Trust, Tech, & Growth at Rentvine with Tollie Brown

Thanks for checking out today's episode. Just a quick note that I'd love to have you join me inside Crain, the new private community built exclusively for property management business owners. Go to joincrain.co to learn more.

Property managers, they have to deal with screening and trust accounting and compliance and maintenance. There's a lot of stakeholders, the vendors, owners, tenants, the property management teams. And so just the operational burden of managing all of that necessitates using software. So again, going back to that like need to have versus nice to have, you can't run run a property management company at scale without a system.

Welcome to Season 5 of Peter Lohmann's Podcast. This podcast is a show about all things residential property management, from property operations to sales and marketing to growing and managing your team. I'm your host, Peter Lohmann, co-founder of RL Property Management. For season 5, I have an exciting new guest each week. We go deep into conversation about problems facing professional property managers and the best ways to overcome them. Thanks for listening. Now let's go. Welcome back to Peter Lohmann's podcast. Today on the show, I have Tolly Bell, who is principal on the investment team at Mansell Partners. And a board member at Rentvine. Tali, welcome to the show.

Great. Thanks for having me.

Awesome. I'm thrilled to have you on here. I'd love to start by just having you give a little bit of a background on yourself. I know most of my audience probably isn't familiar with you, and I'm excited to get to, you know, some of the Rentvine stuff and what you're currently up to. But I also want to hear just a little bit about your journey and your experience in, in the proptech world.

Yeah, definitely. So as you mentioned, I'm a principal on our investment team here at Mainsail. I've been here over 8 years. And Mainsail itself, we're a growth equity firm. We've got offices in San Francisco and Austin, and we focus on backing bootstrapped B2B software companies. We love these businesses because typically they have a great product, good product-market fit, and are run by pretty scrappy, resourceful teams. Mainsail's been around for 22 years. Over that time, we've raised nearly $4 billion in committed capital and backed over 100 companies.

Wow, that's awesome. Yeah, so, so MainSale's been around a long time and I wanted to set the stage a little bit and sort of give a little bit of context as to why we're chatting. MainSale made an investment into Rentvine, and I'd love to hear a little bit more about the background there and sort of why MainSale selected Rentvine to allocate some of this $4 billion in capital that they've raised? 'Cause that's, you know, that's a big stroke of confidence.

Yeah, definitely. So we invested in Rentvine about a year ago, but Main Sail's been in and around prop tech for over a decade. So our first kind of entry into the market was in 2010, Main Sail invested in Paylease. Some of your listeners might be familiar with them, but they're originally focused on rent payments, so kind of the accounts receivable side for property management companies. Through that experience, we got interested in not just the account receivable side for property managers, but also the account payable side. So outbound payments, vendor payments, all of that. So a few years later, we invested in a company called Nexus Systems. They do AP automation and payments for real estate businesses. Through both of those experiences, we learned more about just the tech stack of property managers and got really excited about property management software and where that sits within the tech stack as the core system of record. So in 2017, we invested in a business called Resman. That was actually the first deal I worked on at Resman. I later became a board observer and I was pretty involved in their M&A. As part of that M&A exercise, thinking through how we want to expand our product suite, websites was top of mind, and that's actually how we first got introduced to the, the Rentvine PMW team.

Yeah, sure. So I, so PMW is Property Manager Websites, which for anyone who, who doesn't know, the same team behind Rentvine, you know, their first company or first product was Property Manager Websites. Very well-known company in our, our space of third-party management. And so they took that experience from building awesome websites for property managers and, and, you know, moved into accounting, which, which became Rentvine.

Yeah, exactly. So I reached out to Dave Borden, the CEO of at the time PMW, to see if he was interested in joining forces with Resman, you know, combining Resman's back office PMS accounting with PMW's website platform.

Oh, interesting.

He shared he wasn't interested and told me he was actually gonna go build a property management software and accounting platform. I was, I was pretty skeptical at the time. I even have showed him our, our Salesforce notes. Just 'cause as you know, accounting software's pretty robust. We've seen it, it's very hard to do. And so I was a little skeptical that they would, they would actually go through with that plan.

You showed me your Salesforce notes, like, you know, spoke with Dave Borden, great convo. This guy thinks he's gonna build an accounting software. He's out of his mind.

Yeah, no way. No way. You know, there's a bunch of players out there. Is there room for another one? Little did we know he had a secret weapon, his co-founder, John Ewen. He is absolutely amazing in terms of product and execution. And together they teamed up and built Rentvine. They, they have super deep experience in the industry. I think that really resonated with property managers and through that experience they kind of realized that there are some pain points in the industry that aren't necessarily being solved by, by the incumbents. And so they, they set out and did it and it's been really fun to, to watch 'em execute on that plan. But even tracking them for years, it still took some, took some time. So, we actually presented them an initial offer to invest in 2023. They said no, partially due to they're just fiercely protective of their customers and culture. Dave and John, I think, knew they were already building something pretty special. They didn't wanna be overhauled, they just wanted to be backed, and they were hesitant to bring in a partner without knowing kind of what that entailed. So we continue to stay in touch. We've re-engaged in 2024. They were interested in help with things like building out the team, legal and compliance, and just investing in growth. At the same time, I think they gained a lot more comfort in working with us as a partner. They did a bunch of references on us. We spent a lot of time in person. I think we also, when we have pretty shared values, so MainSales core values are being thoughtful, collaborative, determined, and high integrity. It's very aligned with the Rentvine and PMW values, and we're also pretty aligned on strategy. So we're approaching our 1-year mark of their $74 million growth raise. It's been pretty fun to see what we've accomplished over that time.

