Pinata Revenue, Valuation & Funding (2024)

hey folks my guest today is lily liu she is pioneered using tech to modernize real estate in government after a tenure in mayor bloomberg's office and founding gov tech startup public stuff she's now revolutionizing rent with prop tech company pinata that's pinata.ai lily you ready to take the top i am thanks for having me so why does uh why does rent need to be revolutionized based off what you learned at the mayor's office you know rent is a pretty antiquated industry you know renters don't get anything back for their on time and in full rent payments you know unfortunately with each on-time rent payment you're not building credit you're not building points you're not getting anything back for that good renter behavior and so we're really flipping the model and saying hey renters should be building credit that should be reflected on their credit reports and they should be getting more back when it comes to everyday savings cash back points etc i think you have to convince property managers to be your distribution channel here why would property managers want their renters to use pinata you know for property management companies it's a it's very much both a transaction every single month but it's also a service they're in the industry of essentially hospitality right providing a great living experience for their renters and building that relationship so come time to renew your lease you actually have a good reason to point to not only have you taken care of maintenance issues which we think of as a baseline but now you're providing rewards you're providing a reason for them to renew so they can activate additional points we call them pinata cash and you can get more back when it comes to cash back perks rewards and other things that renters can redeem on in the marketplace we also have something called custom incentives for property management companies because there's a whole slew of other things that these groups want their renters to do things like maintaining your unit referring other friends reviewing folks in social media renewing your lease even things like activating your smart home devices groups are making investments into these smart tech gadgets in the home but it's not very good if the renters aren't activating the accounts and actually triggering it so that the data feed goes back to the property management companies so is this how you make money you're charging the property managers here so we actually have a multi-sided marketplace we make money from property management companies that pay us a recurring subscription fee monthly we also make money from a small amount of money from brands participating on the platform so these are brands that are providing our renters usually something for free or at a rate that you can't see elsewhere online and what they're doing is not only giving that to our renters but we also generate some percentage of that revenue as well and so what i mean i see starbucks amazon target taskrabbit in your ui and on your website these are examples of brands on the platform that's right those are some of our popular brands and it comes in all forms and sizes we have gift cards we have cash back we have actual gifts and merchandise and so you know many of these are limited edition so we'll expose you know 10 20 50 units of a particular device that you can get if you come into the app in time and and then we have everyday savings so this is at gas stations grocery stores that you can actually get discounts okay but i guess so two revenue streams property managers pay sas brands participate in the platform you said the brands there was a small portion of your revenue are we talking like understanding yeah it really depends on the brand but yeah that's right usually under 10 okay but of your total revenue under 10 percent you'd say comes from brands a little more than 10 a little more closer to about 20. yeah so is that growing is your intent to grow that or are you phasing that out no our intent is to grow that we actually uh we're projecting that in future years that revenue stream actually increases as we have more renters and they're more users on the platform making more transactions we're going to generate more revenue and hopefully even bigger brands that are giving us a better cpa i see okay so then the other 80 comes from the property managers that's right oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2807 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 founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to 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 not built 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 1.2 million seed round 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to 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 out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations 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 all right let's jump back into the interview i love this okay very interesting so i guess give me a little bit if there's property managers listening today right and they're going man i'd love to use this or maybe there's a lot of investors on our show that run maybe 12 24 unit apartment complexes right and they're thinking potentially they love to use this what might they pay great question so it starts at a dollar per unit per month now that price will vary based on the actual product offering that they want to expose to their renters and the unit size so if you're a mom and pop like myself and you have under 20 units you're not going to get a much better rate than that although we think it's pretty good based on the value that your renters are getting if you're a very large um group with tens of thousands of units the price will look different i see so the so a group with you know 30 000 units on your platform they could get under a dollar per unit correct i see yeah i see but the most expensive is a dollar per unit per month uh that's right and that's the many of our groups that fall under around uh 2000 units are at that price i see okay very cool give me the back story here you have an interesting history when did you launch the business you know we actually launched it right as cobit picked up in early 2020 and you know one of the one of the things that i've always been a renter on and off throughout my adult life and so now that's almost two decades of dating myself and uh you know the first time i remember the first time i went to apply for a home loan i realized that i only had one credit card and i had not been building credit and didn't realize the weight that that would carry under a you know home loan application and um and i also realized that nearly a decade of my on-time rent payments were not reflected and so i remember trying to pull information to show that