and realized that collecting rent online was just one of a dozen problems their businesses experienced. That is the root of Enproperty, and the lessons I learned building and selling it.

1. Target an industry that can afford to change. This is strange advice since many business school professors advise students to target industries that technology has not yet advanced, such as how Eric Lefkofsky’s businesses Innerworkings targets the print industry, Echo Logistics targets the freight brokering industry, and both are Chicago success stories. But property management is different because very few of the owners, managers, stakeholders and influencers can afford any type of innovation. It took 8 months of slow-motion sales and marketing to realize the property managers simply cannot afford a solution that might cost them $300 - $800 a month, even if if will save their staff time logging paper payments and depositing them in banks. Property management is an industry with  razor thin profit margins, and on top of that, very few parties interacting with PMs are making great profits. If you are targeting low-margin industries, target the brokers or financiers. It would have been smarter for us to build a solution for the leasing agents or the property investors because they can afford new technology.
2. Don’t just solve problems, solve money-critical problems. I had many advisers telling me to listen to the customers (property managers and tenants) in order to understand their problems and pain points. They gave me a laundry list of problems. It took too long to sort paper checks into bank account specific folders. It was difficult to confirm whether or not a tenant’s “check was in the mail”. Tenants had no confirmation that the managers received the check until it was deposited. Low income tenants could not break up large monthly payments into smaller weekly payments. Property managers did not have up to date contact info on tenants. We solved ALL those problems, but NONE of them were money-critical. In other words, the property managers and tenants thought our solution was nice, but we were not making them a ton of money and we were not directly saving them a ton of money. If my software also helped them fill vacancies, they would have paid me a full months rent for each vacancy filled, because filling vacancies is money-critical.
3. Customers don’t care what you plan on building, only what you give them right now. And they will logically compare whatever you give them right now to whatever competitor ’sounds like that’. Enproperty was the only property management software app in Rhode Island, and perhaps one of three in Chicago. We were web 2.0, young, edgy, innovative. Yet 20 meetings later, I got asked the same questions. How is this different from Yardi, Skyline, MRI, propertyware, etc. And the truth was we ‘planned on’ being different. Our business plan shows why our business model is more effective than those competitors at scale. But customers only care what you give them now, and how it compares to the more established names that they trust more.
4. Your customer is your greatest reseller. I thought this banal textbook concept was true for my parent’s generation, but in business 2.0 customers don’t meet at property management bars to chat about what software they use. Well figuratively, they do. Within any industry, even the competitors talk to each other about which vendors they like or which technology they heard of. In other words, the cost of acquisition of your first customer may be extremely high, but if you can keep him happy he will create 4 more customers. And if you anger him he will cost you 10 customers. Your customer is your greatest reseller and it is honestly more important for you to keep him happy than it is for you to solve his problems. Because the first “guinea pig” customers will likely experience more problems than you solve, so keep an arsenal of tactful apologies.
5. Investors like fast sexy disruptive ventures. Enproperty met with several investors during its lifecycle. The first investors were real estate managers, and they liked the idea of “software that made money off of the payment processing instead of the monthly subscription fee”. We were also the first technology venture they invested in; and therefore we were the Bill Gates of the rhode island real estate community. However the traditional investment community has a different opinion. They want to know why your startup will have an IPO or get acquired in less than 5 years for over $100 million, and why no one else can beat you to the punch. Enproperty was founded on the idea that with $200k in funding we could reach profitability and build off of our cashflows. Though that is nice, venture capitalists are not so patient. Our venture did not move fast enough, we did not have a defensible competitive edge, nothing about Enproperty told VC’s that we would be the one software app out of 50 competitors to own the industry within 5 years.
6. Do something you’re passionate about. This lesson can also get you into trouble, because your passions are usually not a good litmus test for business feasibility. But time and again I am confronted by the fact that I have to spend 100 hours a week tweaking the software, meeting customers, attending trade shows, refining my message, talking to employees or contractors about my startup. Admittedly there is a 50 : 1 ratio of music technology startups to property managemetn technology startups because music is for most of us a greater passion than paying rent online. And I would to this day still commit myself to a non-sexy venture if it helped grow my career as an entrepreneur or my capital for my next startup. And if I had to decide between a fun job and a non-sexy startup I’d choose the startup because entrepreneurship fits my personality. But all things being equal, build something that genuinely interests you- or build something you care nothing about and have a perfect plan to sell out early.