That look perfect. I love that, that background and context that really sets the stage for our discussion. Just as quick side question, how important do you feel this technical co-founder dynamic is when you're looking at B2B SaaS companies to invest in? This is something you hear a lot. Is the, the power of kind of a visionary sales and marketing-oriented person and then a technical co-founder who's like a coding genius or just is very immersed in that world. Is that like a, like a little tips the scales when you see that dynamic? Is it common?

Yeah, I think definitely the market we're playing in, we often see a pairing of one co-founder that has really deep industry expertise. Maybe they came from the end market they're serving. Maybe the other one that's a bit more technical. And so that allows them to figure out product market fit kind of earlier and really get pulled into the market, which allows them to scale up without taking on a bunch of VC funding compared to maybe someone that's coming from outside the industry or maybe not technical. They often need to, to raise funding maybe just to, to get going and start gaining traction. So we often see that, that combo a lot, the industry expertise and technical expertise.

Okay, cool. Yeah, I figured, but that's good to hear. So in terms of what Mainsail actually is, so in our space, you know, as a property manager, we hear time to time different investments and VC-backed this or that private equity. As a property manager, I gotta be honest, a lot of the technical nuances between these different forms of money are lost on me. And so let's just set the record straight. So what is Mainsail and what makes what they are different from VC or private equity? Or just help me understand a little bit.

Yeah, that's a great question. So I'd say private equity broadly, it just refers to investing in private or kind of non-public companies. Mainsail is a growth equity firm, which I would say is a subcategory within private equity, and there's kind of a spectrum. So on one side you have venture capital. That's typically much earlier stage, higher risk, might be pre-revenue or maybe pre-product market fit. VCs have more of a portfolio-style approach where they'll invest in, you know, 50 companies per fund. Some of those companies, you know, it's riskier, and so they're, they're making bets. Some will, will fizzle out quickly. Others they hope are, you know, the next Facebook or huge outcome to make up for the losses. At the other end of the spectrum is more of the late-stage buyout private equity that's typically focused on companies much later in their life cycle. They've got large scale, they're typically profitable. These investments often involve using debt as part of the transaction, and so cash flow and profitability is super important to pay down those interest fees. Main sale and growth equity's kind of in between the two where we're investing in growing companies. They have some scale, they've got proven product-market fit, real customers. We often have years of retention and bookings data that we can use in our underwriting. And then we're also generally more growth-oriented. So from my perspective, it's a really fun place to invest because we're all about building the team, launching new products, gaining market share. Versus, you know, financial engineering or making risky bets or optimizing for, for short-term profit.

Mm-hmm. And what's the time horizon for a growth equity firm? Like, at some point you're gonna need to make a return on that investment. So what do you look, what are you looking for there?

Yeah, it's, it's really flexible. I'd say the average is 3 to 5 years.

Mm-hmm.

You know, we do have some flexibility. It's really market timing. Companies are bought, not sold. And so, kind of figure out the next stage, whether it's another growth equity firm joining forces with another player in the market or even IPOing. We work closely with the management team to figure out the right path for the business.

Okay, got it. That was gonna be my next question is like, what's the next— after the 3 to 5 years, does it— does the investment typically roll over to a larger growth equity or sounds like maybe sometimes going public? Who's the next in this kind of chain?

It could be any of those. There's some firms that spend a lot of time focusing on this. Our, our philosophy is more build great businesses and there will be great outcomes for everybody involved. And when I say everyone is the management team and the customers, and so we're focused just on executing and growing the business today. And, you know, at the right time, I'm sure there'll be plenty of opportunities on the table for us.

Yeah. So, so for a customer of, of a company like, like Rentvine, who like the, like the customer didn't take the investment, but the customer's solution took some growth equity in this example, what should that customer expect from a company that has taken growth equity versus a company that didn't do that or took a different form of equity?

Yeah, it's a great question. And I think that the type of equity is important. You know, as you walk through, venture capital versus growth equity versus private equity, they all have very different approaches to, to how they work with businesses going forward. You know, venture, maybe they'll make bigger bets, but it's also maybe risky for the customer because maybe more of a binary outcome. Private equity firms tend to focus more on, on profitability, and so they might be a little more hesitant to make those big growth bets. I'd say for customers that are working with a vendor that raised growth funding, it should be positive, right? Like we're, we're building out the team, building out customer support. Investing a lot in product innovation, and then there's just long-term backing and stability. So should, should be net positive.

Got it. I mean, the cynical or the sort of, you know, the way property managers sometimes grumble about these things is like if a company sold to private equity specifically, oh, they're going to raise prices and all feature development is going to stop and they're going to cut support so you can't get a hold of anyone or they're going to offshore it. And it doesn't really sound like that's the playbook for growth equity.