hey look i'm i'm actually i pay my bills right and this is my biggest bill every month it didn't account for anything and so uh really it was born out of the inspiration of really trying to allow folks that are early in building their credit to have that avenue to build credit but also folks at what we call credit invisible where they may not even be scored yet and as a credit repair facility it's a little bit harder but really that's that's one of the big reasons why we started pinata it was that and then also building uh the ability to get something back right that brands have things that are valuable for renters and their move in live in and move out experiences so how can we support them on that journey for every day discounts rewards perks and during covet it really helped us to narrow in even tighter on our value prop to renters and property management companies you know we had a bunch of other ideas uh i remember during that time and you know kobe just made us cut i cut that slack and just really focused on what was important who's we how many co-founders so we have our cto we have our chief product officer our president and chief creative officer these are all there four of us wow oh no that's our executive team co-founders we have uh one other co-founder uh who's our president chief creative officer and one who is our board member okay so there's three of you total three three total okay got it and and um it's always fascinating to me how folks structure going into a brand new idea right so it sounds like you've got a really a genius creative you've got maybe someone who's been there done that on your board and then that you've got you do you split equity sort of evenly amongst the three of you or do you sort of negotiate that you know certainly in negotiation and i think a lot of it really depends on what we're bringing to the table i've seen you know i've been at other early stage companies as a founder as well and her co-founder rather and you know it really just depends on the dynamic you know how long have you been ideating on the idea did you try something else beforehand you know who's bringing what to the table is their capital at play and that's obviously an important factor as well and are you are you the engineering part of the co-founding team do you get the mvp off the ground i wish now i was uh i am the business business sales uh acumen and you know obviously everything else um that a ceo has to do so call it kind of the the grunt work early on so how did you get that this is a tech platform there's a beautiful mobile app i see on your website how how'd you get that technical like i mean usually that tech person is in the co-founding team it sounds like you didn't have that so i'd love to learn sort of how you structure you just pay him a lot of money at the beginning or her great question you know we actually found a development partner and so we you know we basically iterated on that mvp initially with the development partner um that is that a dev shop when you say deaf partner that's what you mean yeah that's right okay that's right yeah where'd you find them can you can you share who you used or were they good um you know it was actually a group that i the individual we worked with had worked with this company many times in the past so i think three or four times with other companies they were pretty well vetted at that point we had spoken to a bunch of groups but you know it's a process and i think if if you can get that that referral from actual experience and you can point to different products and for us it was mobile mobile and web apps that were important for us to look at so let's say obviously that's nice because there's so many dev shops you never know who's good who's not so that history is important let's fast forward though to today right so you're growing the business how did you get well tell me a story about the first property manager on the platform and then how many property managers are on the platform now today great question um you know in the beginning we did not charge anything and that's actually of course you take away that friction it's much easier to sell but even then you'd be amazed how difficult it is to get a group professional group to actually take an mvp product use it in-house and we're not talking about something they use internally there's no exposure for them it was about having them market this to their renters they were actually taking on significant work to get our product launched within their portfolio and it was still a pitch you know we still had to go through many processes of selling them pitching them showing them the product and i remember you know i remember the the first account that we landed and it was actually a fairly sizable one it was about a little less than 5 000 units and they were going to phase in their portfolio but again for us that was a pretty good uh group you know considering we hadn't actually had the product in market and so i remember that but again even if it's free it's still a difficult sales process when you're doing a b2b sale so how many lily today how many property managers total unique property manager so that would be one the 5000 unit you just told me yeah so we have over 600 property management companies on the platform today many of them are small to medium-sized groups in the market right now about two-thirds of rental units are owned by small to medium shops not the large institutional groups you often think about the grey star the avalon bays and they actually don't represent the majority of rental units uh in the us right now so our big focus was on the small to medium-sized guys first we're actually moving upstream right now to also open up the platform to larger groups and what does that mean obviously 600 property managers my audience isn't in real estate they might not know what does that mean and convert to in terms of number of units on the platform across the 600 managers i think we're hovering around 270-ish renter 270 000 renters and these are renters that have been entered into our platform so that does not account for the full portfolio size of some of our groups knowing that our groups again will go and pilots that's right yeah so 270 000 active today now lily can i do the math there a dollar per unit per month times 270 you're doing about 270 grand a month in revenue can't speak to the specific revenue but that's how you would calculate it now that's right oh i was okay i'm not making any numbers up on this multiplying that's right so that's right that math should work okay so and if you're around that today just so we can understand growth do you remember where you were at about a year ago so about a year ago early if we rewind early 2021 we actually were not generating any revenue and so we were just coming off of that