This content was created by Max Brun. This content was uploaded by Max Brun. This is a YouTube video titled "The New Market Launch & Expansion Playbook For Belong" (uploaded July 12, 2024). The excerpt is a diarized interview-style exchange between two speakers (an interviewer asking about market launches and a Belong executive/general manager answering). The speaker describes Belong’s evolution for launching new markets: initially replicating an in‑house, operationally heavy model (inspectors, contractors, field runners) that delivered great experience but was expensive; then outsourcing operations to scale faster and reduce capital needs (improving LTV and payback at the cost of service consistency); and currently moving toward a third phase of building a curated marketplace of vendors to regain experience control without full insourcing. The speaker also covers offshoring the sales team (BPO in Peru) to lower CAC, the tradeoffs involved, and the company’s focus on balancing unit economics and customer experience.
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fast forwarding to today, you know, what goes into launching a new market at Belong? And, you know, maybe what are some kind of learnings around that as far as, you know, what's worked and what hasn't?
Yeah, it's a great question. I'll give you sort of the chronological series of events because it'll also help you gain insight into how we've evolved, how we approach that problem. But I'll start with the beginning. I was hired as the first general manager at Belong. The idea was the founding team built the company so far in California, primarily the Bay Area. And the challenge was, okay, figure out how to do this outside of the market we built as a founding team, the first market being Seattle, and then build the playbook to do that everywhere else, right? And at first, what I did when I came into that role was I imitated the structure from California. And what I mean by that is that it was a very operationally heavy setup to achieve our growth and experience goals. We hired, as I was alluding to earlier, right, our own inspectors to get homes rent-ready, our own contractors to do any repairs, our own maintenance folks, our own field runners to get, again, manage tours, do all the things to list and lease a home, right? And that was what worked. when we did it in California. So, I repeated that and it worked for the objective at the time in Seattle where the objective was the intersection of growth and a fantastic experience for homeowners and residents, right? And if you own the experience end-to-end, the hypothesis was it's the only way you can provide the very best experience and get the flywheel to turn and get customers to trust Belong as opposed to traditional old school property managers. And, but the challenge was obviously what you're trading off is it made it significantly more expensive to launch any new market and reduced as a result the speed of expansion, right? So when I was trying to figure out, okay, what is the playbook to do this everywhere else? And we tested a few other markets, we quickly figured out, or were forced to, because side note, this was also around the time let's say, I think a year and a half, 2 years ago when the capital markets changed entirely, the macro environment changed entirely and we were forced to think through, okay, this is not gonna be a scalable way to expand because there's no new money coming in and we don't wanna raise right now. So how do we then scale a linear operation knowing that is the case, right? So, we had to shift our approach quite a bit. And what we did is we outsourced our entire operations. So, the inspectors, the field runners, the contractors, what we said is, okay, let's focus on what makes the beer better, right? Building that ops business is not what makes a beer better. There's companies that do that. Let's partner with them and then we can launch more scalably, not have to put down the capital investment. So we did that. We were able to launch much more scalably, much more quickly. The trade-off though was the experience. When you don't control end-to-end, you, as much as we tried to provide a cohesive high-level experience to our members, we lost some of the high level of service we were providing. We still knew that would be the case and had to do it given the need of the time. But You know, we're now in this phase where we're having to deal with, okay, we solved the expansion problem, which ultimately coming back to the equation of payback, it increased our LTV, right? Because our variable costs to, and our operational expense to launch any new market reduced. It increased our LTV per home, which was awesome, sacrificed experience. So, we're now in this phase 3 where we're saying, Okay, how do we still have a completely— well, we don't have to hire these people in-house, right? But we also don't rely entirely on these third parties that make it impossible for us to control the experience, which the answer likely is build our own marketplace on that front of vendors, operators. So like the inspectors, the contractors, so we can control the experience and we'll see how that goes. We're like on that third leg of the journey now. For that LTV and operational problem, right? And quickly, the second piece we focused on as we thought about expanding and going through that change in economic environment was the CAC, right? How do we reduce our cost of acquisition as we expand? And obviously there's all the obvious things you can do to reduce your cost of marketing, optimize your Google Ads, focus on SEO. We can get into that if interesting. But I think the more challenging piece, because that's like, if you know how to do the job, you can do that. The harder piece was we offshored our entire sales team. So we had completely onshore US-based account executives, sales development reps. I had to offshore that entire team with the BPO in Peru. And We're now figuring out what it's going to take to make that team work. There's some promising signs and certainly on the CAC side, like again, have achieved reducing the CAC to where we need it. So our payback is now, you know, in a very healthy spot, but new challenges building in that offshore team. So that was a lot. I'll stop there. Hopefully that was helpful.