Yeah, quite the opposite. Like just recently within the last year at Rentvine, we've added a CFO, a head of sales, a head of marketing. They actually brought over a, a people leader from, from Mainsail who loved the Rentvine culture. We're in the process of hiring a customer success leader, so we have a dedicated person just focused on making sure our customers are supported and onboarded and happy. We just greenlit two new product pods so that we can continue to innovate and build on the product, innovative new features without taking away or distracting from our dev teams working on the core. So we're, we're very focused on growth, and to do that, you need to— a great product, you know, as you know, it's a very competitive market, so you can't take your foot off the gas. We have to continue innovating. We have to continue investing in the team to keep happy, Engaged team members make happy, engaged customers. And so all of that translates into being a net positive for, I think, the industry.

Yeah, perfect. So you mentioned it's competitive and it, it definitely is. You know, we, we won't, you know, name off your competitors, but there's plenty of competitors in the space. So that kind of made me curious about what is appealing about the investing in the property management industry or prop tech software. For a growth equity firm like Mainsail when it is, it is competitive. You know, Rentvine hasn't invented some new category of software and is— they're doing well and their software is great, but they do have these competitors. So I'm really curious about despite the competition, what, what makes our sector interesting or exciting?

Yeah, I might actually break that up into two parts, just, you know, why we like the industry and then how we kind of got comfortable with the competitive landscape. So just in terms of the industry, there's a couple things we believe that are really appealing about the sector. So one is just it's large, durable, and growing. I think over a third of households rent. At Mainzill, we think a lot about nice-to-have versus need-to-have, and housing is generally, you know, pretty essential non-discretionary spending.

I see a lot of RV TikToks. I don't know. Yeah, maybe there's a growing segment that No, but yeah.

But yeah, I mean, so then there's a massive housing shortage and unfortunately housing, buying homes is increasingly unaffordable for a lot of households, which I think is also driving demand for rent. And then even within the rental market, I think there's just increased regulations and pushing some of these accidental landlords to bring in a professional property manager versus DIYing it. So overall, just the market, it's, it's large, it's stable, it's growing. That really attracted us. It's also really complex, like property managers, they have to deal with screening and trust accounting and compliance and maintenance. There's a lot of stakeholders, the vendors, owners, tenants, the property management teams. And so just the operational burden of managing all of that can necessitate, necessitates using software. So again, going back to that, like need to have versus nice to have, you can't run a property management company at scale without a system.

No chance we're going back to Excel sheets.

And, uh, no way.

Hey, Peter here. I want to share with you guys a new tool that we're using at my management company for leasing. It's called RentEngine. You may have heard of them. They're a newer product in the marketplace and they facilitate self-showings and agent showings at all the properties that we manage. We typically have anywhere from 25 to 40 rental listings live at any given time. And since making the switch to RentEngine, or in, I think it was springtime of this year, our leasing timelines have dropped significantly. Not only that, but we're actually saving a bunch of money compared to the solution we were using beforehand. My team absolutely raves about RentEngine. We've used a couple other solutions, but ever since we made the switch, my team just can't shut up about how much they love using RentEngine. I've been recommending them a lot recently to other property managers. Heard nothing but good things. Basically, this is a sort of AI-first leasing platform. It's kind of the first of a new generation of software that's just coming available for property managers. You can actually go into the software and see the AI responding to all the tenant inquiries, both over text message and email. Email as well as voice calls. So I've been really impressed with what they're doing, and the proof is in the numbers. Our leasing timelines are better than ever. Our days on market is lower, and our owners are really happy because frankly, we're just getting their properties leased out really fast. The team also has talked about how much they really like their lockboxes. They're incredibly tough. They're basically unbreakable. And with the company we were using before, We were having a lot of problems with battery life and people breaking them open or having trouble getting them open even when they were trying to legitimately use them. So I encourage you to check them out. I'll drop a link in the description where you can book a demo with their team.

And then there's also just a lot of ways to grow in this space. So not only are companies like Rentvine like adding new property management customers, we often see those customers are growing themselves. Especially when they partner with a group like PMW, you know, they're adding units over time, which is just great from, from a business perspective. We've seen that customers using both Rentvine and PMW tend to have a faster organic growth rate than those that are just using, you know, an accounting system.

And then it would be an interesting like white paper or something. Yeah, it's like good data.

Yeah, I think that came up during our initial diligence. And as we're building out the marketing team, we've definitely Gotta, gotta get ahead of that. But there are some pretty interesting stats in there. And then just going back to the complexity, like these property managers need a lot of tools. And so one example at Resman, we were pretty thoughtful about how we build that product suite, whether we buy, build, first partner. And so we acquired commercial property management functionality to help with our mixed-use property managers. We acquired a website business, affordable housing compliance business, an investor portal. We built in native payments, enhanced our native accounting, and then we partnered with, you know, leasing companies, screening companies, CRM companies, credit building companies. So there's just a lot of tools that these property managers need, which is also just nice from an investor perspective. There's a lot of ways to grow again, whether that's natively or, or partnering.

Yeah. And that question of what do you build in-house versus what do you let the market through point solutions and integrations solve for? Is fascinating. I think we'll, we'll touch on that theme a couple times today. I think you wanted to discuss the competitive landscape for Rentvine and, and how you got comfortable with that.

