Andrew: Hey there, freedom fighters. My name is Andrew Warner. I’m the founder of Mixergy, where I interview largely tech entrepreneurs about how they built their businesses for an audience of entrepreneurs who are building businesses or planning to.
Whenever we get outside of the tech space. I think all of us who are listening here, experiences feeling of, huh? It’s kind of awkward. That’s not the way it should work. There’s such a smooth fluidity to working online that once you get offline, things just don’t feel the same. Joining me is Thomas Kutzman.
He said, you know what? I’m buying homes. I’m looking at real estate. The experience of buying something online is. It’s kind of clunky and old. And he decided he was to do something about it. He was going to fix it. He was going to modernize it. He was going to bring it to the internet, which at this point is decades old. So he went for it. And then he discovered that his first vision wasn’t going to work out. It didn’t make sense. He was wrong and he changed. I would use the word pivot, I would say pivot Thomas, but I think the word pivot now is just so overused that nobody wants to be associated with a pivot. Would you say that.
Thomas: Yeah, it’s definitely an overused word. I think it’s better to say you regrouped after responding to the data. That’s probably the way we thought about it. When, you know, after six months of our original idea, Of creating a for sale by owner platform. the data show that people needed a lot more help and a lot more of a guided experience, but still stay true to the saving money while you were online and creating a less antiquated experience. So six months into our journey, we, we did pivot or regroup, and we responded to that data very quickly , and, uh, it was the, it was the best decision we ever made.
Andrew: impressive. It’s so easy as an entrepreneur to say, I see the world differently. People have to accept this. Why won’t they see it? And part of our job is to evangelize the future that we’re creating. But another part is to recognize, Hey, the realities of the world are. Are different from what we envision and we should adjust. Alright. Thomas is the founder of preview. They help home buyers save money by giving them a reason of up to 2% of the purchase price of a, , their home. I invited him here to talk about how he came up with the idea, what the first version looked like, how he realized that he knew needs to change what the next version look like and how he’s spreading this business throughout the country. I’m going to ask Thomas a question that I think he’s not going to tell me the answer to which is revenue. I want to know how big you are. I gotta be honest. I never heard it. You guys , before this interview, what’s the revenue.
Thomas: So we, we don’t publicly disclose our revenues just yet. Uh, last year preview raised our first institutional round of VC funding, led by Korjan ventures, which was an early investor in encompass and a few other, uh, key real estate technology companies. , we started our market in New York city. And thanks to last year’s fundraising, we’re expanding to new markets.
Andrew: How many homes did you do?
Thomas: so we’ve transacted on over 200 homes in a very short period of time, a little over, you know, , a little over two years since that, that first, rebate was issued.
Andrew: That’s like the origin of this new business,
Thomas: correct? Yeah, so we, we issued our first commissioned rebate in August of 2017. So we’re just a little over two years since that first rebate.
Andrew: you were a hedge fund guy. What hedge fund?
Thomas: so I worked at, multiple hedge funds and multiple investment banks over my career. prior to joining preview, I was a us equities trader at Jabora capital partners in Geneva, Switzerland. but it was actually in the early days, as an equities trader at a major investment bank where I met my cofounder chase Marsh. Uh, and it was actually, you know, we were both financial markets professionals, and so when you work at a big fund or a big bank, you have onerous regulation on you, what you can and cannot trade restrictions on what is in your portfolio, things that you focus on as a market maker. so we actually ended up investing a lot of our personal. You know, assets into real estate, just for the lack of not wanting to deal with that bank and fund frustration. Uh, and that’s where we ended up talking more about real estate and, we found ourselves continually, even after, when I moved away from New York to Switzerland, I would still call chase and complain about real estate investments or complain about our brokers. Like, what am I paying this person for?
Andrew: Were you buying homes and then renting them out
Thomas: mostly residential homes, apartments, uh, in New York city and Connecticut. Uh, and chase also had, some, real estate investments in Massachusetts as well. So, we really had a good view of the Northeast. but at the end of the day, you know, people that were charging five or 6% to sell a home things that were very offline experiences,
Andrew: give me a specific of one example. One time that you were buying something and you came back and you said to chase, Hey, this is stupid.
Thomas: it was actually a a sale of a home. my home, on long Island in New York So I had moved to Switzerland and . I solicited a, a real estate broker to sell that home. She put a price tag on it. And her only advice was to keep cutting the price. And I was like, why am I paying someone five to 6% to just keep telling me to cut my price? And, and the whole communication, the collaboration with that agent was a very offline experience. texts and phone calls. It was just very fragmented.
Andrew: I think it was Freakonomics that talked about how they, the broker has an incentive to get you to cut your price by tens of thousands, hundreds of thousands. Cause it’s a small percentage for them, but for you, it’s a big amount of money.
Thomas: Yeah. When you look at the, how much is spent on commissions and how it’s slice and dice between all of the different agents and intermediaries and brokers, it’s really, they’re not aligned with, as aligned with your success based on a big difference in your price could mean only a small difference in their price. And you’re exactly right. Freakonomics definitely hit the nail on the head with that. so we thought there had to be a better way. There had to be a way to bring down the fees.
Andrew: Was it just the fees because the fees is what you concentrate on now, from what I saw. I saw an old, we work article on you guys, I guess you guys rented space and we work and they decided they were going to write you up. Is that right?
Thomas: Yeah, they actually had approached us, within our rework. And, they, I think you’re referring to the creator magazine article that they had put out on us.
Andrew: Like half a decade ago,
Thomas: it feels like a half a decade
Andrew: it was November, 2016. So somewhere around there. And so what they were saying was. That it was an antiquated system and you noticed some problems and the first version was going to fix it. How.
Thomas: Yeah. So the first version of what we tried to come up with was coming out of the pain of that antiquated process. So we tried to create a platform for, for sellers to connect directly with buyers, with messaging and the ability to, you know, preview your property, you know, punnet pun intended to preview your property to the market, similar how you do in financial markets.
Andrew: But what do you mean? I’m I really want to break this down and detail. So I keep interrupting to go into more specifics. What do you mean like you do in financial markets? What did you envision.
Thomas: yeah. So if we saw how tech technology came into equities trading and really transformed how Oh commissions changed, how the ease of use changed and how the ability for buyers and sellers to connect, uh, you know, anybody that’s read, Michael Lewis is flash boys. Things like dark pools where you can go out and see if there’s a buyer or seller. In the marketplace and something you’re trying to transact in. And we envisioned a world initially where sellers should be able to show their property to potential buyers, connect with them directly and lower that fee. But when we started that process, we realized that sellers need a lot more advice than they’re willing to admit. It was actually in our research about the seller process. We realized that buyer rebates were a thing. And we said, perhaps we’re thinking about this, the wrong way, the industry’s conditioned people to believe that it’s free to be represented as a buyer because the seller pays the commission. Maybe it’s not a case line item for the buyer, but. You’re you’re the buyer you’re showing up with all the money. So it’s, it is coming out of your pocket. So we actually looked at the process on the buyer side of the transaction and quickly realized it was infinitely more scalable. You could have a much more guided experience. Like we like to say that we’re previous now the friend in the early miles and the expert in the last mile,
Andrew: I’m curious about how you got to this place, what the thought process was, what kind of feedback you took in let’s and then also how you built the first version. So you had a vision, the two of you said, we’re going to go for it. You quit your jobs before or after you built the software.
Thomas: Yeah. So we started to build a software with a small, agency shop to help get the initial product out. We’re a rails based application built the first version. It was two of us we weren’t coming from a product management background. We weren’t coders. and we sat there with computer paper. Drew out mockups and designs. Cause we weren’t well versed in all the tools. and we built the first product. Quit, quit our jobs and launched the first site in July of 2016.
Andrew: what was in that first product that you guys designed?
Thomas: Sure. The first product back then was a for sale by owner product. A seller could sign up, post their property, and then be able to message with, any potential buyers that would interact with them. and when you think of it, like most marketplaces when you’re building a marketplace, there’s the supply side and the demand side. you’re trying to draw in both. At the end of the day, buyers are going to look for the largest number of in their area. So, we quickly realized, you know, a few things first and foremost sellers on the platform, it was difficult. And then the sellers that were able to interact with buyers, you know, didn’t have all the expertise that they needed. second, you have to drive all of the buyers to the site. And you know, when buyers show up, they want to see a ton of properties. They’re used to going to Amazon or other sites and see a bunch of products when they’re looking for a specific product. And we quickly realized that, wait, we’re thinking about this, the wrong way. Our mission is to save people money when they buy or sell a home. but maybe this could be actually better articulated than through the rebate,
Andrew: I wonder why you did that, instead of saying, you know, what, if we could have a lot of properties on this platform for people to buy kind of like they buy toothpaste or, or computer equipment on Amazon, then. Then we’ll have a marketplace and then we can start pushing more those people in the marketplace to switch to our worldview. Why not scrape lots of different homes and, or get a feed of homes and put that on your platform.
Thomas: Yeah, well, the initial product was, was based on , it being, you know, seller originated. So like in order for someone to go out and interact and for that buyer to reach out directly to the seller, you’re going out and trying to do like what some of these old rental sites did, you know, five or six years ago and just go out and scrape. It, it wasn’t, gonna be the right right way to do it. So obviously there’s a lot of legal hurdles around doing stuff, something like that. So, you know, we quickly realized that was, was not our intention and not our model. So, we were looking to save people money and we found that the best way would be via the buyer process. Cause. Even like, let’s take a step back and look at for sale by owner versus not versus non for sale by owner. There are a lot of tasks that go into selling a home. There’s a lot of, you know, flat fee brokerages out there, savings, oriented seller models out there nowadays. but there’s a lot of stuff. Time and effort that goes into selling a home. and it’s generally a very difficult process to sell a home where it’s usually negative life events. Like you’re moving away. You’re downsizing, you lost your job. You ha you’re in financial distress or, you’re relocating, which is stressful where buying a home is usually a fun, positive life event. You got a new job you’re upgrading your family’s growing. Usually it’s a very positive experience. and what we also realized from the experience was that. Payers were more willing do a lot of the early part of the process. They just needed the tools to succeed, but they still needed that expertise in that final mile.
Andrew: Okay. Now the word models, there were businesses that had done this. I just looked it up for sale by owner, which is a company that I remember seeing signs for. When I lived in Los Angeles, they started in 1999. I think. Right. And they were bought by Tribune company a few years ago. 2006? . So this has been around for a while. What did you see that was missing from what’s already out there?
Thomas: Yeah. So I think that the key thing was that online experience, obviously we’ve shifted a buyer’s, but even looking back at that early business model before we pivoted, you, you take a step back and look at. People want the online experience on the offline experience. And even if the newer seller oriented models, they’re pulling people to offline experiences again. And, you know, we envision a world to focus solely on buyers now and focus on creating that one stop shop. and there’s more. More tools, more features, more services. You can offer a buyer in their journey, online and automated, and make it more akin to what they’re experiencing and the rest of their lives. We we’re planning to one day go into mortgages. You can go into title and to escrow, you could create a marketplace of services for everything you need after you move into your home. So exactly. So there’s so many different things that you made that it’s, it would be limiting to even put a cap on what those specifics are, but think about the best analog. So I used to trade technology stocks. I was a software and internet trader, and the two best analogies I always make to folks is. In the early days of OTAs and travel sites, you had flight sites, you had hotel sites, you had car sites. Now they’re all rolled up together into one stop shops like Expedia, Priceline, et cetera. Same thing was true in online stock trading. It started with, you know, the basics of like a Charles Schwab. Now, Charles Schwab, there’s $0 commissions. And there’s a suite of other products and services that these, you know, FinTech companies are offering. So we envision a world where you can create that one stop shop for the home buyer in all of the services they need at the right time with the right introduction, with a level of choice and savings. So this starts with brokerage, but it’s, it’s so much more, it goes much beyond brokerage.
Andrew: Can you see a world where you then break even on commissions and then the profit comes from everything else that you sell. You could almost offer it for free.
Thomas: There’s a potentially a world where that plays out. Like, I think you saw it with the Robin hood of the world, with the trades of the
Andrew: Yeah, where they let you trade stock for free because they make money on what, on margins or sorry. When they, when they offer your stock out to, actually, how do they make money? I thought it’s when they offer your stock to people who are
Thomas: there there’s a lot of different ways. Like, you know, some firms offer additional products and services, some make money just by having the deposits. You know, for example, Morgan Stanley just bought a body trade for that very reason. you know, just to have deposits, some people, you know, share out that stock flow for stock rebates. But at the end of the day is like, how are you building a better solution for folks? Are you saving the money at every single point in their journey, maybe you’ll make less per trends section of each service. You provide them, but you’ll make in aggregate much more than you would in any one of the services. You know, I think, another way to really, think about it. It is what if, you know, we weren’t world where commissions went to zero. Yeah. Could be that one stop shop, offering everything to them. And I think that’s potentially a way the world goes. and we’ll, we’ll see how it plays out. but given how liquid the transactions are, you know, that will probably be a slower process than it. It occurred in, in stock trading.
