How LeaseLeads Reached $960K in Annual Revenue with 70 Customers and Near-Zero Churn in Its First Year (Interview with CEO David Freund)

Introduction and Overview

Nathan Latka

00:00Guys, there you have it. Launched an agency helping real estate or those in real estate launched their own websites back in 2015 to 300 k in sales, then grew that agency to about, call it, a million point 7, one point 7 in revenue before saying, you know what? I wanna go build the software thing. His other agency cofounder kept the the agency, kept a little equity. But now David split off and built leaseleads.co, which is effectively templatized

00:20websites for these folks, but also more importantly, APIs and integrations that allow them to update their sites automatically. They've got 70 customers paying on average, or they're doing about $80,000 a month right now all in on revenue. 25 k of that is pure SaaS. The rest is productized service, but churn is almost nonexistent because they spend so much setting up and integrating and onboarding those 70 customers. Hey, folks. My guest today is David Freund. He's the

00:43cofounder and CEO of leaseleads. He boasts a virtual leasing agent that helps to increase tours and leads for multifamily properties more than 300%. He lives in Denver, Colorado, also a competitive enduro mountain bike racer, musician, and coffee snob. David, you ready to take us to the top?

David Freund

00:58>> Let's do it.

Nathan Latka

00:59Alright. What what makes your coffee choices snobby?

David Freund

01:03>> I live really close to this place called Sweet Bloom that is absolutely phenomenal. And when I don't get it from there, I order from Onyx in Bentonville. So I guess it's a little bit of the price point, but I've gotten really picky about my coffee.

Nathan Latka

01:18Amazing.

01:19I I many times, I'll go to Denver just to work at Union Station for a day during the holidays. It's so pretty there, and I will just get whatever coffee is nearby. But this is cool. Okay. So were are you, like, an ex real estate agent, or what got you into this space? How'd you learn about the problem?

How David Got Into Real Estate APIs

David Freund

01:33>> So actually, we've been in web development for real estate for probably six years or so, and we've been working in the API space, really nerdy, granular API space. All these guys use all these different systems to feed in floor plan data, rent's always changing, especially here in Denver, availability, things of that sort, but it would never display on their website. You either use kind of the crappy websites that they have out of the box or you

01:59>> get a big custom site, but the problem is the data is static. So really early on, we got really into the API space and really saw a with this dynamic dynamic information on both the website and a lot of the conversion tools that were out there. So that's really

Nathan Latka

02:14So were you I mean, were you to get exposed to this, were you running an agency building custom websites for agents?

David Freund

02:19>> Exactly. Yeah. Was running an agency for about five five or so years before this.

Nathan Latka

02:24To what you launched in 2015?

Agency Origins and 2015 Launch

David Freund

02:25>> Yep. And have converted it slowly and then really aggressively this past year into more of a SaaS type product. There's still a pretty heavily service based component with the website development. But, you know, as you've probably seen through our site, like, we've standardized a lot of it through templates.

Nathan Latka

02:39Yeah. That's super interesting. So 2015, the first year for the agency, do you remember how much revenue you did?

First Year Agency Revenue

David Freund

02:45>> I think the first year we did about 300,000.

Nathan Latka

02:47That's awesome for your first year. That's super cool.

David Freund

02:50>> For sure.

Nathan Latka

02:51Okay. So what did you scale the agency up to? How many people full time as of, like, what, 2020, I guess?

David Freund

02:56>> So when we started, we were really, really big on the freelance model. So I would say it's a little bit skewed if I give you the full time numbers. We got to about nine and I recently split off with my business partner because he was mostly focused on the SEO side of things. But we got to about nine full time, but we had a freelance team of almost about 50 people. And those are like vetted, thoroughly

03:19>> vetted, like extended team members for freelance there.

Nathan Latka

03:22That's wild. Okay. So your best year at the agency, maybe what was it? 2020 in terms of revenue?

Agency Growth and the Split with Co-Founder

David Freund

03:27>> Yep. 2020, we did about one point about 1,750,000 revenue.

Nathan Latka

03:33One and three okay. 1.75, something like that. Yep. Got it. And then walk me through. Mean, some of the most successful SaaS companies start off like this is an agency, but there's friction. Right? You have a co founder. What if they wanna stay with the agency and you wanna do SaaS? How do you split it? Does the agency own any portion of leaseleads? Like, how'd you do that negotiation?

David Freund

03:49>> Oh my gosh. I we could spend a lot of time there, but it was super fun. I learned a lot about business structure and selling assets and defining value of them. It was hard in the moment, but it was one of the best learning lessons I've ever had. I would say my business partner and I at the time, we definitely wanted to strangle one another, but now we're on great terms. We love one another. I stay

04:11>> in touch with him every quarter. He's crushing it with his business.