Yeah. So I think the first thing that kind of stood out to us was Dave and John and just the trust they've built in the industry. Dave Board's actually been on this podcast. He may have shared, but his parents were property managers. And so when a property manager is calling and has an issue, he feels like it's his mom and dad calling and, you know, they need help. And so it's that deeply ingrained company customer empathy is there. And so they set out to create the software that the industry deserves. And so that, that DNA of being really customer focused is prevalent throughout, throughout the business.

So you view that as like a, as an edge over the competition when you've got this founder and co-founder who have this not only a history within the industry, they've come from within the industry, but they're well regarded within the industry as, you know, leaders and folks who have kind of been there, done that alongside us property managers.

Yeah. And I think maybe two more tangible examples of that and how it is impactful to property managers. One is just around support. Going back to Dave feeling like his parents are calling and need help, Rentfine's setting out to build world-class support across a bunch of channels. They really want to be there when their customers need help, which may not be as much of a focus area for some of the competitors out there. And then even when it comes to strategy, they want to maintain this policy that the property manager's customers and their data are their property manager's customers and data. I'm sure you've heard a lot of horror stories in the market of software vendors trying to sell stuff directly to the tenant without full transparency with the property manager.

Super obnoxious.

Yeah. And that's just not aligned with the Rentvine's values and goes back to just this deeply ingrained company NDA around trust. So as a software investor, obviously I like when the differentiator on this, the software, but I do think the support is also helpful. That being said, Rentvine has built an amazing, excellent product that is also differentiated. So it's great we have both. They've got this modern tech stack, robust accounting, they have an open API ecosystem, and this modern tech stack is important to customers because It allows the development team to spend time on launching innovative new products versus cleaning up old clunky systems and working on what we call tech debt. A good example is, I think, owner statements. I think some of their customers or even prospects have complained that owner statements in the industry aren't generally super owner-friendly. And so, they pretty quickly, you know, listened to customers, built that in, and the response has been really positive. So all of this just translates into really good customer loyalty. It's probably my favorite part of diligence is just talking to customers and hearing firsthand how switching to Rentfine has transformed their day-to-day. And then hearing from influencers like Mark Cunningham and Tiffany Rosenbaum who are not just using Rentfine, but, but really raving about it. That kind of creates a seal of approval and for us signals that there's really powerful market validation and both the trust and support they've built in the industry, but also just the quality of the product and team.

Sure. So we talked about the advantages of our, of our sector. I'd love to hear from your perspective some of the, the downsides and the risks, especially as it relates to single-family versus multifamily. They're fairly different. You know, people ask me all the time like, oh, do you go to the NAA conference? I'm like, no, I've never been. It's just, it's a totally different world. Even though there's a lot of overlap obviously in terms of rent collection and leasing and maintenance, but the operations is just so fundamentally different. So curious how you perceive the property management sector in terms of risks and downsides.

Yeah, so there's definitely some nuances. We have experience in both, obviously investing in ResMed and now Rentvine. The overall operations, agree with you, are different single family. It's a lot more geographically spread out. There's different home layouts, which complete creates additional complexity versus multifamily. The units are more similar to one another. There's often onsite staff. There's also some differences in how a software vendor kind of approaches the market. The market setup's a little different. And so single family, it's more fragmented, you know, long tail of property management companies to go after versus, you know, multifamily, it was larger deals. So in single family, an efficient go-to-market strategy and just building that trust with the industry is super important. Another nuance we found is that single family, the unit volatility might be a bit higher, right? A property manager might work with a bunch of owners or investors and each of those individual owners or investors might buy or sell properties. And so there's more change in the unit volume over time. And if they have an owner that sells a property, they need to then go out and find another owner, you know, maybe that was the only, only property that owner had. And so really focused on adding more owners and, and more doors versus multifamily. It's, you know, more stable, large contracts. They're hyperfocused though on like these big lease-ups and optimizing occupancy. And then we also just looked at market trends and like the cyclicality. We saw a few years ago really rapid growth in multifamily new builds, which has slowed a bit in this higher interest rate environment, single family's kind of been a bit more stable because it's fueled not just by institutional investors, but also these accidental landlords. So those are some nuances that we've picked up now being investors in Rentvine. And then in terms of the risks, I think for us are relatively similar across both. Both markets are incredibly competitive, right? You've got multiple billion-dollar companies already serving both markets and Property managers typically don't wanna switch systems, and so we try to mitigate those risks by being really innovative around product and product development. Again, not taking our foot off the gas and also trying to make that onboarding as seamless and easy as, as possible to kind of take away that switching cost.

Yeah. What do you, what do you think causes property managers to switch softwares either to to a solution like Rentvine or away from it. You hear a lot of complaining from property managers about their software solutions, but I'm curious if you have a handle on like what has to be true in order for them to actually send the email that's like, we're terminating, you know, we're switching.

Yeah, that's a great question. Trying to think back to diligence, talking to customers. I would say they just lose trust in a system. Maybe there's an outage, Maybe, you know, a company did something they, they don't like, but companies maybe not innovating fast enough. There's functionality and they don't feel like they're being heard. So I'd say most people don't like change and typically will change because they're experiencing some acute pain point. And a lot of it's probably around, you know, functionality not being there, being clunky system or just losing trust with the system or the provider.