Andrew: Okay. So you saw this, the two of you decided we’re going to, we’re going to shift now. The first version was built by an outside company. Right. It means you have to go back and start from scratch and pay again to rebuild the product from scratch. Am I right?
Thomas: yeah, so actually there’s a, there are a lot of features that we had initially that were still kept from a conceptual standpoint. but we did go through a very large, you know, Yeah, rebuild process initially, and then have since really transformed it to a whole nother level, especially when we went from being a, for sale by owner platform to an agent platform. You’re not only building a consumer experience, but you’re also building, an elevated agent experience that allows a much more sophisticated collaboration. Between the consumer and their agent. so we were, we were very fortunate. just shortly after that, you know, that business model shift, we brought in a VP of product, you know, chase and I were weren’t, you know, techniques, technicians by trade. We weren’t programmers. We weren’t product people. so we hired a Russell Sinclair who was a former engineer at Microsoft and a former director of product, for StreetEasy, which is a Zillow asset. So, you know, huge domain expertise, and he’s really helped us, you know, guide the product and the platform
Andrew: What did he do? That was different, but it’s, so again, I told you that I, I knew about him being important to you guys because I’d read articles about him. What is it that he did? That was so revolutionary for you guys?
Thomas: I think the anything you do, especially in the startup world is there’s a level of. Experience and expertise and specific functions, you know, as you grow as you scale, whether it’s on the product side, on the marketing side, whatever way you take it. as you begin to delegate different functions, as the different tasks become, you know, more and more, you need additional adults at the table that are tried and true in that specific task. And, you know, I’m sure our developers now prefer his mockups and designs compared to, you know, our computer paper, with our, our hand drawn,
Andrew: So mockups are better. Anything else that you could think of?
Thomas: I think there’s just that having a level of experience, but also having a plan and a product roadmap. I’m really listening to all sides, listening to our vision, listening to customers. And now that there’s an additional aspect of having agents in our platform, listening to all sides, distilling it. and then. Bringing that to a cross functional area where we are discussing, things based on data, what is the data telling us to build? What are we prioritizing based on what people are using? And I think that’s something that we didn’t have in the early days. Like we were responding to data, but it was, it was obvious and annex and more anecdotal where now it’s much more data-driven. and there’s a, more of a scaling and a rating and a prioritization system, to bring together.
Andrew: I realized why there’s so many articles about him. I’m going to talk about that in a moment. And the thing that I noticed about it, but first let me take a moment to talk about my sponsor. It is a company called top towel. you guys tried to get into Y Combinator, right?
Thomas: That’s correct.
Andrew: We’ll talk about that too. There’s a, an entrepreneur who did get into Y Combinator, Todd Blosser, and he realized, you know, what, companies need to train their employees and they’re gonna do it with software. The problem is that training software for companies, especially large enterprise companies, pretty clunky and antiquated and said, you know what? These guys have money. They’re willing to spend money on good education for their people. And if they could get software that encourages their people to actually use the education resources that enterprise are offering. Then people are actually going to learn from it. And the companies will benefit from having smarter people who are aware of things. Like what do they usually use education for? I always think of it as like the sexual harassment training coming from companies, but it’s more than that. Anyway. Todd realized people that big companies need this. And he wanted to have a good experience for them. What he wanted though, was to find somebody who could create that user experience. That was a pleasure for employees to use. That was actually something that would be captivating and fun for them to use. And he needed a developer to do that. So he went to top talent. He said, look, you guys are known for developers, but you also have user experience experts. Right? They said, yeah, They talked to him, they understood what he needed. And then through top talent, he hired Ben wash Shabbir. This is a, this isn’t, a designer that people who are in my audience who know user experience will probably recognize his name. Right. They hired him through top town. This guy comes in and Ben wall started to become a part of the company. He was on their Slack. He was in Trello. He was in Zoom and he was just there to give them some feedback, but he became such an important part of the company that they hired guard him. To help reshape it product. And as a result of implementing the design sales for a work ramp, increased people, started loving the product and they got new customers like video card FiveStars Optimizely, and so many others. And they were able to raise money from Slack, Y Combinator and Reddit, founder, Alexis Ohanian. So a lot of good stuff happened because they got good user experience and they got good user experience by going to the best place to hire user experience and developers. You know, the thing that I noticed on the bottom, the thing that I realized was there are all these articles because you sent out a press release and it’s like, you are such a small operation at the time that you hired him, that it’s your name, your email address, your phone number on the bottom of the press release. I’m assuming you’re the one who wrote this thing.
