This is part of our How We Work series, which focuses on how successful southeastern tech companies are developing authentic work cultures.
Rented.com, formerly VacationFutures, was doing well at the close of 2016. The startup, founded in 2012 to connect rental property owners with professional managers, had raised capital, presented at Venture Atlanta, and was seeing steady, if not stellar, growth.
But the team realized that what they were doing — serving as the go-between marketplace between property owner and manager — wasn’t quite enough to serve the needs of both populations. After almost five years in the business, co-founder and CEO Andrew McConnell says they kept seeing a disconnect.
“For homeowners, what they really wanted was guaranteed income — the stability of knowing what they were getting every month. And most of the management companies, they just weren’t able or weren’t willing to give that guarantee; they only wanted to manage on commission,” McConnell explains.
So the company began testing different models where they could give both parties what they wanted. From their huge database of property managers — the largest network of its kind in the world — they had collected a massive amount of data on which managers in each market did best with which properties, and could use their algorithm to optimize that data.
With these insights, plus an initial loan from Silicon Valley Bank, Rented.com began to offer property owners a guaranteed income stream, like a salary each month, to take their property and match it with a manager. The manager was paid by Rented.com on commission. The company counts on making money when the rental market is good, making up for months during slow season or events like bad weather periods when they lose money.
“Both sides got exactly what they want,” says McConnell. “And as soon as we started doing that, the company grew about 5x in 2017 [in revenue].” He anticipates that number to grow by 10x again this year.
At the end of 2017, Rented.com announced a $125 million fund that they had set up specifically for this Rented Capital service. Though less than half of it has been deployed, according to McConnell, they’re seeing above-market returns of more than 50 percent on realized income.
The genesis of the idea
McConnell is proud that the entire Rented Capital concept came from the brain of, not the co-founders or executive team, but a frontline salesperson with an idea.
“He [the employee] looked at this and said, hey can we do this differently. And that’s our single biggest driver in the business right now,” says McConnell, who expresses that one of the things that “keeps him up at night” is hiring the right team to scale at the rate they are seeing.
“We are very deliberate about hiring. We’re very explicit about our values. You could be a top performer, but if you don’t share our values you’re not going to enjoy being here and people are probably not going to enjoy working with you,” he says.
One of his most instrumental hires has been Cliff Johnson, the co-founder of Portland-based digital property-management company Vacasa. While at the startup, Johnson had helped the team raise over $140 million to become one of the biggest venture-backed startups in Oregon.
Earlier this year, Johnson announced his resignation from Vacasa, made a move to Atlanta and became Rented.com’s Vice President of Sales. When he posted the first open role on his team, over 500 applications rolled in.
Beyond selecting the right people, McConnell, Johnson and the team make sure they treat their now-40 employees to the same standard as their customers. Earlier this year, Johnson pushed the team to commit to a minimum salary for every employee of $50,000, higher than the average wage in Atlanta and an increase of 60 percent for some positions, according to McConnell.
McConnell expects the team to triple this year, hitting about 60 with half of those positions in Atlanta and half working with property managers across their many markets in six continents. In Atlanta, they’re hiring data scientists, software engineers, and marketers.
Beyond pay, McConnell has defined a strong set of values that he says empowers employees, keeps them motivated and, above all, keeps them at Rented.com in a tough tech market. He breaks them down further to make the case for a value-based business.
The values shaping their growth
- Better for all: we don’t do anything to hit a quarterly or monthly number. These contracts only sign if its financially better for us, if the homeowner is truly better getting this deal, if the manager is truly better.
- Continuous growth: this may be the single biggest thing. When you’re in this hyper-growth mode of 50x over two years, every single one of us in the business, including myself, has to be in hyper-growth as well. The job that we have to do a month from now is not the job that we have to do today, and if we’re static, we’re going to fall behind.
- All is greater than any: what we’re trying to take on is so big, it doesn’t matter how smart you are or how hard you work, you cannot accomplish anything on your own. You have to able to elicit excitement, and followership, and bring people together, and recognize that we need each other.
- New ideas: we believe that ideas can and should come from anywhere and anyone in the company. The Rented Capital product, that was not me. It’s this idea that it’s almost an obligation to speak up and share ideas.
- Relentless execution: it’s not like any of us can just be a manager and expect everyone else to do the work. If you have this great idea, this thing that you’re passionate about, you have to then get the team behind it, get yourself behind it and figure out how do you get this out there and start testing it.
- Ownership and autonomy: we make every single full-time employee get options and be a true owner of the business, because we want you to actually be an owner so you can share in the rewards of what we’re building. And it’s autonomy, not empowerment, because empowerment sounds like you showed up and I gave you something, which is not the case. You are an autonomous human being, and I’m not taking that away from you in the first place. As long as you’re achieving the results that we’ve signed up for together, you’re not going to be micro-managed. By giving people that autonomy, we get these new ideas and innovations.