Building a Successful Business & Leaving $150MM on the Table with Dave Borden
Dave Borden, the founder of numerous multi-million dollar rental businesses gives us advice on starting companies and his regret of selling his first company too early.
Time Stamped Transcript
Dan Daugherty: 00:03 Welcome to episode number three. This is rentbits rental talk, and I'm your host, Dan Daugherty. Today I have a very special guest who I've known for, Gosh, over a decade now. He's a rental tech entrepreneur who has a built, not just one, but two multimillion dollar businesses within the space with very little resources. Dave Borden. Thank you so much for joining us.
Dave Borden: 00:32 Hey, thanks for having me, Dan. I appreciate it.
Dan Daugherty: 00:34 Well, you know, you've been instrumental in pushing the rental industry forward as it relates to technology, right? Your first company, what year was that? Rent Clicks, rentclicks.com was what 1999.
Dan Daugherty: 00:51 2002. So you develop rent clicks, which was really one of the first websites to help property managers and landlords post their single family home rental online. Before it was going to the Denver Post and putting in a weekend kind of snippet of your rental property. You changed that, revolutionized it, grew it dramatically. And then sold it to Prime Media for a lot of money, which is now known as a Rent Path. Uh, you left prime media and then start another software business specific to the rental industry called PMW (property management websites) and you have grown that, but over the last nine years, 10 years.
Dave Borden: 01:41 Um, yeah, I guess it's been, it's been nine years now. Yeah,
Dan Daugherty: 01:45 nine years. That's very successful software as a service model. You offer websites and other tools to help property managers and landlords efficiently run their business. The question is, how do you come up with these ideas that eventually turned into multimillion dollar businesses and you do it with very little resources? I don't believe you raised a lot of money at rentclicks. Maybe none at all and I don't believe you've raised a lot of money here with pmw, but how do these ideas come to mind? Is it out of frustration that you're trying to solve a problem? Are you looking into the future of where technology will go and figure out how to apply that to the rental space? What goes through your mind?
Coming up With Business Ideas
Dave Borden: 02:30 Well, I think the, uh, for the first time was necessity and it was, it was, uh, you know, I was doing property management with my mom in Colorado Springs, which is where I'm from. And that was always my family business growing up. Um, I was, I've always been an entrepreneur. I just wanted to have a business. I didn't really know what kind of, you know, as you know, I joined the army, which is the least entrepreneurial place possible. But when I got out I went into business with my mom. The rental market was really good and so it was really easy to rent your properties in the paper in a few days. Even though it was expensive, you only had to run ads for a few days. It wasn't a big deal, but after the market kind of turned a little bit, now I'm running ads for months at a time, 30, 60 days, which is costing hundreds and even thousands of dollars, which I don't. And I had to, you know, I'm billing the owners for that and they're like, what is going on? And I was simply just searching for a solution to advertise those properties without having that much of an expense. And as I was searching, I just realized there was nothing there. So luckily I had. And you said that I moved the industry forward. I have nothing to do with that. I always hire really good developers and I have friends that are good at that kind of stuff. Um, I think that's probably what I'm most talented at is finding the good people to, to drag me along with them. So, um, but, but that, that, that first one came out of necessity the second time, the second time we applied, we applied similar principles. I mean, you're very, you're very familiar with how rentclicks worked. You know, we were contacted landlords and property managers and ask them to advertise the properties. And then we did really good job with search engine optimization. So we got their listings, found people rented houses, everyone was happy. We did it at a fraction of costs of the newspaper. So later on I was contacted by a couple guys who had a business in the space and they had, they were familiar with what I had done it rent clicks and they wanted me to help them with their business. They were super smart guys and so I started working with them, but the idea here was more to help them grow their business from a owner's side and in the property management industry that an owner is someone who owns a property that they want managed professionally. A lot of people manage it themselves. Um, and we kind of, we just applied the same discipline to that business. Uh, you know, we did really good job of getting their, instead of having a collective site this time we build sites for property management companies. We help that company get found in their market. When someone does a search looking for a property manager and we apply our conversion metrics, things that we've learned over the, over the last 10, 15 years. Then we help them grow their businesses and we do it at a very high rate of return. I mean, we only charge for our basic service, it's $139 a month and most of our customers, even even the ones that just do a basic basic services add two or three new properties a month, which is a significant return on that kind of investment. Um, so that's the second one was kind of creating a piggybacking off of the previous business, but doing it from the other side of the equation.
Dan Daugherty: 05:50 So rentclicks was 2002, 16 years ago. Obviously the market was different, SEO was different, SEM was different, technology was different. When you launched the new business about eight or nine years ago, did you see a significant decrease in the cost to get to market, with different types of API's and tools and all the new products that you guys are launching from feedback from property managers, are you also seeing a decrease in the barriers to entry? Are those decreasing over time?
Is it Cheaper to Launch a Business Now
Dave Borden: 06:28 That's a really tough question. And I think if you've been in the industry and you've been doing this for awhile, I think you'll notice that the barriers are, are pretty low. Um, it's, I mean storage space and servers and all of the infrastructure required to run this type of business is literally a fraction of the cost that it used to be. I mean, when we made our first major upgrade at rent clicks, it costs us a quarter of a million dollars and we just didn't have. We had to borrow money from my dad, which luckily he had and was able to give to us. And you had mentioned raising money. We didn't. That's the only money we ever raised for that business. We ended up selling it at about eight months later and paid him back immediately. But those kinds of upgrades, that expense just isn't there anymore. You can launch a huge infrastructure on Amazon web services for a pretty, pretty low amount per month. The technology, they figured a lot. A lot of that stuff has been figured out. So from a barrier to entry standpoint, if you're extremely talented and smart and maybe have some experience, the actual cost of it is not very high, but the intellectual cost of acquiring those skills and knowing how to do stuff that truly works because nobody wants to use an app that's clunkier or does it doesn't work well. So if you have those skills, the actual cost of doing it is, it's just so significantly less than it used to be.
Dave Borden: 07:58 And you mentioned the aws that's, that's obviously a Amazon web services you have Google getting into the to the online kind of storage space that compete with AWS. We've noticed that as well where the cost has dropped dramatically. You have various apis. I don't know if you were ever tracking phone calls with rent clicks, but in the very beginning of rent marketer we were tracking phone calls and we spent about $50,000 building out a way for us to have an Ivr and track every single phone call. And now you can do that within 15 minutes.
Dave Borden: 08:35 Yeah. Now you'd call callrail and get one for two bucks and five cents of editor, you know, just the infrastructure cost is compared to 10 or 15 years ago is it's just, it's almost nonexistent really.
Dan Daugherty: 08:50 This is a weird question, but do you have any regrets selling the business in terms of timing or you think back, Gosh, I could've made a lot more money or you have the time. Maybe the market was turning. You would have made less money, but do you have any regrets about that whole process?
Regrets in Selling to Early
Dave Borden: 09:10 Yes and no. I mean at the time it was the, at the time it really felt like the right thing to do, but with hindsight it was, it was really stupid. That business has made well over $150,000,000 since we've left and it was a high margin business and that's a lot of money and I also feel like, you know, no offense to those guys over there if they happen to listen to this, but they just, they didn't have the passion for the business that we did and I really feel like I really feel like we could have taken that business and you know, pretty much zillow's the 800 pound gorilla in that space now I really feel like we could have made that business the Vrbo or you know, a major, the major rental brand because we just cared about the business. I think that we had a good management team and we were very passionate about how we ran it. So there's definitely some financial regrets because the business has made a lot of money since we left. But we also think that we could have taken it with the customers that we had. I think that we could have gotten into the software space. I think that we could have done a lot of the, I think that we could have done a lot of stuff to make the industry a lot better because we had the talent on board, we understand the industry and you know, we're, we're starting over and doing those things with this existing business and I love my business partners now, so it's a great situation. So if I had to do it all over again, I'd probably do it again. But if you look back and say, yeah, as their regrets financially, yeah, I left a lot of money on the table for sure. And we had a, we had a great reputation, great customer base that we could have easily tapped into for building additional products and services for the industry, which I think we're pretty good at that we kind of had to start from scratch again with the second, with this business. But we're, we're doing those things now and I have a very talented team here. So, um, you know, life is life kind of deals you situations at the time. And we made that decision at the time to do it. And it was based on a couple of things. We were very tired because we'd run the business extremely hard, long days, long nights, lots of travel, um, and, and we were, we were very, we were tired and it looked like a lot of money at the time and it was, and, but, but you know, financially there's regrets, but ultimately I'm, I'm very happy where I am, so none of that would've happened had we had, we hung onto that business.
Dan Daugherty: 11:41 You mentioned passion and passion or lack of passion can make or break a business and specifically for an entrepreneur who's getting passionate about to me, you know, passion has got us through the tough times and inevitably you'll have tough times running a business. And I think to your point of having maybe another outside executive team who just looks at spreadsheets and looks at numbers but lacks the passion to really fulfill your mission or your purpose as a business in inevitably leads to maybe self destruction over time. Um, from a, from a passion perspective, it seems like you carried that over to the new business. You were able to obviously go back to maybe customers that were using rent clicks in the past and say, hey, we have a futuristic thing that will help get you x more revenue, x more customers, time to market decrease and so forth. Would that be, would that be one of your things that you would recommend to entrepreneurs is really follow and get into a business or technology that you're really passionate about and all else will kind of come together?
