In Episode #345, Nathan interviews Max Nussenbaum, co-founder of Castle and a Venture for America fellow based in Detroit. Max and his co-founders are revolutionizing property management in one of America’s most opportunity-rich property markets. Tune in to hear what Max is doing differently, why he defends splitting equity evenly with his co-founders, and why you should be investing in Detroit.
- Favorite Book? – Anything You Want
- What CEO do you follow? — Henry Ward
- Favorite online tool? — Instapaper
- Do you get 8 hours of sleep?— Yes
- If you could let your 20 year old self know one thing, what would it be? — Relax a little bit
Time Stamped Show Notes:
- 01:27 – Nathan’s introduction
- 02:04 – Max is based in Detroit
- 02:20 – Castle manages rental properties for owners – they find tenants, collect rent, and coordinating repairs
- 02:29 – They make money by charging a flat fee of $79 per month per rental unit
- 03:00 – They want to simplify the pricing structures associated with regular property managers
- 05:30 – Founded in late 2014 and launched in 2015
- 05:47 – Currently managing 530 units, all in the Detroit area
- 06:10 – “Our target market is the regular-person property investor”
- 06:43 – First year revenue was around $100k last year
- 07:14 – The metric Max focuses on is MRR – the subscription model is similar to SaaS
- 08:12 – Raised around $3 million, most recently $2 million in a seed round
- 09:17 – Team of 10 people
- 09:35 – “Structurally we’re a lot like a SaaS business”
- 10:00 – Monthly RPU is $174, as the average customer has 2.2 units
- 10:35 – Switching costs are very high in terms of time and energy, so monthly churn is only around 1%
- 11:51 – “The bottom line is that we just don’t know lifetime value yet…we haven’t even been around for 2 years”
- 12:18 – They consider acquisition costs on a per-unit basis – and they’re willing to spend around $200 to acquire a unit
- 12:55 – Most customers are investing less than $1 million in property in Detroit in their lifetime
- 14:30 – There are a lot of cheap properties in Detroit – but generally you can’t get a mortgage for them
- 15:50 – The percentage of properties that have been vacant for more than 30 days is around 5%
- 17:17 – “There are still 700k people in Detroit and they’re regular people who just need places to live”
- 21:45 – Connect with Max on Twitter
- 20:04 – The Famous Five
3 Key Points:
- Don’t stress too much when you’re young. There’s plenty of time in life.
- If you can simplify a complicated process, there’s a good chance you’ll make money
- You don’t have to be bullied away from splitting equity evenly with co-founders – what each of you brings to the table is less than what you achieve working as a team
- Host Gator – The site Nathan uses to buy his domain names and hosting for cheapest price possible.
- Freshbooks – The site Nathan uses to manage his invoices and accounts.
- Leadpages – The drag and drop tool Nathan uses to quickly create his webinar landing pages which convert at 35%+
- Audible – Nathan uses Audible when he’s driving from Austin to San Antonio (1.5 hour drive) to listen to audio books.
- Show Notes provided by Mallard Creatives