pilot phase where we weren't charging property management companies anything to use our platform you're really running the the mvp tests so lily i mean this would this would be very you've gone from nothing to a 270 000 a month in under 12 months that would be incredible growth yeah our revenue is actually uh not quite at that level but the calculations are correctly accurate and that's the and that's because once people are more than 2000 units you give group discounts and you have some larger folks okay can you break 200 000 bucks a month this year you think by december um you know it's hard to say i think our our intent is to be pretty aggressive on the revenue front well i mean everyone would say that right everyone wants more revenue i'm curious how ambitious you are right do you think you can break it or how many how many more property measures would you have to add to break it would you say um you know for us it's unit count so that's the important thing but again as we get more units as we get more renters in it's just more revenue for us yep how have you i mean if you're a pre-revenue exactly a year ago that means you had about 12 to 18 months of building with no money coming in how did you fund the business uh we had about one year of building and then mvp and so it ended up actually being just about uh seven to eight months building out the product we actually did an even earlier pilot during that eight months and then the the end of 2020 we actually spent on that on pulling in those property management companies that were using and piloting the program and then early 2021 is when we started um shifting our sales process to have a literally sorry we're we're short on time here just curious how did you find it in the first 12 months there's no revenue coming in oh we were seed funded so we were able to receive funding yep that's right okay you raised how much did you raise and it was at 2020 that was 20 20. um i think we raised about we raised a few million in our seeds so it was a pretty good sized seed it's like three million something like that yeah that's right okay and why uh are you have you are you still using that capital today or did you decide to raise more capital we've raised our series a since then yeah okay and are you comfortable sharing how much that was so that was a 13 million dollar round okay and that was this year that was this year earlier this year that's right very cool okay okay so why do you need that's a lot of capital where's most that gonna be invested so a lot of that is about growing our our team of course you know the first investment for us is human capital after that we're looking at making a big investment on the product and rewards offers so renters are getting even better things now on the platform and finally the third tier is really focusing on sales and growth so you're going to see a lot of new campaigns coming out to not only grow the number of renters on the platform but also the number of property management companies and lily most folks series a this year you know they're selling whatever 10 to 10 to 15 10 to 20 sometimes percent of the business we're sort of in that same range that's right yep that's right so it felt pretty fair to you you didn't feel like you you had to go with a low valuation or you didn't feel like on the opposite they got a really high valuation you were sort of right in the market no we think it was fair and our investors are great yeah that's awesome okay cool so again if you sold 10 that'd be somewhere around a hundred million hundred ish evaluation maybe a little less than that but regardless you're growing quickly which is great tell me about the team today real quick as we wrap up how many folks full time so we have just around 20 folks on the team right now a great executive team that have been with us since the beginning since the inception and again looking to grow our team largely on product and tech and then sales and marketing after how many engineers today right now we have about eight engineers on our team very cool lily all right guys let's wrap up here quickly with the famous five number one lily uh favorite book that you've read oh favorite favorite book you know i'd have to say um you know i don't have time to read books recently and so i'm going to unfortunately have to skip that but i have a lot of podcasts that i can do that's good no worries number number two is there a ceo you're following or studying um you know i try to read up on um a bunch of great ceos obviously i think it's hard not to follow elon musk you know he's doing some pretty incredible things i'm a big fan of you know how visionary he can be but i think there's also a lot of lessons to be learned and what not to do so i think there's you know he's a great example in both numbers number three what's your favorite online tool for building pinata favorite online tool for building pinata oh gosh that's um that's a hard one you know i think for us because we are a remote team it's hard to really stay plugged in with on a regular basis so uh for us it's been a project management tool that we've been using across the team called click up good for process documentation also building out the product with engineers and zeb was on the show a couple weeks ago breaking 80 million bucks in arr scaling very fast 4 billion valuation incredible story there so good stuff number four lily how many hours of sleep are you getting every night oh well you know what i have a newborn so not many hours all right so maybe yeah on one kid two kids uh one yeah one kid first one congratulations emily do you mind me asking how old you are um yes no you can lie i'm 39 all right fair enough fair enough last question something you wish you knew when you were 20 um that it's something i wish i knew when i was 20 and nothing is as it seems you know it's always different guys pinata.ai helping property managers incentivized renters to do what they're hoping that they will do install devices smart devices pay rent on time earn credit get kickbacks from target etc they're scaling nicely over 600 property managers use their tool today across 270 000 units they generally charge a dollar per unit but obviously there's some group discounts in there they've grown nicely no revenue a year ago somewhere around caught 100 to 200 000 bucks a month today in revenue as they look to continue to scale they've got a 13 million series a under their belt 8 20 on the team eight engineers now building up the sales and marketing function we'll see what happens next lily thanks for taking us to the top awesome thanks 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 sass 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 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 click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya