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Classified Markets And The Reason Why They’re Considered A Mess!


This episode discusses how the classifieds market in real estate is such a mess today because of all the scams and fake listings! There are so many options that it can be overwhelming and tough to know where to start.


Dwellsy is a site for residential home rentals, built on the radical concept that true, organic search in a free eco-system creates more value than the pay-to-play model embraced by all current rental listing services. With Dwellsy, renters should be able to find ALL of the rentals, all in ONE place. They should be able to trust that a listing is not fraudulent. And they should be able to quickly distill down to rentals that meet their preferences -- not be driven toward irrelevant listings from paid placement owners and managers should be able to list and lease their vacant units for free. Not free with an asterisk. Free. (You can never create a true, organic search on a play-to-play model).


We are on a mission to transform the home rental market for everyone involved. 

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Classified Markets And The Reason Why They’re Considered A Mess!


While there are so many classified listing websites, CoStar is on everything. In every regional market internationally, there are so many different websites on how to find a place. What's going on?


I used to be at a REIT called Essex Property Trust. When I first arrived there, we had our infrastructures set up to list our properties at 60 different listing sites at that point. They're syndication platforms. When you look back at the history of the formation of the space and the classifieds business, what you saw was this massive rush into it. There was a business model that was predominant at the time, which was success fees. We send you a lead and you pay for that or we send you a lease and we pay for that.


There were lots of frustration and cheating with that business model, but ultimately, a lot of small players were able to establish. A lot of platforms like Essex were able to list very broadly because the property management software made that possible. It lowered the bar for entry into that space. You fast-forward into the post-Craigslist era and CoStar, Zillow, and RentPath have rolled most of the market. You have the two challenger brands, Zumper and Apartment List but those are only the five major classifieds platforms even though folks are feeling like there are others out there.


Renters will experience one or another. They're on StreetEasy in New York and they think they're on a separate platform but they're on Zillow. That's the experience a lot of renters have without transparency or digging into the hood of which platform they're using. They think they have a lot more choice, but the reality is there's relatively little choice. By the time I left Essex, the overall majority of our properties were on one platform. That platform changed from time to time as different platforms offered different value propositions.


When you're getting started, the question is always supply or demand. Ultimately, you've got to get both of those going and find a hack to get that working.


We had the whole thing on Zillow at one point and then at We test out some other things from time to time, but it's a very different market from that standpoint than it used to be. In that universe, all of the infrastructures are still there to allow something like Dwellsy to exist and tap into that legacy syndication technology. That has been super helpful to us, but it's hard to get people to sign up for something new, especially when they have been conditioned to get rid of all of their partners because the cost is going through the roof. That's one of the challenges that we have had to navigate.


Jonas, it's exciting to bring you on because marketplaces are a huge part of PropTech. It's refreshing to see a company take a different approach. Are you able to comment on the different types of marketplaces that exist? By that, I mean there are certain marketplaces that focus on short-term rentals or are looking for corporate furnished rentals. I get pitched by startups all day as an investor that focuses on these niches. There are marketplaces outside of the rental asset class.


The marketplace might be finding industrial space, storage space, office space, or marketplaces themselves to rent. Here is someone who's growing your marketplace to a significant scale. I don't know if you're able to share numbers, but you have an enormous amount of traffic and a lot of listings. You haven't scraped your listings. What insight do you have for other founders who are focused on other marketplaces? What are your learnings in building a B2C-focused marketplace?


Number one, be sure you want to do it. It's not easy. If I had half of an idea of how hard this was going to be, I don't know if we would be here. A certain naivety was necessary to get started and go after this. There's room for a lot of different types of marketplaces in the space. This is an enormous business. There is so much money spent on real estate in so many different ways. This is one of the biggest areas for consumers where they have unmet needs.



There's always going to be room for the mass-market and super broad marketplaces like Dwellsy that serve a broad range of folks. There are always going to be needs for somebody who wants a short-term rental to have a bespoke marketplace that serves their needs. There are opportunities for marketplaces of all different scopes and scales. I'm happy for folks to be going after that. It's hard. The question when you get started is always supply or demand. That has so much to do with the individual founders and what they bring to the table. Do you start with supply or demand?