Yeah, really interesting. The language that you use there about trust, not being heard. Those are very soft human dynamics, you know, and I think it's actually completely true. You would think that, well, if there's some feature that a competitor releases, or if, you know, they can't get a hold of someone in support, or like, there's like these hard factors that go into these decisions, but even more important than those, it really does seem to be that trust factor. It's the same thing with us, with our property owners. If a property owner loses trust in our ability to manage their property well, we know they're very, very, very likely to churn. Whereas if an owner trusts us, even if we make a mistake or even if they experience a longer vacancy, they're likely to stick around because they have this like confidence moving forward that we're looking out for them, we're acting in their best, best interest. And so it's interesting to hear, it's kind of like turtles all the way down. It's like, it's the same way for you guys, no matter how technically great your solution is, if customers don't trust the direction of the company or the leadership or what's going to happen with pricing, or that, you know, things that they say are going to be actually followed up on. So it's a really interesting lesson around like you have to get the, the ones and zeros have to be right. Just like for us, the accounting has to be right, but there's a layer on top of that that's even more important and even more predictive of things like customer churn.

Yeah, absolutely. I mean, I think both the Mainsail team and Redfine team think trust and high integrity are just table stakes in doing business and while they're businesses, it's all people making these decisions at the end of the day. And so it's an emotional decision. Like even going back to Dave and John deciding to partner with Mainsail or a property manager deciding to partner with Rentvine or even their customer deciding to partner with the property management company, that relationship is super important and feeling like you, you have a partner.

Yeah. I'm curious about what it's like for a company like Rentvine to work with a company like Mainsail day to day. Like we know, you know, the, there was a big press release. I, had an interview with Dave about the investment and everything. We know that side of it, but what is it actually like now that they've taken this investment? In talking with you and in talking with Dave, it sounds like there's some close collaboration happening, but I assume, I mean, it's not like you guys have people on their programming team or anything. So I'm just curious about how this dynamic plays out in a day-to-day setting.

Yeah, it's a great question. And our philosophy is to not necessarily come in and change anything because it's working. Like, what they were doing is working. Really just want to amplify that and build a foundation infrastructure for continued growth. And so, tactically, how we engage, we do weekly catch-ups with Dave and John just to act as a sounding board, right? Thinking through hiring and, you know, new product and just things that come up in day-to-day that they want to chat with other people that have visibility into similar companies, but in different industries. So we've often seen some of these pain points before. We have more formal, we do a monthly financial call and then a, a quarterly board meeting where we do a deep dive on performance, strategy, things like product roadmap. Those are typically really fun discussions. And then more broadly, Mainsail has a 30-person growth team to support our businesses. That translates across 4 kind of key pillars. So, team advisory, project work, and network. On the team side, I mentioned we brought in 4 executives, hiring a customer success leader. We added 3 independent board members, 2 of which come from the industry. We also added a product advisor and a technical advisor to the board. So, just surrounding Dave and John with great resources where they can delegate and get advice and just learn from others. Second is ongoing advisory work. And so, one example is we brought in this product advisor. He's actually a product leader at another Main Cell portfolio company. He redesigned, helped John redesign the, the product organization to have these more pod, different pods that are focused on, you know, maybe accounting or, you know, or, you know, resident journey, just different pods focused on different parts of the, the product to again, allow us to innovate without distracting from other components of the core business. Third is more project-based work. And so, we just had an engagement where it's one of our operations teams engaged and helped Rentvine with a robust competitive landscape analysis and thinking through, you know, how they're winning against different competitors, different opportunities. And the fourth is just network. As you probably know, being in a leadership role can be lonely, and that's where the beauty of this network is and community that you've built with your, your podcast. It's, it's so powerful to have peers that are going through similar pain points in life to, to talk with. And so, we, we recently had a CEO summit. We do functional summits for growth leaders, talent leaders, finance leaders, tech leaders to really foster that community and have shared learnings across software companies. And so, that's kind of how we engage. It's just the, the more casual catch-ups, formal board meetings, and then we bring in our growth team when Dave and John kind of raise their hand and see an opportunity for them to get involved and, and kind of push things forward.

Okay. So pretty, pretty involved actually, more than I was making up in, in my imagination. So I'm glad I asked. Do you find that founders, like, like founders tend to have this like super independent streak about them. That's why they went out and created something. Do you find that some founders are more receptive to this than others? Do you run into founding teams who, after they hear what this might look like, are just like, no thanks, I, I, I'm gonna do, do it on my own. Uh, this, you know, is it certainly more than just a cut and a check?

Absolutely. And I mean, we're investing in companies that don't need money. And so if it was just cutting a check, like they, they don't need a check. Uh, they often do want at least some, some support. While I mentioned all these ways we can get involved, our engagement is really a pull versus push model. And so, we don't come in with playbooks on here's exactly how you have to do things. Like, that's not our MO. It's more, you know, Dave and John were growing the team quickly. They needed a finance leader. Great. We have 4, 5 executive recruiters on staff to help run that search for your CFO. That's a great point. And help advise on systems. Yeah.

A great executive recruiter can make an unbelievable difference in a company. I've, just gotten my first experiences using a real recruiter in the last calendar year. And I got to tell you, it was— is night and day from trying to run the search by myself and just taking whoever applies on LinkedIn.

Yeah. And a lot of our— the people we place are already in the Main Cell networks. There's a lot of kind of repeat executives that have worked with us at one portfolio company, want to work with us again. CFO actually came from a referral from someone on the Main Cell marketing team. You know, I mentioned the VP of people at Rentvine actually came from Mainsail. And so, mm-hmm, there's some network effects in that, you know, as we expand the network, our portfolio companies kind of benefit from that. And so, the time to close a search is a lot faster than engaging a, an outside recruiting firm. I think we typically have lower turnover than industry as well, just because we have, they're often executives we have experience with and we know the specific types of companies and we're running multiple of these searches all the time. And so, there's a lot of pattern recognition on, you know, finding an executive that can scale up to the next level but is also willing to, you know, roll up their sleeves and get work done.

Sure. Do you have any investments in, in the HOA or community association management world?

It's a good question. We have looked at a few over the years. We have not invested in the sector, not necessarily because we don't like it. We're pretty selective about the companies we invest in. We tend to make maybe 5 or 6 investments per year, and that's you know, we invest across field services, construction, prop tech, compliance tech, legal tech. And so yeah, we, we do like the space. We just haven't made investment there.

Today's episode is sponsored by Crane's Access Granted live webinar coming up on September 30th. If you haven't heard of Crane, it's a private community for property management business owners who want freedom of time. I co-founded Crane with Wolfgang Kroski 2 years ago, and the community has grown very quickly with over 170 members. We only open up twice a year to admit new members, and the next application window opens very soon. Our upcoming Access Granted live event is for current and prospective Crane members. This is our first ever launch event for Crane, and we've saved up a ton of exciting news and announcements that will affect everyone in the industry. As part of the event, we're doing a 1-year CRANE membership giveaway, which we've never done before. We're also going to be announcing new ways to pay for your CRANE membership, the location of the next CRANE Horizons retreat, upcoming CRANE Unplugged dinners around the country where you can mix and mingle with members, and tons more I can't even talk about yet. If you've ever thought about joining CRANE, this is the event to get your questions answered and learn about all the amazing benefits that members enjoy, some of which end up paying for the membership costs multiple times over. To register for the live event, go to joincrane.co or click the link in the description. See you there. I want to look forward now, and I'd love to hear a couple things. One is, where do you see the industry, the property management industry going in the next couple years and then even further out, if you have any intuition there. AI is really shaking things up right now and is, I think, drastically shifted it. You know, honestly, AI has had more of an impact on the, what we call the vendors than our own businesses from what I've seen. You know, as a, as a owner of a property management company running the business day to day, Yes, we're using AI here and there, but it hasn't been a drastic change. I think we're still very, very early. But if I look at the vendors who I, I talk with these folks a lot because they sponsor my newsletter and my podcast and things, and they are seeing pretty dramatic impacts to their business and their competitive and their margins due to AI. So kind of wrapping that into how do you see AI playing out in our space? And then more generally, how do you see our space evolving and changing over the next 2 to 3 years and then even further out?

Yeah, so we're definitely excited about AI in this sector. I think it'll transform the industry over the years. As we chatted about before, property managers are often overworked. And so hopefully leveraging some of these AI tools will help give them more time back to do what they enjoy doing, whether that's going for a bike ride or spending time with family. I think near-term we see ways to embed it into the Rentfine product to just drive efficiency, whether that's accounting workflows or something like that. PMW is using it a bit to help with the marketing and SEO. So this is an area Renfine's actively investing in. Longer term, we see AI kind of allowing these vertical application software businesses to go deeper. So where today software budgets maybe 1-2% of customer revenue, we see that expanding into services and other workflows as they take on more and more work. So it'll be interesting to see how, how this all plays out. It's top of mind for Rentvine and they want to be a leader within AI and the property management space. So we actually have a board meeting coming up next week and I know it's one of the big topics on the agenda.

Yeah, I mean, the, I think the expectations of property management companies, because they see how easy it is to spin up software applications with AI. So for example, Crane, which is the, the community business I run with Wolfgang Kroski, Wolf, who has no technical background, spun up a Crane custom software for our members that includes things like a member map where they can zoom and see where other members are located. There's a member directory. They can browse our global talent RTMs. They can interview them on the platform. There's all these different things that he was able to incorporate into this piece of software that's available to our members. That it just, it blew me away because he's not a coder. And so the more our industry is exposed to things like that, the more they get to thinking like, well, geez, I mean, this, this or that CRM product or leasing product or whatever. I mean, how hard could this really be? I can, I could maybe code something up like this, or at least, you know, how much more effective somebody with coding knowledge could be with these tools. And so I think it puts, puts pressure on vendors and, and proptech solutions to do more and charge less. And I'm wondering if you're experiencing that pressure in any of your portfolio companies or how you're using that lens to look at potential future investments.

