How Ember Home Reached $17.4M in Funding and 100 Families in 10 Months (Interview with CEO Kurt Avarell)

Introduction and Kurt Avarell's Background

Nathan Latka

00:00Hey, folks. My guest today is Kurt Avarell. He's the co founder and CEO of Ember, where he's responsible for leading the development and execution of long term strategies and identifying key opportunities for growth within the industry. He's obsessed with helping people own the vacation home of their dreams, where they can create lasting memories of family and friends. He's a serial entrepreneur and has taken more than one company from inception to scale, having raised over 70,000,000 in

00:19venture capital financing at his prior startups.

Kurt Avarell

00:22>> Kurt, you ready to

Nathan Latka

00:23take us to the top?

Kurt Avarell

00:24>> Absolutely. Thanks for having me.

Nathan Latka

00:25You bet, man.

Prior Company: Canopy and the Founder's Journey

Nathan Latka

00:26So before we get into Ember real quick, quick on your backstory. So what was your last company?

Kurt Avarell

00:31>> Company is called Canopy. So Canopy is in the is a SaaS software solution for accountants.

Nathan Latka

00:38Ah, interesting. And were founder there or did you join a little later on?

Kurt Avarell

00:40>> I'm the founder. Yep. Solo founder and, yeah, took it from inception through scale and it continues to do really, really well.

Nathan Latka

00:49That's amazing. What year did you launch that business?

Kurt Avarell

00:51>> 2014.

Nathan Latka

00:53And this is the accounting practice management software?

Kurt Avarell

00:56>> Yeah. Yeah, exactly.

Nathan Latka

00:57Yeah. GetCanopy. Fascinating. Okay. So that was 2014. And then I guess what made you leave Canopy and jump into Ember?

Kurt Avarell

01:03>> So I left in 2019, took a bit of a sabbatical and then kind of went back to my roots. My family is kind of a generational home builder. And so my parents and then also my grandparents built second homes for people in Lake Arrowhead, California, which is a destination outside of Los Angeles.

Nathan Latka

01:22Interesting. Now, how did you replace yourself? I mean, obviously, I think you guys raised significant capital there. How much did you raise at Canopy?

Kurt Avarell

01:29>> We raised at the time that I left, it was about 70,000,000.

Nathan Latka

01:33Yeah. So that would have been what? That would have been just post series C?

Kurt Avarell

01:38>> Mhmm. It was like a B a B one, I think.

Nathan Latka

01:41Yeah. You guys have quite the fun. I'm looking at you have quite the funding history. Not traditional. There are some debt mixed in. There's some up, down all over the place.

Kurt Avarell

01:50>> Yeah. Yeah.

Nathan Latka

01:50Yeah. Okay. So I guess that's a good lesson here first too before we jump into Ember. How did replace yourself as founder? So leave it in good hands and make sure you're exiting gracefully there.

Kurt Avarell

01:59>> Yeah. Mean, I think like as founders, have to realize that, there's gonna be a time when you're there with the company growing it, and then there's gonna be a time when it's time to move on. And for me, it was like a deeply personal decision to move on to the next thing. The way I viewed it is I think, you know, I thought that there, you know, A, after five years of being a founder at a

02:21>> high growth startup, you're ready for a sabbatical. And so taking a sabbatical probably one of the best things I've ever done. And then, you know, B, I think, you know, as an entrepreneur, what I love to do is build and create. And so I knew that I could go out and build, you know, the next, you know, the next thing. And that's what really gets me, you know, gets, that's what motivates me. It's what keeps me

02:43>> going in the morning and gets me up and rolling.

Nathan Latka

02:46And are you able to share when you left there in 2019? You sort of went from zero in 2014 to how much AR when you left?

Kurt Avarell

02:52>> Oh, yeah. No, I'm not able to share. Unfortunately, yeah.

Nathan Latka

02:55No problem problem You're always under strict NDAs.

Kurt Avarell

02:57>> That's the way it works.

Nathan Latka

02:59Yeah. I mean, it's your company. That was three, four years ago. I'm I'm I'd be surprised if those are still active today. You can't share anything about the range you grew it to besides the amount of capital you raised?

Kurt Avarell

03:08>> Yeah. Just the amount of capital raised.

Nathan Latka

03:09I just think it's terrible to judge any company on how much capital they raise. It's a horrible metric of

Kurt Avarell

03:13>> Oh, 100% agree.

What Ember Home Does and the Market Thesis

Nathan Latka

03:15100% Okay. All right. Ember, you go back to your roots. Why vacation homes? Why partial ownership if that's the model? And explain the marketplace to me.

Kurt Avarell

03:24>> Yeah. So we kind of fit right in between, you know, an Airbnb and a whole home vacation home, right? So if you think about your options, you have a handful, right? When you go on vacation. Our thesis is, we're looking for people who are going to the same vacation destination on a regular basis, right? These are typically vacation destinations that sit right outside of a large metropolitan area. So it'd be St. George, Utah, which is a

03:50>> gateway to Zions National Park to Salt Lake City. It'd be Bend, Oregon to Portland. It might be the Hamptons to New York City, or, you know, Cape Cod to Boston, where you're going on a regular basis, right? And for that, your options are basically to Airbnb, which is, you know, fairly expensive as we know, and then, or you buy a home outright. But the challenge with buying a home outright, I mean, comes with the benefit of

04:15>> having the home and being able to use it whenever you want. The downside is most second home owners don't use the home that often. And so, you know, they're only, they think they're gonna be there six months out of the year, but they end up only being there six to eight weeks out of the year. And then it's just, that second home becomes a second job because homes are work. And, you know, whether it's just fixing

04:36>> a faucet or paying your property taxes, that's just work. It's just a lot of things that are going on in that home. So what Ember does, it's kind of bridges a gap. It sits right between an Airbnb and a full home ownership where we take a home and we buy it with an LLC and then split it into eight different shares. And a person can buy anywhere from one to four shares of that home. Now think

04:59>> about these homes, these are high end vacation homes. The goal is to like make it so that when you walk in, there's a wow factor. Your friends and family walk in, it's there. When we buy the homes, you know, they're high end, then we also furnish the homes and with high end furnishings and hand it over to the owner group totally turnkey. At that point, we manage the property so that we abstract all of the work

05:22>> that comes with a second home away from the ownership group so that they can just enjoy their vacation, but while still retaining that ownership in the asset that can appreciate over time.

Nathan Latka

05:33Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

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06:43built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired, the valuation and the multiple. Maybe you're going

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How the Marketplace Works: Supply and Inventory

Nathan Latka

07:58Yep. Let's look specifically at 2293 North Serratos Road, Palm Springs, California. You've got it listed right now up on the side as potential buy two hundred twenty four thousand five sixty. Now is that what you would pay for one eighth ownership or is that the total price of that? That's not the total price of the house.

Kurt Avarell

08:12>> That's the one eighth ownership. That's right.

Nathan Latka

08:14Yeah. Now

Kurt Avarell

08:15>> what that does, gives you six weeks out of the year at that home. And, you know, if you wanted to be there six months out of the year, you buy, you know, half the home instead of instead of one eighth, which we have some customers who do.

Nathan Latka

08:27Yeah. So 224,000 for one eighth, the home price is about 1,800,000 total. If you wanna buy more than forty four nights per year, you just buy two, three, four, five eighths of the Have ownership you pre negotiated basically almost like a ROFR with the current owner or an option agreement with the current owner? How do you generate the supply on your marketplace?

Kurt Avarell

08:47>> Yeah, so for most of our homes on the marketplace, we actually go in and buy the home. We have a pretty good sense of what our buyers want in their homes. And so we go buy the home in the first instance, and then we then market the home to, you know, to the buyers. In this case with the home in Palm Springs, that's a potential buy. We have two different categories of homes. We have homes that

09:11>> are for sale. So you can look in Newport Beach, you'll see some there. Those homes that are for sale are homes that we actually own. And now we're selling, actively selling shares in those properties. The potential buys like the one in Palm Springs, that's a home that we could buy if we had enough interest in the home. So we kind of put the potential buys up there to provide some diversity and then also gauge interest in

09:37>> that particular home.

Nathan Latka

09:38What prevents someone sophisticated like a Blackstone to hire a data engineer to scrape your site, Pacaso and others, where you have basically labeled these yellow labels potential home, just go buy them ahead of you, right ahead of your ability to close it if you have interest?

Kurt Avarell

09:50>> Yeah, they could. I mean, they definitely could. Thing is this is a massive market. It's a massive market. We're talking about the largest asset class in the world real estate. And so we think there's gonna be a couple large players and we kind of welcome that. It's a new asset class. There's a lot of education layers, but people who buy in, they love it. They love the experience. So right now it's basically the two big players

10:18>> in the space are Pacaso and Ember. There are couple others that are smaller, but those are the two big ones.

Nathan Latka

10:24And how do you measure size? Is it literally GMV through platform number of closed deals?

Kurt Avarell

10:29>> Yeah, I mean, would look at it kind of an inventory. So, you know, clearly, you know, Pacaso has been very aggressive and is a couple of years ahead of us on their growth trajectory. So they've got inventory, you know, coast to coast and Ember is mainly on the West Coast. So it's Oregon, California, Utah.

Nathan Latka

10:48Interesting. And I mean, what would you

10:53I guess you can look at number of unique properties. You can add up the total amount of the value of the properties, like the 1,800,000 place in Palm Springs. Like, I mean, what do you try to get to or how far can you stretch your supply side here? I mean, do you wanna have a 100,000,000 of sort of listings on the platform or what's that number?

Business Model: 12% Uplift and Recurring Platform Fee

Kurt Avarell

11:09>> Yeah, I mean, I think it will get very big. Yeah, so we've been doing this for ten months. My co founders and I, and then our team at Ember and the company's grown very quickly. So right now we have, you know, just shy of right around $15,000,000 of inventory that's available on the website. That's homes that we actually have purchased and are for sale. So I think that will grow into the hundreds of millions over the

11:35>> course of the next few years. You know, the way we think about it, if you look out five to ten years, which is what you gotta do in a startup, right? You gotta think about what this will be. It's gonna be a massive marketplace where people are buying and selling shares in these homes. And it's the way that we, you know, our thesis is that this is how people will buy vacation homes. The old way of

11:55>> buying whole homes, which with all the work and costs that comes with that will start to fade. And certainly there'll be a segment of the market that will still buy the home outright. But for most people, they the, they wanna be able to show up and have a worry free vacation and not really have to deal when, you know, when they leave at the end of their vacation, they leave all the troubles of the home behind

12:14>> to Ember. So, yeah, we think that there's like a, you know, multi $100,000,000, you know, certainly, you know, potentially into the billions of dollars of inventory if you go out ten years and that's kind of where we're headed.

Nathan Latka

12:27Mhmm. So Ember got going about ten months ago. Did I heard that correct?

Kurt Avarell

12:31>> Yeah.

Nathan Latka

12:31And so how, you said you've purchased already $15,000,000 to feed the inventory we currently see on the site?

Kurt Avarell

12:38>> Yeah. So we have $15,000,000 live. We've actually sold quite a lot more than that.

Nathan Latka

12:45Oh, interesting. So over the past ten months, you've bought way more than 15,000,000. 15,000,000 is just what you bought currently that hasn't sold yet. It's sort of in the Yep. Middle right

Kurt Avarell

12:53>> That's actually for sale on the website right now.

Nathan Latka

12:55I see. I see. How much have you moved over the past twelve months?

Kurt Avarell

12:59>> It's in the tens of millions. Yeah. Oh, wow. We've moved in the tens of millions of inventory across the website. So there are a lot of homes that we have purchased and sold that are no longer listed on the website. Obviously, once we sell them, we take them off the website.

Nathan Latka

13:12Yep, yep. Do you think you can break a $100,000,000 of sort of GMV, you know, this year?

Kurt Avarell

13:18>> Oh yeah, yeah, absolutely. Yeah. Based on the current growth, a 100%.

Nathan Latka

13:22Do macroeconomics matter? Interest rates going up, people can't get loans as easily? You know, does this They do matter.

Kurt Avarell

13:27>> Yeah, they do matter. You know, I think, you know, we're obviously high in vacation homes. It's usually a discretionary spending. We watch it pretty closely. You know, that said the growth trajectory to date hasn't been impacted. We're continuing to grow in what I would characterize as kind of the top, you know, 1% of startups.

Nathan Latka

13:45And

Kurt Avarell

13:46>> the company operates, we're pretty tight lipped about like absolute numbers, but I can tell you we operate pretty close to a breakeven. Like we've not burned hardly any cash. Most of the cash that we put on the balance sheet is to buy inventory.

14:02>> So, I think like you could see a three, four, five X growth over the next twelve months, you know, based on what we know of the market over the last twelve.

Nathan Latka

14:11Where'd you get the cash to buy up all the inventory? I mean, to get going.

Kurt Avarell

14:16>> So it's a combination of the equity dollars that we raised from the venture side. And then we also layer in a debt, some debt on That top of gives us kind of the purchasing power. You know, the one thing I'd mentioned that you brought up was the interest rate. So typically when you think of like a one eighth ownership in a home, you're not thinking like, oh, you know, that's something that can be financed, right? That

14:36>> in fact, historically that's not a product that would have been financeable, but that's actually not the case with these shares. Like these shares can be financed. We have a partnership with a bank that finances these shares at a low interest rate. In fact, in the Newport Beach homes, the interest rate's 4%. So it's actually less expensive than a traditional mortgage in kind of the current environment, which is amazing.

Nathan Latka

15:02Very interesting. Now you mentioned equity. So it sounds like you've closed a seed round. When was that and how much was it for?

Funding: $17.4M Raise Led by Peter Thiel

Kurt Avarell

15:07>> Yeah, so we closed a seed and an A, which we kind of announced together at a $17,400,000 financing. The A led by Peter Thiel. So we were super excited about that to have him lead that financing. And we closed that in February.

Nathan Latka

15:25Okay. And sorry, if you split that out, how much was the Series A?

Kurt Avarell

15:29>> The Series A was 15 and the seed was 2.4.

Nathan Latka

15:34Interesting. Okay. So a lot of your early inventory was really fueled by, it sounds like a great debt deal you got done, which is nice because there's real collateral here to get a debt I deal mean, when you took about FinTech and SaaS today, you're seeing people raise these warehouse facilities and bankruptcy remote SPVs, and there's no collateral except like software contracts or invoice factoring. Right? Did you sort of use the same structure, but your collateral

15:54is not a contract or an invoice, it's the actual house?

Kurt Avarell

15:56>> Correct. Yep.

Nathan Latka

15:58Interesting. And how much, I mean, you obviously have track record, right? So you have history here. I mean, how big of a debt facility are we able to raise on day one to go fuel this supply?

Debt Facility and Capital Structure

Kurt Avarell

16:07>> So we, you know, we have raised, you know, roughly, well on the debt side, it's, there's several different sources of debt that we use to make this happen. And, know, it's probably in the 20 to $30,000,000 now on the debt side and the combination of everything collectively.

Nathan Latka

16:26Okay. Okay. Interesting. And do you wanna keep holding that debt even when you move that house off your site because buyers buy all eight shares? Because obviously that's a revenue stream for you potentially, right? You can pass those costs on.

Kurt Avarell

16:38>> Yeah, once, so it's really just designed to be acquisition debts. We'll acquire the property in the first instance, and then the property will move hands to the new owners. If that owner decides to finance a portion of their purchase of the share, then there will be some debt that remains on the property. But in a lot of our homes, it's been cash buyers. So, you know, debt is financed out entirely and then the owners own the

17:01>> home outright kind of indefinitely.

Nathan Latka

17:03And you can sort of recycle there. Very interesting. Let's averages are dangerous, but it helps really understand the marketplace quickly. What's the average sale price of the home on the platform?

Kurt Avarell

17:12>> So it depends on the geography. In St. George, Utah, which again is if you've ever seen the Red Rock, you know, of Southern Utah, that's where St. George is. So it's a beautiful area. It's actually a very big vacation destination. You know, your homes are typically between 2 and $3,500,000 In Newport Beach, that ranges from 4.5 to $8,000,000. You know, so we have two homes that are actually on the low end, you know, was 4,000,000, but

17:43>> that's you're talking about a home that's in a stunning neighborhood and, you know, 90 steps to the sands.

Nathan Latka

17:50Yeah, they're beautiful. I mean, I'm looking through a bunch of them now, they're beautiful. So it sounds like sometime across, look, geography matters, but somewhere between sort of a 3 to 4, maybe $5,000,000 sort of averages around the sale price. Help me understand how you guys make money. You sell a place for $4,000,000. How do you make money?

Kurt Avarell

18:04>> Yeah, so we're super transparent about it, right? Like our goal is to make sure that the consumer, when they come in and look at it, they understand exactly how the pricing works. So we purchased the home outright. We provide, you know, the REPC, which is the real estate purchase contract to the customer so they can see that this is what we paid. And this is all listed on the website. Then we add furnishings on there. So

Revenue Mechanics and Pricing Transparency

Kurt Avarell

18:26>> let's just take an example. Let's say it's a $2,000,000 or let's say it's a $4,000,000 home down in Newport Beach. We'll break this out as $4,000,000 for the real estate, another $250 to $300,000 for the furnishings. That includes, you know, closing costs, you know, really well appointed home, window treatments, appliances, etcetera. We also throw in like, you know, beach cruisers and things like that so that when people show up at the houses, it's like they have

18:55>> all the toys that they would expect to have at the beach. And then where we make the money is on that, you know, we're right now at $4,300,000 the $4,000,000 purchase price of the home, 300,000 of furnishings. We take a 12% uplift. So we'll take that 4.3, multiply it by 12%, and that's where Ember makes us money. So we break that out as kind of line items so that everybody can see exactly where that revenue comes.

19:21>> Now that's a one time revenue source. On the recurring side, and this kind of fits into both kind of the SaaS and kind of PropTech side of things, there's a platform fee. So that platform fee is a $100 a month per share. That covers the management of the LLC and then a tech layer. So there's an app. The app is what handles all the scheduling. You can kind of think about it like an Airbnb, you know,

19:45>> scheduling app where you've got a calendar, you can go into any time. So there's not set weeks. This is not a timeshare. This is not like, Hey, you get, you know, the forty fourth week of the year. It's a first come first serve. You can come down for one night or fourteen nights. And

20:02>> then property management, right? Actually managing the property in kind of a traditional property management sense. That's kind of the recurring revenue side of the business.

Nathan Latka

20:10And how many shares do you think you'll sell this year?

Customer Count and Growth Trajectory

Kurt Avarell

20:14>> Well, we've had over a 100 families buy in to Ember to date over the past ten months. And

20:22>> yeah, we expect to double or triple that number toward the end of the year or so.

Nathan Latka

20:28And are most times those families are buying one share? So it's a one to one ratio?

Kurt Avarell

20:32>> Most families right now are buying one share. We've just added the financing layer. And I think with the financing layer, you're gonna see, you know, more people buying two shares, a quarter of the home, having more time at the house.

Nathan Latka

20:45Yep. Yep. Okay. Good. So I mean, we could take a 100 families each owning about one share times a $100 a their monthly. I mean, you're already at $10,000 in MRR, not including your 12% uplift.

Kurt Avarell

20:54>> Correct.

Nathan Latka

20:55Yeah. Okay. Wow. Fascinating. And you said earlier, you have 15,000,000 sort of available today, but you've already sold multiples of that. So if we assume conservative 30,000,000, we could take 30,000,000 times 12% uplift. Right?

Kurt Avarell

21:04>> Good. Yeah.

Nathan Latka

21:053,600,000 already there on uplift. Months in is pretty good. Good.

Kurt Avarell

21:10>> Pretty good for ten months.

Nathan Latka

21:11Why is that I mean, that's actual. Right? I mean, why would it not be 12%? Have you always had 12%?

Kurt Avarell

21:16>> Yeah. It's always been 12%.

Nathan Latka

21:17Okay, so there we can brag about you a little bit. Okay, that's pretty good for ten months in.

Kurt Avarell

21:20>> That's not too bad.

Nathan Latka

21:22Is the model working? Do you think you anticipate any pricing changes? Is 12% too high, too low?

Kurt Avarell

21:27>> I think the model is working. The value that Ember provides and the reason people are willing to pay a 12% uplift on their shares, because we're unbundling an asset, right? You're taking an asset that was previously unavailable to a group of buyers and you're making it more affordable and turnkey for them. And because of that, they're willing to pay a little bit of a premium. It's kind of like, you know, the analogy that one of my

21:52>> co founders uses is like, you know, you can buy a six pack of Coke back in the back of the, you know, the grocery store that's not cold and on the shelf for a couple bucks, but you inevitably pick up that cold one that's like, you know, already set out in the refrigerator, in the aisle, in the checkout aisle. And so you're essentially just taking that asset and unbundling it and there's a lot of value in

Competitive Landscape: Ember vs. Pacaso

Kurt Avarell

22:13>> that. So I would say, yeah, a 100% we've got pretty strong product market fit. We've actually had more of an issue keeping up with demand on the buy side and being able to get the inventory, which is always a good problem to have in a startup.

Nathan Latka

22:30Yep, no, that's tough. Now, in terms of funding, obviously dilution, you wanna manage that. You've been through this rodeo before, so you know all about dilution with your last company, but most folks say, you know, closing series A's, they're selling, know, call it 10 to 15% of the business. Were you sort of pretty standard there?

Kurt Avarell

22:43>> Yeah. I'd say it's pretty standard.

22:44>> Yeah. Okay. Got it.

Nathan Latka

22:45So you're you're talking like a 100,000,000 valuation, something something around there?

Kurt Avarell

22:49>> Mhmm. Okay. Interesting.

Nathan Latka

22:50What's team size today? How many folks?

Kurt Avarell

22:53>> So we're just shy of 30 people right now.

Nathan Latka

22:5530. And how heavy on engineering? How many engineers?

Kurt Avarell

22:58>> On the engineering side, that makes up, you know, roughly five. So it's interesting. Yeah, five of the 30.

Nathan Latka

23:06Okay. Five. And I mean, look, anyone listening is gonna go, wait, this guy's rich. Why does he want to sell 10%, 20% of his business over two rounds, the seed in series A to investors? Why not sort of be greedy, bet on himself and keep as much to a 100% as possible? How would you answer that?

Kurt Avarell

23:20>> You know, there's a couple things. One is, you know, it's a fairly capital intensive business. Obviously we got to go out and acquire the property in the first instance and then sell the property. So there's reasons to have a lot of cash on the balance sheet so that you can take that cash and leverage it. I also think that there's gonna be a couple big players in this space and we're kind of starting to see those

23:43>> players form. And, you know, the way we view this kind of five, ten years out is this is a, you know, a nationwide marketplace and also a worldwide marketplace where people are buying and selling, are buying and selling shares. And I think speed to market is really critical for marketplaces. If you get out there and kind of establish the name, that's what gets you in kind of a, in a, in a, you know, first or second

24:05>> position. And so we're, we're going to be pretty aggressive and to be aggressive, you know, it's helpful to have the insight and backing of venture capitalists.

Nathan Latka

24:15Yeah. I mean, look, this is my preferred way of living, right? I'm here in my house in Austin right now, but I travel most of the time. My preference is to have five or six cities I'm in each year. And I go a week here, a week there, I'm able to do this. So the challenge with something like Ember is if I wanna become an Ember loyalist and go on today, well, there's only really five cities

24:31I can spend my time in. I love Barcelona, you don't have Barcelona, I love whatever, I'm making this up, Sayulita in Mexico, you don't have that yet. So like there really are network effects here, right? Whoever gets the most inventory, the quickest wins. Isn't that true?

Kurt Avarell

24:43>> 100%. Yeah, 100%. Yeah,

Nathan Latka

24:46interesting. And you feel like you can catch up? I mean, what's your mousetrap? How do you catch up to like a Pacaso?

Kurt Avarell

24:53>> So I think there's a couple of things. I mean, I think like, you know, A, this is, I mean, this is a massive, like I mentioned, it's a massive asset class and there's no way that, you know, one player can kind of capture an entire market. It's not, this is not an Airbnb. Like you think about an Airbnb where you go to an Airbnb and you go there on you go there, it doesn't matter where you're

25:14>> traveling in the world, right? If you're gonna go out to, you know, Barcelona or to London or, you know, to Newport Beach, you're probably gonna go to an Airbnb and go to single source. This is not really that, right? This is a very localized regional, you know, home buying is a very regional localized, you know, I think buying process. And it's also a much larger asset class. So one is I think that there's space for several

25:43>> players to coexist. Two is, you know, we're in a slightly different price range than Pacaso. Pacaso's in the ultra luxury side of the business, right? Like, you know, taking what was available to, you know, one tenth of a percent of Americans and making it available to the 1%.

Nathan Latka

26:01What do think their average sale price is? You think it's closer to like $9 or $10,000,000?

Kurt Avarell

26:04>> Oh yeah, yeah, yeah, for sure. Yeah. If you browse kind of through their Newport Beach homes, it's just a much higher price point. You know, two to three X what Ember is. Where, you know, Ember is coming down market a little bit and say, maybe what's available to the 3% is now becoming available to the 20 to 25%. And so that democratization is, you know, part of our strategy.

26:29>> You know, even if there's encroachment on those pricing, you know, there's just, again, there's just so much space in the market that it doesn't, it's not too concerning. So, you know, in our minds, it's just expansion, right? To your point, we have people who wanna have a desert home, a beach home, a mountain home. And so as we expand, it's like, you know, get to the East Coast quickly. Now that we've kind of got a handle

26:50>> on the West Coast and continue to build out the West Coast, then East Coast and then Europe.

26:57>> I think, you know, I think it's the makings of a very big business for, you know, for both of us.

Liquidity: How Owners Sell Their Shares

Nathan Latka

27:04So I'm in Bend, Oregon. Love this place that sleeps fourteen, six beds, seven baths. I'm gonna buy at $409, $419,000 for one eighth of this share. The flip side of this is though I sort of have eight co founders. Three years from now, markets are way up. Everything's up. And I'm like, wow. This little share is worth a lot of money. I wanna exit and go move to Cape Town. What if there is no buyer on Ember?

27:27I can't just list my house with a realtor because there's eight, there's seven other co founders I have to get to agree with me. You know what I mean?

Kurt Avarell

27:33>> Oh yeah. So this is the magic of Ember. So when you're ready to sell your home or your share in your home, you can sell it at any time.

27:43>> Know, because Guarantee that, you'll buy it?

27:47>> You can sell it on on the MLS with the real estate agent at any time at whatever price you want. So let's say that the home went up, you know, 30% and now instead of 410,000, you're sitting at over $500,000 for that share. You go list it on the MLS and Ember will help you do that.

28:06>> And then you sell that share to another buyer and you can buy a share out in Cape Cod or wherever you wanna buy. That- Interesting. The amazing thing, and this is part of the magic is unlike a full home where you have to actually go through, you know, underwriting and title and etcetera, this is like a twenty four hour transaction. You list the property, it goes up on the MLS, it goes on Ember's website. We bring

28:28>> in a buyer, the buyer buys a share and they can actually close on that share in twenty four hours because what they're buying is a membership interest in an LLC, not in, not, you know, the actual real estate. So

28:42>> that process of buying and selling these shares is, you know, is part of the benefit of owning.

Nathan Latka

28:49And someone's done that already. Has someone done that?

Kurt Avarell

28:52>> What we've had is we've had several customers upgrade. So it's been interesting. Nobody's sold out of Ember because once you've experienced it and tasted it, it's something you can't really let go of, right? Because it is such an amazing experience. But what we have had is customers who said, You know what? We love the home that we're in, but there's a new home that you just listed and we would like to buy a share in that

29:13>> home and sell the share that we have in our existing home. And actually during the first year of ownership, you can trade without any fees. So no real estate commission. So if you find a better listing, it's kind of like an Ember guarantee. You can just move to the other property. Maybe it's a bigger house or a smaller house or a different location within the first year. After the first year, it's just the traditional 3% real

29:36>> estate agent commission. And in this case, were within their first year, so they upgraded to a larger home. We took the shares that they had and we sold them on the open market.

Nathan Latka

29:46Really interesting. Yeah, really interesting. Well, I think this is probably, this is sort of definitely in the future, at least certainly for somebody like me. It's just a question of who has the inventory the fastest where I can just become literally an Ember loyalist and go anywhere I want whenever I want and own the you know, one eighth of the share, you know? So very cool. Alright. Great story here. Let's let's wrap up with the famous

Famous Five: Books, Tools, and Personal Habits

Nathan Latka

30:03five. Number one, favorite book.

Kurt Avarell

30:06>> Favorite book. Hard Things About Hard Things.

Nathan Latka

30:08Number two, is there a CEO you're following or studying?

Kurt Avarell

30:13>> You know, it's probably a little bit, you know, I guess I would probably say Steve Jobs. I mean, you know, it's probably one of the most common answers that people give, but I think kind of his work ethic and his ability to innovate across multiple products. That's what's so remarkable about him is, you know, a lot of entrepreneurs can nail one, but Steve Jobs hit, you know, multiple products and was able to innovate. And that part

30:38>> is extremely difficult to do and also, you know, super inspiring.

Nathan Latka

30:43Number three, what's your favorite online tool for building Ember?

Kurt Avarell

30:50>> Favorite online tool. Well, it's hard to, it's hard not to go back to some of kind of the sales, you know, you know, the, some of the sales tools and reporting on like HubSpot and Salesforce,

31:02>> you know, that those are the first that come to mind because obviously, you know, as a startup we're sell, we're super sales driven.

31:10>> So that's probably where, that's probably where I'd hang my hat.

Nathan Latka

31:13Number four, Kurt, how many hours of sleep do you get every night?

Kurt Avarell

31:16>> Six hours.

Nathan Latka

31:16Okay.

31:17That's good. In situation, married, single, kids?

Kurt Avarell

31:20>> Married with kids.

Nathan Latka

31:21How many kiddos?

Kurt Avarell

31:23>> Four. Ages yeah.

Nathan Latka

31:25Like 15 to eight.

31:27Wow. Busy guy. Okay. How old are you?

Kurt Avarell

31:29>> 42.

31:30>> 42. Last question.

Nathan Latka

31:31Something you wish you knew when you were 20.

Kurt Avarell

31:35>> So I wish I'd been in tech a lot sooner than I was. I started as an attorney in Manhattan and I think I wish I'd gotten in tech sooner. And then I also ended up learning how to code. So I've been on the engineering side and I wish I'd learned how to code sooner. Guys,

Closing Summary and Wrap-Up

Nathan Latka

31:54that makes a ton of sense. Guys, there you have it, Ember Home. Again, if you believe that the future is about going and living wherever you want, whenever you want, but you don't wanna buy outright houses in all these places you're only gonna spend four or five weeks a year in, Ember is a great solution for you. Very interesting space. You can go buy one eighth of a share in Palm Springs for $400. You then pay

32:12a $100 a month to use the Ember application to book those times first come, first serve, to trade your shares into other houses if you want. They're off to a nice start here. Ten months in, they raised about $17,400,000 in capital because they actually buy these houses. They hold them until they sell them. They have about 15,000,000 in houses they bought today that they're waiting to sell on the site. They've already turned over multiples of that.

32:31Call it maybe $20 or $30,000,000 already through the platform. They take a 12% fee on top of that. So if they did $30,000,000 in volume, 12% fee fee would be about 3,600,000 there. But again, already on the recurring revenue side, a 100 per share, a 100 families, that's about, again, $10,000, $11,000 per month already in MRR as Kurt looks to scale the business. Kurt, thanks for taking us to the top.

Kurt Avarell

32:50>> Hey. Likewise. Thanks so much for having me.

Nathan Latka

32:54One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live, and the founder shares back end dashboards, their expenses, their revenue, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM

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