Nathan Latka

04:15That was So who owns the agency today? Do you guys still own the agency together or no? You shut it down?

David Freund

04:20>> Yeah. So he runs the SEO agency. It's called Intergrowth. And they are they're doing really well last time I talked to him. He's just wanted to stay more on the agency side of things, and I really wanted to double down in the SaaS venture. I saw the opportunity here, and I had a lot more kind of knowledge and exposure in the API and development space, along with my my business partner, Dylan. So that's really where I

04:41>> jump full fledged into this.

Nathan Latka

04:42So inter hyphen growth dot co was is the agency?

David Freund

04:45>> You got it. Yep.

Nathan Latka

04:46Okay. So you own no equity over there anymore? No profit sharing? No nothing?

David Freund

04:49>> I actually do. I own some equity. As part of the transfer, my my shift was making into a parent company and kind of a holding company for all of our different ventures. And in in part of that was getting some asset or getting some equity.

Nathan Latka

05:03Oh, 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

05:27your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

05:51get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity And red is if you sold the whole thing outright. Now what's cool about this is this is

06:13not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder 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

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07:00if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into

07:27the interview. Interesting. Yeah. Okay. So so what about the spinout? How do keep a clean cap table for leaseleads? Is the agency on the leaseleads cap table?

David Freund

07:37>> The the intergrowth is not at all. No association there. I was able I was able to do a clean-cut buyout for that.

LeaseLeads Cap Table and Clean Spinout

Nathan Latka

07:44Interesting. Okay. So you plus your co founder that you found who is not related to agency are now own a 100% of leaseleads?

David Freund

07:51>> Yep. You got it.

Nathan Latka

07:52Okay. Very cool. This makes a lot of sense. Okay. So question for you. For your first customers on leaseleads, do you have permission to sell to folks who are customers of the agency?

David Freund

08:01>> I do. Yeah. They're one and the same. So really what we did is the agency model that we were doing web development for, we brought over to leaseleads. So we really turned it into a recurring product. So what we found out was they want this pricing information coming through and they want their leads going to their portal, and then we also added some things like source attribution, telling them what the user is actually doing on the

08:23>> site, what floor plans they're looking at, what amenities they're looking at. So a lot of those things we're able to pass through to the systems that they're using. So exactly that. Yeah.

Converting Agency Clients to SaaS Customers

Nathan Latka

08:34That makes a lot of sense. Okay. So let's fast forward to leaseleads today. Right? So what are what are customers paying you on average per month to use the technology?

David Freund

08:43>> Yeah, so there's a build fee if they do a website and there's some different options based on the templates they wanna use. Those range anywhere from 5,000 to $6,000 for the initial build. And then there's a recurring fee. The lowest recurring fee is $200 a month. And that's just gonna cover keeping the engine up, feeding the data to and from your systems that you're using back to the website. So the whole thing we sell is you

09:05>> don't have to update your website. There's really no reason for you to log in unless you're gonna do content updates, but other than that it's gonna be purely API data feeding from exactly what your ILM or your property management system says there. But then the virtual leasing agent, which is kind of our flagship product that's really taking off, is that conversion project product that lives in the corner of the website. That one's gonna be $350 a

09:31>> month there.

Nathan Latka

09:32Going to be. So that one you don't have any customers for yet?

Pricing: Build Fees and Recurring Subscriptions

David Freund

09:34>> Oh, that one is. Sorry. Sorry for the It's live. Yeah. We have about 70 customers total on that.

Nathan Latka

09:40Oh, wow. Okay. So you have 70 customers paying $350 a month already?

David Freund

09:43>> Yep.

Nathan Latka

09:44That's great. Okay. So that's what was that? $24,500 a month in revenue there already?

David Freund

09:48>> Yep. You got

Nathan Latka

09:49That's awesome. That's awesome. Okay. And then and then that's on top of I assume if they pay you the $350 a month fee, they have to also be paying the $200 a month fee, right, for the website?

David Freund

09:59>> So we merge them together for a different package. We are you know, we're learning every day, so we are rebuilding a different package for both of those services. But it does include all that data feed within that virtual leasing agent as well.

MRR, Total Revenue, and Churn

Nathan Latka

10:11Oh, I see. I see. Okay. Is the right way to think about was gonna say, is the right way to think about your MRR today? You're doing about $25,000 a month in revenue all in?