Yeah, it's a good question. It's definitely something we talk about internally and we kind of view it, it's both a risk and an opportunity for our portfolio companies. I think it's a risk if they do nothing and stop innovating and AI-first incumbents come out or customers try to spin up their own lightweight software using AI. Whereas an opportunity for us is, you know, you mentioned AI tools are powerful, non-technical user. How much better if it is a technical user? How much more powerful is it if you've got the whole, you know, Rendvine team who has deep industry expertise and they're technical and they already have a head start with, product and years of customer feedback if they start building this into the platform as well. So they've, you know, a lot of our software vendors, they've got that industry trust, the distribution, the feedback on what's worked, the resources and bandwidth to go build it into their platform. And so we are working really closely with our portfolio companies on helping just launch AI products embedded in their platform faster and making sure they're using it in their, their, you know, coding as well, just to make the team more efficient.

Very cool. And then what about outside of AI? What, what do you see for this industry? I mean, it's changed so much in the last 3 to 4 years, and I'm just curious, since you're plugged into a number of different prop tech companies, you've been in, in and around the industry for a long time, what do you see outside of AI as changing or starting or stopping in the next, you know, years to come?

Yeah, it's a good question. I mean, I think the industry as a whole is pretty durable and so there's no existential risk. You know, there's some industries where, you know, maybe robots will be replacing roofs at some point, where maybe there's a, a bigger risk of AI and robotic automation, or maybe manufacturing. I don't think there's any near-term existential risk that we're worried about. There's some trends around unbundling versus bundling of software.

You know, I'd love to get into that 'cause that, I, I think you're right. There's definitely something there. What's that quote about? The whole history of business as bundling and then unbundling.

Yeah, totally.

And, you know, it's very relevant for a company like Rentvine where you have this decision every day. Rentvine is making decisions on, do we build XYZ solution in-house and roll it into our core product, or do we allow integration partners to do that? And then what rules do we have around what integration partners are allowed to build? Like, I assume Rentvine wouldn't integrate with some rent payment processor, like that would be, you know, probably not permitted. Fascinating to hear you talk about this.

Yeah, it's a good question. I think years ago, especially smaller businesses wanted that one vendor. We saw actually with Resman that the industry wanted to have more options. They didn't want everything just from one vendor. And so at one point they had an integration ecosystem of like 200 different vendors where the property managers could pick and choose best of breed tools in addition to the Resman accounting platform. At Rentvine, we kind of want to do both. Like, we want to build and have the best features in Rentvine so customers want to choose Rentvine and have that really seamless integrated workflow while also continuing to maintain that open API where the customers can control their data. And if there is a better vendor, they're welcome to use it. Like, Rentvine today has an awesome partner ecosystem with LeadSimple and Apply and ZInspector and I think we want to continue to support those great partners in integration, just giving the, giving the industry choice.

Yep. Do you see the overall trend as being more and more openness and integration partner solutions, or do you see the trend more as consolidating core features into the main product?

I would say we want to offer both. So, you know, I think different companies are different. Like some, some property managers might be super tech savvy and want to try the latest and greatest and great. We want to give them that option to use the best tools out there. Some might be like, I don't want to manage different vendors and different contracts and worry about an API having an issue. And so we also want to be able to provide some things internally. Rentvine can't build everything, you know, investing heavily into product, but those partners are always going to be really helpful, you know, to kind of plug the gaps in the ecosystem.

You know, historically, you're right, it was super closed. You know, there, This was not an option through any of the softwares till just here in the last few years. And I think the, the, if you were to ask, you know, any of the, the accounting softwares, if you were to get in a time machine, go back 5 years and say, why don't you allow integration partners? They would kind of go, what are you nuts? Like, this is our data. This, these are our customers. You know, we can't allow these other partners to start chewing away at our margins and start taking away dollars that should be going to us. Because we, you know, these are our customers, right?

Mm-hmm.

And of course property managers hated that. How, like, how do you think that these groups got comfortable with these integrations? And then do, do you think they should be worried at all about some of those concerns they would've articulated very strongly circa 5 years ago?

Sorry. So how would the software vendors get comfortable just opening up and having partners?

Yeah. Like, do you think that, and you don't even have to speak specifically to Rentvine, but do you think any of them are worried about like, hey, now all the rental applications are going through some third-party partner, whereas we used to get those rental application fees, just to pick a random example?

Yeah, that, yeah, that's great. I mean, they need to keep their customers happy and so customers can either use their bad, non, you know, again, not talking about any vendor specifically, but just the mindset is you need to keep customers happy. And so either let them use what they want to use or build a much better product, or your customers are going to leave, right?

Like, that's a great articulation, I think. Yeah. I mean, yeah, yeah.

If, if customers aren't getting it, then they're going to switch. And I think it goes back to trust and allowing your customers to do what they want to do and use the best tools out there. So yeah, there are plenty of vendors. And one thing we didn't talk about is just like the technical ability, like some of these systems, weren't built API first. And so even if they are opening up integrations, those integrations maybe aren't as deep and seamless as a company like Rentfine that was really API first. And they built Rentfine with the long-term strategy of having this kind of open ecosystem. And so some of it is definitely business strategy. Some of it is also just like the actual technical product, what's feasible.