Ultimately, you've got to get both of those going and find a hack to get that working. Once you find that, hopefully, that will clear the way for you to grow it. You've got to marketplace dynamics. That is the first thing we focus on every day and the thing that we focus on making sure works. Are the marketplace dynamics working such that renters and landlords are having a good experience on Dwellsy? If they aren't, we immediately course-correct to fix it and make sure that they are. That is an everyday obsession because that's a core value creation in any marketplace.


When we dissect a marketplace in PropTech, I'll come up with what I think are the top three most important things. I'm curious to see if you disagree or agree. I'm not going to even be bold enough to rank the top three. User experiences are essential. There's the customer acquisition. How are you going to get customers and, eventually, the monetization model? If I would have forced you to pick three of the most important characteristics of a marketplace and you could look at them from your perspective as the Founder and CEO of Dwellsy, would you agree with those three? How would you rank them? Would you change them? Would you add anything else or subtract?


Having the marketplace activity, which was your number two, more or less, is the ball game. Without that, you've got nothing. Craigslist and others have shown us that they will forgive UX if somebody can get what they need to get done on a platform. It helps if your UX is good, especially in this day and age when people expect things to be beautiful and professional. I see things happening every day when there's an unmet need and people are finding the answers to that need. It's not beautiful and perfect. There's a willingness. God knows when we first launched Dwellsy, it was not that good, but we had an inventory that people couldn't find anywhere else.


In this day and age, people expect things to be beautiful and professional. Where there's an unmet need, people are finding the answer to that need.


That drew them in, brought them back, and had them transacting on the platform. That made a difference. We're years into this thing and we're starting to focus on revenue. One of our partners calls this a 2004 business in many ways. We're focused on building a marketplace and understanding that if we are the marketplace at the center of $550 billion of transactions each year, we're not going to have to worry about revenue too much. There are lots of different potential sources of revenue. Once you're in that position where you're facilitating a market that large, revenue, to me, would be third on that list.


I read a book. Reid Hoffman is one of the coauthors. It's Blitzscaling. Have you read that book?


I have.


To summarize, it sounds like there are times in certain companies' journeys when they have to blitz scale, which means spending a crazy amount of money inefficiently to create dominant market shares. That playbook is applied to Uber and many marketplaces. It's a marketplace-centric type of strategy. Do you feel that's the approach that is needed to create a marketplace? Can you grow organically, slowly, and carefully?



You have to know where you are and what's needed and look hard at what's happening around you. In PropTech, I don't know what scaling applies quite as much. The reason for that is it's a very thoughtful industry. A lot of people criticize property owners and managers for being slow to adopt new tech, but in many cases, they're smart and thoughtful about being slow to adopt new tech.


The reason for that is because these are people's homes you're dealing with. If you want to put a lock that's remotely controlled on somebody's door or change how somebody completely interacts with their home, that's a big deal that requires careful thought. Everybody always wishes that everybody else would move more quickly. Property managers are smart to patiently and thoughtfully.


I don't know what scaling strategy always works in an industry like ours. There might be other places where it makes sense. I might decide that we need to do some blitzscaling strategies for Dwellsy at some point in the next few months. Who knows? This is an industry that appreciates people who take the time to do the hard work, explain things, and work through the issues.


It's a complicated byzantine industry that works in a unique way. A lot of the reasons it works the way it works are not bad at all. They seem bad to outsiders looking at it, but they're protective of the folks participating in the ecosystem, both renters and landlords, in many cases. You have to be careful about that kind of strategy, but there's a time when you say, "It's time for us at Dwellsy to go out and get every single renter in the country on the platform."



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About Zain Jaffer:

Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780M.  

His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as "Forbes 30 Under 30," "Inc. Magazine's 35 Under 35," and the "SF Business Times Tech & Innovation Award." He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.



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