David Freund

10:20>> Yep. So in recurring revenue, now we do have a pretty heavy service based component still. Because we inherited, like I was mentioning previously, we inherited a lot of the agency services that we were doing previously for web builds. We do a lot of custom builds outside of the templates, custom API integrations that aren't necessarily they don't fall in the recurring bucket like our productized offerings. Yep. So all in, we're doing about $80,000 a month in total.

Nathan Latka

10:45That's awesome. I love this model because, like, let me ask you a question. How many of your customers have churned?

David Freund

10:50>> Very few. It's been great. Yeah. Because they're kinda sticky. It's a pretty sticky model with the data. So Yeah. You know, it's it's probably less than 1%, I would say. It's been early on so far with the recurring, but in terms of the Yeah.

Nathan Latka

11:02Because of because of sunk cost. Right? If they pay you $5,000 to set up a website and they cancel two months in, they they don't wanna cancel you. They just spent $5,000 on a website.

David Freund

11:09>> Exactly. Well, we also pull the API feed too, so they get their data. It's not like we pulled down the site, but the data doesn't update anymore. So if their floor plans change, the pricing changes, it's really contingent on that.

Nathan Latka

11:19This is the counterpoint, guys, the VC argument that you shouldn't sell pro services inside of your SaaS. I would always argue the opposite, which is if you touch a SaaS sale with a big upfront fee like 5 k, they're just not gonna churn. Your net dollar return is gonna be through the roof, and you're seeing that here with David.

Trailing Twelve-Month Revenue Outlook

Nathan Latka

11:35David, you can disagree if you want, but I this is what I

David Freund

11:37>> How about you know, you're a smart guy. I totally agree with you.

Nathan Latka

11:40No. No. No.

11:40>> Yeah. Yeah.

11:40Interesting. So $80,000 a month. I mean, so will you guys do a million bucks in revenue this year all in?

David Freund

11:45>> I would say yes in a in a trailing twelve month. We had a little bit of a slow start, but, yeah, if you take a trailing twelve month here towards the end of the year, we'll we'll be looking at a million dollars.

Nathan Latka

11:55And when did you launch leaseleads? Was it this year or last year?

David Freund

11:58>> Officially in January of this year.

Nathan Latka

12:00Okay. Interesting. Yeah.

12:02Clean cut. So so were you still making money last year based off salary from the agency?

David Freund

12:08>> Mhmm. Spot on.

Nathan Latka

12:09Yep. Okay. So you guys just did the split early this year?

David Freund

12:12>> Yeah. Exactly. Very, very new in that sense. So a lot of the services that were already occurring, like the web development services, those were brought over. We've tried to productize as much of them as we can. As you know, you can't throw everything in a template, right? You can't throw it So in that's kind of where I would totally echo that service based sentiment is like, these guys, this industry, especially at the enterprise level, I don't

Team Size and Freelancer Network

David Freund

12:34>> think you can always fit them in a template. A lot of these companies have custom solutions for multiple feeds. I just got off a call earlier where a client uses a CRM for one component, but then they use two separate data feeds for their property management. So it's you know, you do have those instances that come through and you can't necessarily throw them in a in a recurring template, so to speak.

Nathan Latka

12:54Yeah. That's wild. What's the how many folks are full time on the team today?

David Freund

12:59>> Right now, it's six full time. Some of them went over to the SEO agency when we split. So six full time on our team, and then we still have a pretty substantial amount of freelancers that we work with anywhere from

Nathan Latka

13:10How many?

David Freund

13:11>> Content loading, QA specialists, some part time web developers, but we have about 15 freelancers, I'd say, in total.

Nathan Latka

13:18And so, like, everyone wants the superpower of, like, finding cheap talent that's, like, really talented. Right? So, like, how are you finding these free for example, how do you where did what how'd you find your good content freelancers?

David Freund

13:29>> Yeah. So we vet very, very intensely. I would say we vet obviously better in the spaces that we know best with our development. Content wise, I would say that was a labor of love over the the years, just working in the agency, testing different relationships, things of that sort. We found our folks that work really well.

Nathan Latka

13:46But what's top of funnel there? Is it like Upwork, Fiverr, others, then if they do a bunch of work for you, bring them off those marketplaces and into your network directly?

David Freund

13:52>> Exactly. So we test for initial questions. How many hours are you looking for? Personality fit. We obviously move quick because we

Nathan Latka

14:00How do you measure that?

David Freund

14:02>> We have a type form that we use. We try to standardize it for each role. Especially for development, can get pretty specific with that. Like, what's your vision of x, y, and z code base? What frustrates you most about, say, WordPress as an example? So we do a lot of vetting around that. And then we ask for specific test examples of their code before we even get on a call with them to evaluate next steps.

Nathan Latka

14:27Interesting. Can you send me the type form you use for con hiring content people?

