When Marc Rutzen started getting questions from state attorney general offices about his latest proptech startup HelloData.ai, he switched some things up.
The government was ramping up an antitrust investigation of Rutzen’s competitor RealPage, which the Department of Justice ultimately sued last month for alleged rent price fixing for major apartment landlords across the U.S.
Rutzen and fellow HelloData.ai cofounders Nico Lassaux and Tim Gamble started the firm to try and do essentially the same thing as RealPage — make pricing recommendations to apartment owners based on the market at precisely the time a renter signs a lease. (RealPage announced in recent days it would let clients opt out of its “algorithmic pricing” service at the center of antitrust accusations, and it has denied its revenue management software isn’t legally compliant.)
Yet Rutzen and crew knew they had to go about it a little differently after legal concerns began mounting.
They figured they’d stay on the right side of public officials as long as they configured pricing and property management advice based on what’s already publicly available, using AI to scrape websites of apartment buildings to calculate rental rates from listings, advertised concessions and other public property records.
Essentially, HelloData.ai is meant to condense the work of dozens of multifamily acquisition analysts into calculations it can spit out within a few minutes, by gathering the data it collects and plugging it into formulas to determine real time market value.
Rutzen — who’s based in the Chicago area and serves as HelloData.ai’s CEO — already started one multifamily analytics firm that integrated AI, called Enodo, which was bought by brokerage Walker & Dunlop in 2019. Lassaux and Gamble were his first and second employees, respectively.
After spending a few years at the brokerage helping onboard Enodo, the trio decided to take a leap and founded HelloData.ai last year. Now, it has landed multiple landlords on the National Multifamily Housing Council’s list of the largest apartment owners in the U.S as clients.
And he and his partners have bankrolled the entire operation.
“Given that we’re a year into it, with several million in annual recurring revenue already and on a steep growth trajectory, it’s been kind of crazy,” Rutzen said. “I anticipate by the end of the year we’ll be at $6 million, maybe $7 million in ARR. Having launched last year, that’s insane.”
Here’s more from Rutzen on how he’s dodged antitrust allegations as RealPage comes under scrutiny, his plan for growing the business and why it hasn’t taken on any venture capital.
This interview has been edited and condensed for clarity.
How does HelloData.ai recommend pricing differently than RealPage?
We have built a platform that goes straight to property websites as well as several listing sites across the U.S. for just public data. We’ve put it together in a very organized way to help you inform where you should price based on where your competitors are pricing, but it’s all public, so I don’t know, for example, the true occupancy levels of any of these floor plans, and I can’t say what a renter actually signed the lease for. That, I think, is the issue, RealPage does have all that, and so they can use it.
Even though this data you’re drawing from is publicly available, aren’t you still putting the same information that they’re using into the hands of the same people?
The fundamental difference is if you were a commercial property owner and you wanted to go to all the websites of all your competitors every day and copy and paste into a spreadsheet and use that to inform pricing, you could do that. It’s just really labor intensive. Acquisitions teams do this every time they acquire something. But it’s several hours of underwriting, and we do it daily, at a very granular level. What I can’t do is look at the rent roll of my competitor and see when their leases are expiring, see what actual leases they signed, what the terms are; there’s no way to do that. The stuff RealPage gets, you can’t get anywhere else.
What are the challenges in branding a product that is an alternative to a company being sued for antitrust?
We don’t use the term revenue management anymore because of that. We don’t have a full revenue management solution. We have pricing recommendations, but it’s not integrated with property management software pushing pricing live. We were pursuing that, going the integration route, and we decided to pull back because of the lawsuits. So it has influenced us. We had an attorney general outreach because we had the term “revenue management” on our website. Even though we didn’t have a product for revenue management; we said we’re working on it, it’s in beta. They reached out, and it cost money even to just respond to them and say we don’t have anything. I thought, “This could start to add up, we don’t want to use the term revenue management.”
How much capital have you raised?
Zero. We’ve bootstrapped it to millions in revenue with just six people on the team. We started with the three of us and just recently added more. We’ve gotten interest, but we’ve said no every time. We’re funding this with revenue. We put in $15,000, each of us put in $5,000. That’s it. So many groups I talk with in the VC world, I tell them what we’re doing and the problem we’re solving. They ask, “What is revenue management?” And I’m like, “Gosh, I have to explain the whole history of the industry.” No thank you. That’s part of why we stopped trying to raise.
Why do you think proptech has faced so many headwinds over the past few years, and how do you think it can rebound?
Proptech in general will hopefully come back and should. We need to keep innovating. A lot of big promises were made and not delivered on. It’s easy for proptech founders to say, “Oh, real estate is so backwards, they don’t want to adopt my tech.” But you’re talking about people who have made millions of dollars, so it’s a little foolish to say real estate is doing everything wrong because they’re doing it the old-fashioned way. Every market is different and these proptech solutions have tried to make a one-size-fits-all and skirt the details, or do too many things. Every market has a unique assessor, rules and regulations around everything that governs real estate. We are trying to be very, very detailed and show that we thought of how to solve problems.
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