How MaidThis CEO Neel Parekh grew to $3M revenue and 600 customers in 2024.

hey folks my guest today is neil parrak he is building a tool called made this which is a cleaning franchise for vacation rentals neil you ready to take us to the top i'm stoked let's do nathan are you running one of these franchises or are you the creator of the brand and you sell franchisees both so i am the creator of the brand i started this in 2013 i was working in uh tech venture capital for a few years before doing this kind of as a side hustle uh so now i am running two corporate locations for this and we have two franchises as well so we just started the franchise operations a few months ago very cool okay let's break into the business model right so what are you selling cleaning services for vacation rental so there is kind of a gap in the market where a lot of short-term rentals have popped up airbnbs vrbo's things like that and they need a proper cleaning service which could use a lot of tech right uh typically a lot of cleaners are not very tech savvy but these vacation rentals have quick turnovers you know they need someone to be able to sync with their calendars to automatically see when guests are checking out to be able to report low supplies damages things like that so we kind of help be the middleman between usually the low-tech cleaners uh as well as the hosts kind of automate the entire process for that it's a marketplace model here exactly all right tell me about taking me back to day one your first your first host that you connected to your first you know cleaners yep so uh it is what i'd call like a local marketplace model right because we are a localized business and uh this one part i want to clarify with vacation rentals airbnbs any local model reviews are so king right you can't just do like um uh there's the biggest competitor is called handy where it's just like an uber type service for cleaning it can't what we found is it can't really be like that for um air bees vacation rentals that's why we're doing the franchise model which is much more localized for that uh your question nathan the first airbnb host i connected you know we started doing just residential cleaning uh because that's that's what i knew i found out about this kind of on reddit just as an idea and i'm like hey this guy's doing cleaning i'll just do the same thing and this is like a side hustle while i was working in vc um so the first guy called me and said hey do you guys do vacation rental cleaning by the way there are people laughing listen because there's a lot of vc's that listen analysts they're listening going wait a second i thought side hustle was supposed to be like launching my own like software company your side hustles double down on this reddit thread i'm gonna go clean some houses here it's the most ridiculous thing if you think about it like from tech vc to cleaning company that's exactly what i did uh i i i just go on that nathan i mainly did it because i wanted to eventually leave and travel right and i wanted some sort of side hustle to do then it ended up becoming cleaning i guess it could have been anything but i'm very happy was a local business um but yeah it is kind of ridiculous when you say it out loud how much was that first job would you get paid i think like a hundred bucks we were undercharging like crazy it was like barely anything i was just stoked that we actually got something right um yeah so someone called said hey we need uh cleaner for your case rentals i said we don't do that and then i looked into it more no one else is doing it high high volume right you know people are staying for three four days at a time so i realized how much more profitable was than a regular residential so just started to curate it from there so so now let's scale up to today let's look at last month's cohort data right so in july how many houses did your marketplace help get cleaned uh probably about 600. wow all in la la sf so that's where the corporate locations even more if you count the franchise locations okay interesting and and how many cleaners did you give work to how many did it take to clean the 600 sure probably about 20 to 25. okay interesting and are those 25 cleaners are they on your payroll as fixed expenses or are they hired as needed based off the marketplace demand good question uh as needed so they are independent contractors many of them have their own clients however our service does like a pretty heavy vetting process five steps to interview them in person everything to make sure they're fully vetted and they're reliable because airbnb hosts need reliability above everything so they've had their honor system we know them and then we refer them out work imagine with clients make sure things are smooth and what is the average like cleaning a job costs the homeowner sure anywhere between 125 to like 150 i'd say on average some like four bedrooms in la are going to be like 300. right if it's a mansion some studios might be less but let's say around 140 would probably be about the average so can i take like 140 150 times the 600 homes and that's about what ninety thousand dollars in like marketplace revenue last month yeah and look there's uh fluctuations right because many homes are going to be cleaned um more more often right some are going to clean a lot less um so at least that amount is what you'd be looking at well i guess it could have it was probably way higher than that if you had 600 homes but they booked for two weekends in july that's you just doubled your numbers what was it exactly what was actual marketplace volume last month uh you know it'd probably be it'd probably be north of 100 um the reason is right now would be a slightly i'm slightly slower with travel and everything i mean oftentimes people are staying for longer stays not as much weekend hopping it just depends on the season sometimes they're crazy busy doing so many turns some hosts are only there like they're gone for summer and then they're back right so uh you're probably looking right now north of 100. and if we look at the economics on 100 100 cleaning job breakdown how it works how much does the cleaner get sure so it does depend on the cleaner but you're looking at uh roughly 50 to 55 maybe up to 60 percent uh if we're outsourcing to a company it could be even more but like let's say fifty to sixty percent is typically what you're pushing out to the cleaner um marketing costs are um nathan as you know at the beginning you're doing a lot of marketing afterwards it's mostly word of mouth referral so we spend maybe i'd say five to ten percent on let's say five percent of revenue and marketing per month yep um then we have some overhead expenses um so overhead expenses probably 10 to 15 uh other large expense i could think about would be um credit card transaction