Great. So what, what's next for Mainsail? You know, you've really, I mean, you, you didn't come in as a principal. If I remember right, looking at your LinkedIn, you kind of moved up over time and you seem really happy and engaged there. Just, you know, where, where's, where's Mainsail looking, you know, over the horizon? Maybe they get to the top of the mast. We'll use a naval analogy here. Look forward over the horizon and, you know, where, where are they headed?

Yeah. So, I think we just want to keep continue doing what what got us here, which is investing in great founders, building high-quality products and supporting them. And so we're actively investing in our growth team and a big focus area, as we talked about earlier, is AI. And so to that end, we just launched Mainsail AI Labs where we brought in a head of AI innovation, a bunch of developers, and then company-specific technical leaders to help advise our portfolio companies on their AI strategy, partnering with them to actually build products, leveraging some of that knowledge, you know, to help other portfolio companies don't have to go, you know, recreate the wheel if they wanna launch something similar. And so we always have an eye on like, how can we help our portfolio companies more? And this is so, so top of mind. A lot of, you know, previously bootstrapped companies maybe haven't had the resources to build out a whole AI team in-house yet. Mm-hmm. So we're kind of helping them get there.

That's great. And Plenty of property managers have had success with their business. Some of them have sold. Property managers are really on the front lines of actually using these tools like Rentvine and others and have a great pulse on which of these prop tech solutions is really taking off, has a great product, is changing their business. And is that something where you have like a hotline they would call? Like, hey, you got to talk to these guys, you know, should they— how should they get in touch with you?

Yeah, feel free to reach out, reach out to me. I think my contact info is on the website or we have contact forms on the website. They can, they can reach out, let Dave and John know as well. If there's interesting vendors, maybe they're not partnered with today and should check out. So definitely feel free to reach out.

Great. And how about yourself, Tali? What do you, What do you see for yourself? Sounds like you're really loving this growth equity world. And maybe let me break this into two questions. If somebody's listening to this and they're like, you know what, this sounds like really fun, how could, how could they get started? Or how did you get started in the equity side of business versus the operations side?

Yeah, it's a great question. I have actually been doing this since college, so I, I graduated, like I went to UVA. My boyfriend at the time, now husband, started a student-run venture fund. He had all these cool VC internships. I was like, that's pretty interesting. I want to do that too. I end up working for a growth equity firm in the DC area for a bit before joining Mainsail in 2017. So that might be the atypical path. A lot of folks may do investment banking or something like that before going into growth equity. There's other paths. I would say that the way property managers might be able to get involved is like angel investing. I know there's a lot of angel investing networks. And even Dave and John, I think, raised some initial funding from friends and family and, and industry thought leaders and stuff like that. And so, there's definitely ways to get involved in this like private company investing ecosystem without having to be, you know, at a, at a, at a fund and that be your, your full-time job.

Do you ever see companies that you invest in, do you ever, does talent ever move the other direction? Like, do you ever see leaders from those portfolio companies move up and work for, for the mothership?

Oh yeah, all the time. You know, I mentioned this, kind of have a revolving door. I mentioned our Becca, who was on our talent team, joined Brent Fine. We recently had Matt Buckley, who is on our operations team, focused on marketing. He joined a portfolio company that's doing a roll-up in kind of a GM role 'cause he wanted to get that operational experience. We have a couple of folks like Phil, who's a principal on our operations team, leads go-to-market. He was at a portfolio company, came in-house, now advises software companies. Same with Meg, who advised on revenue operations. She was at a growing portfolio company, joined Mainsail. So we often, you know, for us, we talked earlier about how this, everything, it's humans and human relationships and trust. And so when we work with great operators, we wanna work with them again. They tend to wanna work with us. And so whether that's, you know, joining another portfolio company, coming in-house at Mainsail, becoming a board member at a, another portfolio company, we really like continuing to grow that, that ecosystem.

That's awesome. Well, I think that's a great place to end. That's, that's really helpful and has opened my eyes to your side of the house a little bit and helped me deepen my understanding. If folks wanted to connect with you and, and/or Mainsail Partners, where would be a great place for them to do that?

Yeah, mainsailpartners.com. You can check out the website. I believe we've got some contact forms on there. And then my email's toliver@mainsailpartners.com if there's anything prop tech, field services, construction tech, anything like that. But thanks for having me on the podcast. I've actually got a, a bit of a fun story. I first came across the podcast when we were in diligence with Rentvine. So I was a fan, thought it was great. Love hearing, uh, you chat with thought leaders. And then a couple weeks ago, I was actually at a wedding in Peru. The groom was a property manager in the US and I happened to sit next to another property manager and of course I was talking to him about systems. And multiple property managers cited they're using the Peter Lohmann tech stack, uh, which is wow, pretty amazing. It was coming up, uh, that's awesome. Um, in, in Lima, Peru at a wedding. And I think just goes to show the reach you have and the incredible team you've built.

Well, thanks. That's a, that's a really cool story. I'll, I'll have to tell my wife. She'll be impressed by that, I think. So thank you. And it was great having you on the show, Tali.

Yeah, thank you.

If you like the show and want to get connected to the community, you can follow me on Twitter @PSLohmann and subscribe to my email newsletter on my website PeterLohmann.com. I try to share as much valuable property management content as I can on a regular basis. Thanks again for listening and have a great week.