David Freund

14:30>> Absolutely. Freelancers? Yeah. For sure.

Nathan Latka

14:32I would love that. I'll attach it to the show notes so you guys can see how how David vets content, folks. That's interesting.

David Freund

14:37>> Absolutely.

Nathan Latka

14:39Very cool. Okay. So team of six now, have you bootstrapped to leaseleads or have you raised?

Bootstrapped from Day One

David Freund

14:43>> Totally bootstrapped. Yeah. We bootstrapped from day one. I took the cash from the agency and rolled it over into this venture.

Nathan Latka

14:51That's smart. But but the agency is not on your cap table. Right? So how did you take that cash? Or that's like your personal cash you made from the agency?

David Freund

14:56>> Yes. Yes. Yeah. Yeah.

Nathan Latka

14:58Are you all in? Did you invest all all your savings a 100% into lease leaseleads?

David Freund

15:03>> No. Not all of it. You know, it didn't take much. I feel like the you know, when you have a really, really solid team, especially our our CTO, Dylan, it doesn't take much. It just takes time and a really narrow scope of what you wanna build for an MVP. So that was the big thing for us. It's like, you know, pushing out all the other features on the nice to have list and being like, what's the

15:22>> core solution we're trying to solve here, especially with the the virtual leasing agent. Because that was kind of the unique value prop we really wanted to get to market.

Nathan Latka

15:30Did you and Dylan split equity fifty fifty at the start or you took more because you're bringing in customers?

David Freund

15:34>> We did not. No. We we split it a little bit differently just because, you know, ideation kind of premium and bringing the customers and things of that sort.

Nathan Latka

15:42Yeah. So you own more just to be clear.

David Freund

15:44>> Mhmm. Yeah.

Nathan Latka

15:45Yeah. Okay. Very cool. Let's wrap up here with the famous five. Number one, favorite business book.

Equity Split with CTO Dylan

David Freund

15:51>> Favorite business book? I would say The Obstacle Is the Way. I think it's a beautiful book from Ryan Holiday.

Nathan Latka

15:57Number two, is there a CEO you're following or studying?

David Freund

16:01>> CEO following or studying. At this point, I would say

16:09>> I like Dharmesh from HubSpot. I really like everything he has to say. I also like Brian Halligan, but Dharmesh is just so philosophical and insightful. I love that guy.

Famous Five Rapid Fire

Nathan Latka

16:17Number three, what's your favorite online tool for building leaseleads?

David Freund

16:21>> Favorite online tool? I'd say Figma. It's kind of a weird one, but Figma is just the coolest tool for me.

Nathan Latka

16:27Number four, how many hours of sleep do get every night?

David Freund

16:29>> Eight. I'm big on sleep.

Nathan Latka

16:31That's good. And situation, married, single, kids?

David Freund

16:34>> Oh, you cut out there a little bit.

Nathan Latka

16:36Yeah. Yeah. Married, single, kids.

David Freund

16:37>> Oh, married. Married.

Nathan Latka

16:39Yep. Any kids?

David Freund

16:40>> No kids. Yeah. Yeah. My my wife's

Nathan Latka

16:43That's a question you was gonna say that's a question you wanna get right, by the way. Yeah.

David Freund

16:48>> No kids right now. No kids right now. We're we're working on it slowly.

Nathan Latka

16:51Life's That's awesome. And, David, how old are you?

David Freund

16:54>> I'm 33.

Nathan Latka

16:56Last question. Something you wish you knew when you were 20.

David Freund

16:59>> Something I wish I knew when I was 20?

Nathan Latka

17:01Yep.

Closing Advice: Patience and Persistence

David Freund

17:02>> Things take time. Patience is patience and persistence is virtue over everything else.

Nathan Latka

17:07Guys, there you have it. Launched an agency helping real estate or those in real estate launch their own websites back in 2015 to three hundred k in sales, then grew that agency to about, call it, a million point 7, one point 7 in revenue before saying, know what? I wanna go build the software thing. His other agency cofounder kept the the agency, kept a little equity. But now David split off and built leaseleads.co, which is effectively templatized websites for these folks,

17:30but also more importantly, APIs and integrations that allow them to update their sites automatically. They've got 70 customers paying on average, or they're doing about $80,000 a month right now all in on revenue. 25 k of that is pure SaaS. The rest is productized service, but churn is almost nonexistent because they spend so much setting up and integrating and onboarding those 70 customers. Now looking to scale, totally bootstrap team of six. We'll see what happens next. David,

17:51thanks for taking us to the top.

David Freund

17:52>> Hey. Thank you so much. Appreciate it, Nathan.

Nathan Latka

17:56One 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 one

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