fees where which are painted above but that takes off three percent immediately uh then other minor software expenses here and there just you know zapier things like that just to connect everything active campaign um things like that so that'll add uh some fixed amount as well let's call it 50 to 60 cleaner than like another 30-ish all your costs so basically profit is called 20 bucks for 100 job roughly yes that's that's pretty good math yep okay cool so i mean could i say sorry back in and say in july you guys did about twenty thousand bucks and sort of you know profit or gross revenue at least and then multiply times a hundred it's like what a quarter million dollar run rate something like that uh yeah yeah exactly i mean we count the revenue as the top line right because we we take all of that in uh so 20 would be probably profit net profit is kind of what you're looking at okay cool yeah yes sorry that's obviously even better you're north of a million dollar run right then and uh and you're profitable which is great now are you bootstrapped as well or did you raise capital yeah bootstrap bootstrap from a1 and the great part about the business model is like it is pretty lean right you get a job you do the marketing at the beginning but it's highly recurring revenues especially when you get that client in you keep them happy you don't have to keep spending money and marketing to sell someone over and over and over uh so we're bootstrapped since day one um have never raised capital and just growing from there yeah and hopefully there's low turnover on your cleaners if you paid out about fifty thousand dollars to them last month fifty 50 of the 100 grand total revenue i mean i think on average across 22 cleaners that's like almost 3 000 a month for each of them that's that's sustainable right exactly yeah a quick bath and look many of them have other jobs other clients that they take care of you know the beauty of working with us is we give them the clients who let them know when that turnovers are they could fill in their slots with anything they want after that as well so i always get asked and you're the perfect person asks you came from bc how to value a marketplace let's say you are going to go out and raise whoever right which vc firm were you with it's called anderson in los angeles let's see we're going to go raise from kane anderson now how do they value the marketplace model so we would be valued at a local service model right because it is local service so let's talk about marketplaces though a marketplace would be valued simply based off of comps because it's so tough to value it based off of any actual metrics especially what's going on right now so you simply look at the closest comps to the marketplace uh and you can take a look at the business model in terms of like what is the revenue what is the profit margins but the reality with the marketplace model that's not going to be as relevant so i think comps is for sure number one is what you look at right now for us it would be honestly another uh franchise cleaning company so franchise cleaning companies trade at anywhere between like typically in normal times six to eight times ebitda um so that would be what a fair entrance cleaning company um would trade it at and then uh obviously when the market has gone crazy it's just based off the brand value right for large franchises uh but that's that's the beauty of franchises is as you scale the brand grows the value the intrinsic value of the brand just grows much more right it's no longer based off of a local cleaning company multiple it's based off a franchise multiple brand multiple so just playing that out for you guys twenty thousand bucks a month in revenue two hundred bottom line two hundred thousand dollars a year at a conservative like six x multiple on ebitda right it's about a one point five million dollar evaluation something like that based off of corporate location alone right so what we're doing with the franchising model um what i mentioned is just corporate location we have denver we have myrtle beach and especially we have more and more franchise units that's going to grow with themselves right and those franchises don't be able to make money themselves hopefully copying our economics right we're going to show them the model help them do it uh and then that just scales with it i see so the 100 grand a month you're doing right now that's across two locations in la and san francisco yep that's it i see okay let's now go into the franchise model so yeah so who did you sell it to in denver and myrtle beach and what do they pay you sure so the franchise model um we charge 35 000 for the initial fee and then we charge up six percent royalty is the amount that's um charged for the ongoing fee and these other minor fees like tech fees marketing fees which kind of just are cost covers basically um so yeah that's the amount we charge and then you know we just guide them and help them get set up and grow from there and you've sold two so far gee so far so we launched at the very end of 2020 so been about six to seven months uh since launch and how much do those two locations combined do in project volume or cleaning volume in july yeah it'll be lower because they're just getting set up denver is uh up and running already uh myrtle beach is just getting set up so myrtle beach would be at zero right now because they're still in the setup phase interesting interesting model so so um most times when you're buying a franchise uh folk the ones that you pay the most for the ones that are coming with a proprietary system that you've built so or you're helping them get like a leapfrog start that they couldn't get by themselves so when i pay you 35 grand and i want to bring your service to austin texas what sort of systems are you giving me that you feel like are totally worth a 35 000 feet yeah sure honestly i see this time collapsing right i've spent hundreds of thousands of dollars in mistakes uh simple things is like setting up a one-hour rival window right it sounds stupid sounds so simple like why don't you why do you have an exact time that they clean arrive versus one arrival window that takes a lot of testing to get to and that's one of a thousand things that we've tested to kind of optimize what we're doing it's also done in a completely remote way so we teach you how to find a remote labor how to pay them it's almost like let's say you could have a coach but also you literally copy the business model and we set up all the tech stuff for you so i would say it's a lot of you're buying the systems um which will speed up what you're doing now let's talk about the cost right if i could speed up what you're doing by two years right if i spend what i was doing by two years i'm doing a hundred thousand dollars per month run rate how much is that in profit that i would have saved um or gotten myself if i just paid someone for that speed so a lot of it is um hey guard rails well make sure you don't mess up make sure you don't make the same mistakes i did it saves you a lot of time headache money and then the second part is i think you'd be able to accelerate much faster lastly there's just the brand effect right is like we could start going after large partnerships we could eventually go after airbnb and say hey we're in x number of locations send us leads immediately directly so i think there's a lot of economies of scale um both with partnerships as well as stuff like simple stuff you want to think about type form right like if you're an individual company you have to buy your own type form of course this is a large brand you could just piggyback off of our our system so there's just huge cost savings which you don't even think about by not having to do all these little things i was hoping i was hoping what you're going to dive into uh was addressing this question which is zapier and tools like zappy right now the valuations in the marketplace and sasser i'll through the freaking roof right now yeah have you figured out a way to actually templatize all of the hundreds of zaps you've sent up to make your system run and actually white label that and copy that for your denver franchise owner your myrtle beach franchise owner or they have to set that all up themselves no we do that for them that's that is the proprietary information it is right there right i mean yeah exactly it's not it's not our software um but everything we've created is like using zaps and to talk the active campaign to sync to the booking software we use which is completely customized to link to our website which we completely customize so there's customization involved which is extremely hard and expensive to copy right i spent twenty thousand dollars just on doing the ui testing for booking forms how much of your money you put into this uh initially to be honest it was like a thousand dollars to get started and started rolling more and more of the profits back into it so um for the franchise operations i probably put two hundred thousand dollars and i get that set up interesting are you paying attention better now yeah yeah paying myself so you're doing this whole time now full time yeah we've been around since 2013. i quit my vc job in 2015 and i booked a one-way flight to colombia and i was traveling for about five years while building this and then cove it up and so came back to la and now post in the us that's very interesting okay what's this you keep saying we what's your team's i say full-time folks sure so we have about 10 people on um operations um give it i'd say about eight eight full time about two part time who are on operations for um for the home offices and what what are some growth hacks you're using to build both sides of the marketplace you touched on your systems for getting reliable cleaners what about getting more homeowners are you doing any interesting sort of scraping and interesting data sources here you know what's interesting is uh the local market especially for cleaning i feel is like two years behind the time in terms of marketing i think most local businesses are so here's the dirty secret such a hidden gem as long as you do the stuff which is current you are already ahead of the competition 45 of local companies still don't have a website if you think about that most of them are doing like flyers things like that so as long as you're doing like seo keep your google ratings pristine have an awesome looking website you're already way ahead of the pack so small growth hacks would just be keeping on top of what especially google which is the king is releasing right for example they release google local services get on that immediately growth hack that figure out how to optimize it figure out why they show people at the top and just kind of focus on everything google is putting out and optimizing that because if you do that alone you're already way way ahead of the competition um so that's what i love about local market is like you don't have to reinvent the wheel just do it better do you have or have you been able to back into like a cac to get a new home on your system in la we have um and there's two different um there's two different amounts one would be for regular residential and one would be for vacation rental um ours is probably about i think last time i calculated uh a cac which for regular residential i think was about 66 okay yeah and that's gonna be clean or just to get them on the platform and then it's earnings get them on the platform you know maybe their one-time customer maybe their recurring customer right so uh the goal is for them to be recurring customers because sixty-six dollars per clean would not be profitable that wouldn't work but most of the customers were getting there's a there's a sales funnel to get them on the recurring program very cool neil all right let's wrap up here man with advanced live number one what's your favorite business book oh um you know i don't know if there's a business book exactly there's a book called can't hurt me by david goggins have you heard of it can't hurt me yep no that's great i have to check it out yeah number two is there a founder you're following or studying there is uh jessie itzler uh yeah he's the founder of zika water and a few other things but just loving what he puts out number three what's your favorite online tool it's gotta be happier i had a feeling that was gonna happen number four how many hours sleep to get every night uh eight i am i am useless unless i get eight hours of sleep so i actually get a full night's sleep and neil what's your situation married single kids i am single right now okay uh and how old are you 32 32 last question what's something you wish you knew when you were 20. i wish i would told myself to take bigger risks because you can make effort because you have more time so you use that time wisely network a lot because you have way more free time so take risks network a lot need your time wisely guys made this it is a marketplace it wouldn't surprise me though if he does end up with some sort of sas product here in the future to help these cleaners manage their businesses we'll see what happens but right now the marketplace doing a hundred thousand dollars per month top line revenue twenty thousand dollars in profit just sold those first two franchises in denver and myrtle beach at 35k pot plus six percent royalties growing nicely all bootstrapped which we love neil thanks for taking us to the top thank you nathan one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 p.m central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you 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