One tip for People Looking to Start a Business
Dave Borden: 12:56 You know, that's a really good question, Dan That's a really good question. And I think the, um, the answer to that, it kind of depends on what stage you're in and, you know, look at myself personally when I, when I started the first business, I was a, you know, I hate to admit it, but I was motivated by money and um, I don't think there's any shame in that, but it's not, it's not the most noble of, of pursuits. But I was like, man, the harder I work, the more the better job we do for these people, the more money we can make. And initially that was for, that was, that was good enough at the time. I found that doing another startup, that's just not enough anymore. Once you've kind of tasted the good life like that and you're, and you've had that success, there has to be something else, some other motivators, some other, uh, some other intangible things, whether it's getting satisfaction out of helping people grow their business or I'm getting satisfaction out of the fact that people respect you and trust you and will do anything you want. Do anything you ask them to do because you've earned a reputation. Um, there has to be. So, you know, a lot of people do great businesses that are a very altruistic and that motivates them. It is a personal decision and it's okay to be motivated only by money. At least that was what happened early in my career was we had an awesome business. You know, let's face it, rental advertising, we weren't saving any lives. We weren't, uh, we weren't saving the environment. We weren't doing any noble pursuits. We were just helping people rent their properties in a much more efficient and cost effective manner, which was, was certainly satisfying, but ultimately we were doing it because it was a great little business with high margins that made us personally very wealthy. So, and that was a good enough at that part of my career. This part of my career. I'm 46 now. I have two kids that are, that are teenagers and I have A. I have so much more demanding of my time on a day to day basis that I got to have a really good reason to want to spend my time on something. And that includes work. And if you're not, if you're not doing something that you think is in some way it doesn't have, you know, some way creates passion for you, then you got to move on because it's just not worth it.
Dan Daugherty: 15:14 I completely agree. In fact, I read a lot about, you know Dave, I have one child now and your perspective on things change quite a bit. Um, you want to spend more time, more quality time with your family. Um, we've been leveraging technology to help you do that. So I talk about something called automation needs to liberation. Do you as a company, do you guys leverage ai or automation to help you do other things that you're passionate about? So it might be spend more time with the family or maybe it's been more time with customers. Are you leveraging any tools that automate a process that maybe five years ago you needed a person to do and now you're using technology?
Business Tools to Automate the Process
Dave Borden: 16:04 Uh, I have one really good example off the top of my head that everybody uses here. And uh, it's a, it's an APP called calendly. I don't know if you guys use that or not, but it used to be anytime you had to set up an appointment with someone you'd have to go back and forth. Five Times has 2:00 on Saturday on Friday. How about, oh, that doesn't work. How about 4:00 on Thursday? So now I just put a link. Why I put my calendar calendly link in my email and say, just pick a time that works, that literally saves 3 to 4 emails and 15 or 20 minutes of back and forth to schedule a meeting with somebody. Um, so that's one, that's one example. And there are tons of them. We have a project management board that is fantastic, that keeps everyone up to anyone in the company see exactly the status of any. And I think it's either it was Trello, but I think we just changed. Maybe it's called click up. I'm not sure I'll look into that. Anyone at anytime can see their status of any project. That's huge. Even 10, five, 10 years ago, everybody had everything in their own little silo or on their piece of paper on their desk somewhere or on their hard drive or their computer that they couldn't act. You know, it's, it's things have changed a lot and that stuff does make it a lot easier. That is kind of the focus of our business right now is property managers. I love him to death. It's my family business. So I'm talking about my parents here. They get lazy from time to time and they have a lot of fires to put out. So we try to make everything that we do automated, try to automate their lives as much as possible. So their rental advertising, we automate that. We their, their, um, there we have a market analysis tool that we go through a rent range on that, that automatically does all their cma's and follows up with our customer and puts it in their crm because those are things that they're just not going to do and it gets them more business and it does it automatically, which is, that's kind of the key focus of our entire business now is we want to help you out of business, but we want to make it automatic so that you don't have to, you know, expect you to have a big checklist of stuff to do in order to be successful. And there are always going to be certain manual things that people have to do if they really, if they really want to be successful and hustle. But we're trying to make as much of it is we're trying to make it as automated for them as possible because it, it makes it easier for them to buy from us.
Dan Daugherty: 18:30 Well, and being in a service oriented industry like property management, if you're dropping balls here and not really servicing both the tenants and the owners, you might be losing business. So what you're saying is you guys really help streamline that. Use Automation, use technology. So property managers come in, focus on what really matters and that's servicing of the tenants as well as the owners.
Dave Borden: 18:59 That's correct.
Dan Daugherty: 19:00 Now, now for the final question here, what, what would you do differently? I think you kind of, you kind of talked about, especially from the acquisition standpoint, but let's use your most recent company as an example. There's probably lots of things that we would all do differently. We learned from but is there one big thing that you can tell our listeners that are looking to potentially start a business within the rental space? Is there one theme that they should know before they jump in? Any recommendations there.
Dave Borden: 19:38 Is it, is it, so it to be specifically in the rental space? Huh?
Dan Daugherty: 19:44 Actually, it doesn't have to be specifically in the rental space. That's just most of our demographic, but, but maybe even just starting a business.
Don't Burn Bridges
Dave Borden: 19:55 I've got a couple of things you know, and you. Number one is if you look at the growth of our current business, it was, and it's not a rocket ship like red clicks was, it's a very nice profitable company and we're growing at a very nice and sustainable pace. You know, it's not like it's not yacht money instantly, but it's a good business and a lot of it we really kick started this business with contacts that I had from my previous business. Um, you know, we one affiliate of the year three times with rent clicks for NARPM. For those of you that don't know what that is, is National Association of residential property managers. They have several trade shows every year. There's a bunch of property managers walking by our booth and we have a spotless reputation with those people. So, I mean, my biggest advice to anybody starting any business, any job, any endeavor in life is that you get one reputation and you, it is really the best currency that you have. Now, like I said, I was able to go up to customers that I had for my previous business and say, I know we don't have anything really to show you, but will you trust me on this? And a lot of them said yes. And we've done everything we've said. We've, uh, we've built their site, we've maintained it, we've done everything we've said we're going to do. And now every time, every time we have another product that we go to them with and say, Hey, this is gonna help you add a few more properties a month. Can you trust me on this? The answer is like, yeah, it's so far. Every time you've told me something, you've done it. It's worked. It's been as advertised. Um, so regardless of what your passion is or what industry you're going into, which I think is very important, like I said earlier, pick something that you really liked to do something or something that you're really good at or preferably both, but remember your reputation, you get one crack at it. And especially in certain organizations like the one I just talked about, they all know each other, they all talk to each other, they all see each other all the time. So if you do any of them wrong, you're, your mountain, you're going to have to climb is going to be 10 times bigger than if, if your reputation is, is solidly intact. Um, so that's made. And you know, there's a, we're, we're actually going to be building some software here, uh, going forward that our customers have come to us and begged us to build because the current providers aren't doing as good of a job as they, as they would like. And they think that we're the company that, that, that can do it. And we agree. So we're going to do that. And most people would think we're crazy going in a property management software for accounting and our, our competitors are Appfolio and PropertyWare they think we're crazy to go into that. But we have customers asking us to do that because they're not doing the job that they want them to do and we would never take on that endeavor unless we had the trust and faith and reputation that we have that our customers that say they're going to switch when we build a good product will actually do that or otherwise it would be a complete waste of our time. So keep that in mind whether you're doing your first venture, when you think you're going to be a billionaire when you're done with it and you're never going to need to work again. You're, you, you might. I mean, I, I sold rent clicks and made a bunch of money and I lost a lot of it in the crash of 2008. So I, you know, I had to pull myself back up. So you never know when you're going to need those people again. And um, if you, if you've done any, if you've done anything sketchy or unethical or immoral, you're not going to get it. You're not going to get a second crack at it. So just remember that, that just doesn't apply to just entrepreneurs. That applies to people with jobs. That applies to people that volunteer, people that work with kids. Whatever it is, you only get one crack at doing the right thing and nobody's perfect at it. But you gotta, you gotTa make every effort to do the best you can in that regard.
Dan Daugherty: 23:54 Great Advice. Don't burn any bridges.
Dave Borden: 23:58 Don't, don't throw dirt on any bridges. Don't, don't, don't mess up any bridges. Keep the Bridges neat and tidy and in and well maintained at all times because you never know who's gonna, who's gonna. Cross it again. They may come back and say, here, I'm ready. I'm ready to crush the bridge again. And thanks for not. You know, like I said, I, we had such a huge immeasurable headstart on our second business because of what happened in the first one. So that's, that's critical.
Dan Daugherty: 24:32 It's a small world. Even if he, even if you were in a different industry, things come back to you. positive and negative things come back. So again, thanks so much for your time, Dave. We're at a time here. Uh, we definitely appreciate it.
Speaker 2: 24:48 Hey, I appreciate it. Thanks for the opportunity.