Thomas: Yes, that’s, that is correct. And, you know, in the very early days, you, you wear many hats as an entrepreneur. you know, that the company itself started with, you know, chase and myself, you know, just two guys in an office with, with, you know, remote developers and, you know, over time, I now judge myself of periods of success of the more things I can. You know, be able to be able to delegate and afford to delegate. only allows me to bring in, you know, other top talent, other top people, to, and that’s a, it really is where an organization as you scale, can you really benefit from the compounding of talents where you almost, it’s almost like you have an accumulating advantage as you begin to delegate more tasks.
Andrew: And so the reason that you wanted the world to know that was you wanted to show, look, we’ve got expertise. You can trust us. And then you use that to try to raise money. At what point did you try to raise money from Y Combinator?
Thomas: so we actually pursued why Combinator. So actually had filmed the demo video or not the demo video, but the video for the application process, while I was still living in Switzerland, it was, you know, in the early days, again, not a, not a founder, not a serial entrepreneurs meet with a preview tee shirt with a white background behind me. And, you know, I think looking back on those days of why we didn’t get into Y Combinator was we didn’t have. That technical cofounder, we didn’t have that additional tech viewpoint. so when we did go out and add to a function, like a product head, we decided to share with the world, cause you know, You have to build trust and confidence. Like you have to build it with consumers, you have to build it with him. and you know, obviously given, you know, Russell’s, you know, struck on domain expertise and, and respect in the industry, especially in the New York city tech ecosystem, you know, it definitely went a long way and it wasn’t until much later that we actually went out to raise, it was probably. Well, over a year after Russell joined us, you know, we had originally bootstrapped the company with our own money. Cause you know, coming from a financial markets background, we were probably in a more fortunate position to, to attempt it with a bootstrapped approach.
Andrew: You needed? Oh, well, tell me when you read it, your first, your first round was a $2 million round. Am I right? How far along were you at that point?
Thomas: So we announced it in September of 2019, so only, you know, several months ago. and when you think about it, we had launched and paid out our first commission rebate in, August of 2017. so it was just about two years after that, you know, that first rebate that, we raised our institutional round.
Andrew: Wow. I’m impressed by how far you got without money with just your own, your own funding.
Thomas: for sure. I mean, I think the way to think about it, and I would recommend this to all entrepreneurs, any podcast I go on to do, I like to share this the longer you bootstrap, the longer you force yourself to be creative and do more with less, you’re going to become much more disciplined, operationally, much more capital efficient. When you do have the money to flow through the, the engine that you build.
Andrew: I always ask for specifics. Give me an example of something that you do differently.
Thomas: Sure. Yeah. I think the w one of the best examples is, you know, in the early days we didn’t have a huge marketing budget. So we started with a very content driven approach, you know, akin to a HubSpot or an Intercom, and, you know, folks like that. So we took the tech playbook and brought it to real estate. And thought about, like, let’s write about every type of question that a New York buyer cares about. As we now enter Philadelphia, we write about everything a Philadelphia is going to care about.
Andrew: P the plan is every time you told our producer, every time you hear a question twice from a customer, yeah. You say that is a good topic for a blog post, and then you have it written up. And that then becomes the answer for the third person. Who’s wondering about it. Who made, who never heard of you? They come to your site, they get their answer and they say, well, who is this company? Let’s see if we can talk to preview.
Thomas: exactly. There was a, there was an old phrase you used to hear on trading desks, on wall street where, you know, hear the room and you know, when you’re sitting there and your agents are on the phone with customers or, you know, customer success, people are doing early intro calls. If you start to hear the same question over and over again, Clearly it’s important and we shouldn’t be, you know, re rewriting it every time, single time. And it’s also, you know, anybody that’s, you know, read an Intercom or HubSpot blog, you usually connect with folks by answering a question for them. So it comes back to our branding around being smart and sharing. educational pieces for free, you know, almost like a Gary Vaynerchuk approach, but, but just give away, give away free answers and people will find us, especially given the value and the magnitude of, of our savings.
Andrew: I’m going to a, a Trefis, because I’ve got a partnership with them to see what pages are doing well for you there. The number one page is New York city closing cost calculator. the number two, one that I could see as closing costs, a buyer’s guide in New York city condos versus co-ops. And then you’ve got, common questions about buying a co-op in New York city. I guess co-ops are really big for your clients, right?
Thomas: Yeah. Co-ops or it’s a New York city nuance. no that we’re not going to see in as many other markets. but I think at the end of the day, I think you, you, you, you highlight a good point is that, you know, people have questions and though well-researched people that want to do stuff on their own, they’re going to go out and find it, find it on their own. So they’re, they’re looking for answers. They’re well-researched and those are the initial folks we connect with and. obviously we’ve gone to, you know, many more marketing channels now that we have a budget to really bring our mission of saving homebuyers money to the forefront. but it, but going back to in the early days, like we’re very efficient with our marketing spend. We, we do experiments and then pushing in a big way when they work. So I think if you were starting out and just had an unlimited budget after a big round with no. no prior experience trying to be creative, you’re going to blow through your money really fast. So I think that’s where we were able to go so far because we were very disciplined cause we were spending it like it’s our own money. And then when we went to meet investors, they know that you’re going to spend their money. Like it’s your money. So it’s a, it rang true with the, with all of the investors that we met with and the messages that ultimately came into the round. They, they trusted us in that operational discipline.
Andrew: So I, I was smiling because I was going through your funnel to see how a page converts. Someone who’s just curious into a potential customer. There’s one article on mentions in New York city. It was written a few days ago and it looks like it’s doing well for you. It’s a buyer’s guide for somebody who is buying a mansion in New York city. It has all the answers, I guess, that people needed including taxes on mansions, et cetera. And then throughout as I browse, I see a bar that says. Buy your home online, save thousands. I hit the browse listing button. It says, where are you looking to buy? And then as soon as I hit next, after I commit by adding some information, it says, what’s your email address? What’s your phone number. And that’s how I would get into your funnel. By being curious, researching the answer to a question I have, and then, telling you that, and I’m looking to buy that’s where you get your customers.
Thomas: yeah, it’s definitely, that’s the easiest way to do it. So we provide obviously answers and we also provide a great service. So even if you were to come in through one of our, you know, landing pages and one of our great content pieces that our team creates, or one of our educational calculators, you know, folks make. Folks can use, they can, they learn about us and they can start browsing. And I think the unique thing for us is that compared to sites like Zillow or Redfin, you can see on every single property listing on preview, how much you’re going to save. And in New York to date, the average savings per transaction is $23,000. So that’s meaningful for folks.
Andrew: You saying I would see it as I browse through, but you know what? I, you know, it’s interesting. I can’t browse until I confirm my email address. I just gave you guys a fake email address because I wanted to go through the process and it says, all right, now, if you want to finish browsing, you have to go and confirm your email address because it’s all, it’s all a direct marketing approach, right?
Thomas: The key thing with that is when you look at, when you’re in a market, especially like New York or, you know, even other markets, the information is highly regulated. We are a brokerage, so we are subject to all of the rules. So unlike, you know, aggregator sites that, you know, just show you everything. we are brokers, so we do are held to a different standards. So, you know, we are very, we are required to verify enrollment for folks. so. Well, it may seem like a slight friction point. that’s just us, you know, being above board and white hat with, with, with the regulators.
Andrew: wait. So if I go to Remax, for example, and I do a search for a home, they can’t show me homes until I give them my email address.
Thomas: It depends on the market you’re in. So in New York city, it’s, it’s highly regulated, on what we can and cannot do. that will be different in, some of the other markets we, we are entering, but, currently that is a, that is a New York city restriction.
Andrew: Oh, I’m going to try it and see what happens when I go to them and did a search for a place in Manhattan. I hit search and it’s frozen. For some reason, I’ll just do New York, New York. Let’s see what they
Thomas: they, what they, what, and what sometimes you will see is you may see like an initial, like, Hey, like a teaser information, but it will require you to log in. And if they’re not, they’re a, they’re probably been in the rules a little bit. And, that’s just not the approach we take. We try to be very above board.
Andrew: So number one way that you get customers is using content marketing. As we just described. Number two is word of mouth
Thomas: Yeah. So, yeah, so it’s, it’s really kicking in now. So I think the, in any business you want referrals, right? Whether you’re a SAS business, any other technology business referrals goes a long way. And you know, most people tell people about the agent. They. We’ll end up using the first agent they interview so when we hand back checks to people for 2345, the largest rebate we ever gave out was $110,000. You’re going to tell somebody, you’re going to tell your friend just to impress them of how. Smart you are how much you got back. So, our, referrals are probably 25 to 30% and it’s organic. So we can’t give out, you know, incentives to people as cause it would be deemed a commission. So our initial referrals to date are all organic and it’s about 25 to 30% of our business. so the more and more deals we do, it’s just, it’s just beginning to really, you know, compound, very, very fast.
Andrew: Do you do anything after the sale to make the, to help the buyer? Remember you, you sending flowers. Are you sending a welcome mat or something to their house?
Thomas: sure. Well, I mean, I, I, I’m still in the accounting function at the, at this time. So like, like, like we passed off the, the key roles for technology. one day I’ll hopefully pass off the accounting role as well. but I’m still sending out the rebate email that goes out to folks I’m still writing and processing those checks. So I’m able to connect with folks when we’re giving those rebates. you know, we don’t give back specific, you know, Closing gifts like a traditional agent, would we already feel like we’re giving back on average $23,000 per transaction. And, and people are, are super happy when they get it. So, we do stay in touch over time, you know, via, via email, you know, additional marketing after the fact, not so much marketing, but you know, different tasks, different articles that will actually be important. As a homeowner, not just a home buyer. so we, we definitely stay in the funnel. And the other key thing is, you know, given the speed of New York city real estate, a lot of folks do buy and then choose to buy a vacation home or buy and then buy an investment property. so we’re also seeing a, a large influx of, repeat buyers now that we’ve been around for greater than a certain period of time.
Andrew: You told our producer, that’s one way that you realize you could expand that when you go to New York city and you help somebody buy a home in the city, when they eventually were ready to move, they might want one in the suburbs and you realize this as you call it hub and spoke approach for growth in a city is the way to go.
Thomas: Yeah. I mean, it’s definitely a, one of the longer term strategies we have, you know, we, we first look at metropolitan areas where we can have the largest financial impact with our mission of saving people money. also just for the efficiency of our agents, being an densely populated high price point markets, we can have the greatest impact and the most efficient impact, but like most great brands, you start in one city and, you know, and it grows out. So we are already seeing a large increase in requests for the suburbs. it’s not our core focus right now, but you know, there’s, we’re already seeing that there is the demand for it, which, you know, we’ll, we’ll probably address that at some point. but we are, are able to help those folks by as well.
Andrew: Would you have a guy who is interested in business growing up? I don’t know much about what you were like before, before you were an adult.
Thomas: Yeah. So I would, I would explain, you know, I was deer classic high school nerd.
Andrew: What type of nerd were you? There’s so many different ones.
Thomas: So I was, I was a math geek. you know, I, I always loved math. That was on mathletes. yeah. You know, where I am today and how my life has progressed. but I was the valedictorian in my high school and I skipped lunch to take extra AP classes, you
Andrew: Because of what where’d you grow up? What city?
Thomas: So I grew up in Queens and then long Island in
Andrew: Me too. So in Queens, in New York city, in general, and in long Island, there’s a sense that business defines you. You can see people who are. You’re better is almost because their names are on buildings because when even go to the, to the opera, when you go to the museum, you see them there too. So they’re respected in every way that you can imagine New York did you, as a mathlete say, I’m going to know math really well. So that one day I could be one of these masters of the universe as they’re called.
Thomas: Yeah, I guess like when you, when you live in a place like long Island, you’re seeing everybody get on the long Island railroad to go into the city and like growing up around the city, you know, that there’s there’s business and commerce that’s transpiring, but it was actually when I was probably a junior or senior in college, my one uncle actually said, Oh, you’re pretty good at math. What do you want to do when you grow up? And yeah, obviously I thought I was going to be president and I wanted to be a lawyer, but he’s like, yeah, I feel like math. Like, why don’t you go into finance and. I was like, that sounds great. So I basically went to NYU stern focused on finance and accounting. and it, it just almost consume you because you’re also not only going to college for finance, but you’re also in New York city, so you’re doing the internships. So, yeah, I worked at, you know, major investment banks while I was a, you know, junior, senior year of college. Like I did my summer internship at Goldman, and then I went to work for a hedge fund. I guess it’s also the intensity of New York, and actually bringing it back to what we’re working on. Now. Most people thought we were crazy to like, why are you starting this in New York? This is going to be the toughest place on earth. And we’re believers that if, if it works here, it’s going to work everywhere. So. It’s definitely the toughest. Yeah. New York is obviously super competitive. So the best, the best anecdote I can give you on that is that, you know, there are 30,000 licensed agents in New York for 15,000 transactions a year.
Andrew: Let me, half of them are not even making one on average, not even making one transaction in a year.
Thomas: There’s a lot of part time folks. There’s a lot of, you know, struggling actors or waiters and waitresses that are, you know, doing it part time. And, you know, there aren’t given the tools, they aren’t given the leads to succeed and build up that level of experience. And most agents actually leave the industry after two years.
Andrew: You still considered licensed agents, even though they’re not doing anything. Got it. So the number of fields higher than it
Thomas: So in, in a place like New York, you know, 10% of the folks who are doing 90% of the business and everybody else just washes out. So, and if you look at like the average agent, probably in New York does three to four deals, maybe five, our average agent does 36 deals. And as we add more automations and more features for the collaboration between the agent and the consumer, we see that number going even higher.
Andrew: All right. I’m writing a name, a note here about the automation. Let me come back to this in a moment. automation, … You’ll see what I’m talking about. Alright, automation, what type of automation are you using to allow your brokers to do so?
Thomas: Yeah, so very similar to what we do with content. We, we took. See every task, an agent does day to day and realize that any one of these tests than agent does, you know, more than twice, similar to how we wrote blog posts. how can we get that as close to a single click as possible, whether it’s scheduling a tour for a customer messaging, a customer’s sharing a property with a customer, you know, we’ve built our own proprietary CRM on the backside of, of our application that allows our team to collaborate with customers too. It ends up giving them a much more responsive, much more sophisticated consumer experience that they’re not going to be able to get from, from other brokers that are taking them offline to email or text.
Andrew: Can you give me an example? What’s a process that you reduce down to a button
Thomas: Yeah. So the, the perfect example is scheduling. So both for the consumer and for the agent to schedule it, you know, if you’re searching on it, Just schedule a tour. Exactly. So, you know, you’re there looking at a specific property in Manhattan. Like I’d like to see this, you can click select the time it goes to our team. They verify that, make sure, obviously like who would go to tour that property with you if that’s the case. and it’s a single click to request it
Andrew: Single click on the, on the customer’s
Thomas: a single what’s a single click click to request it for the customer. And it’s a single click on the agent side to request it, with the other side. So what do you see.
Andrew: to say to the agent to say yes, I want to do it. And when you say the agent, do you mean the seller’s agent?
Thomas: Yeah. It’s a single click to request it from the seller’s agent,
Andrew: Got it because it’s the seller who has to do it. So you have a single thing that automatically goes out to the seller and says, Hey, we don’t know, you don’t know us, but somebody just wanted about wanting to tour one of your properties. Do you want it? They hit a link and then they
Thomas: No. Yeah. So I know our buyer’s agent would attend with the, with our buyer, but it’s one, one click to schedule. So in many cases, in most markets, that agent has to then go to a different site to look up the contact information of that property, that listing agent, we streamlined that down to a single button. We have we’ve we automatically do all of that. so it’s little things like that. So when you start to save people, you know, minutes a day here and there, that’s where it really allows you to take it from five transactions a year to 36. And as, as we add more features for that collaboration in two clicks of a button, that that number can go well, North of 50 transactions per year, per agent.
Andrew: We asked you in the pre-interview, how are you expanding beyond New York city? And you were talking about how you’re looking for inbound for people to tell you where to go. What’s your process for doing that?
Thomas: Yeah. So I, I think there’s a, there’s a couple things. you know, when we looked at the, the folks that were coming in to the New York market, we looked for how we can again, have the most impact. So we looked to markets most similar to New York, that have been very similar clientele, very similar price points, and great, you know, great tech. Community’s great. great. Job environments, economic activity overall. so when we are our first market outside of New York was who is Connecticut, our S our third market now will be Philadelphia, and we’ll be adding one more market and Q2, which we haven’t yet disclosed. but it was really those similar makeups. So that meant those metropolitan areas and those big price points where we can really bring that largest, the large mission of saving. So it was, it was actually requests on our site that helped guide that.
Andrew: You know, it seems like you guys are really smart. You’ve got financial backgrounds you were doing really well, adjusting to the market, getting customers and still, I would have thought it would be easy for you to raise money, but it wasn’t. What was that process like?
Thomas: Yeah, it was the first round of funding I think was, you know, took a admittedly low touch longer than expected.
Andrew: A touch only. It seemed like it, it seemed like they really made it. Like, I think you said it was a second or third job to you almost
Thomas: yeah. At one point it definitely was. I think, we also were raising at a time of the year when, you know, it turns out a lot of VCs like to take off during the summer. So it was definitely a quieter period to reach some of the folks. So it definitely, you know, added to it. but I think when you, when you look at it, you really have to make sure your differentiator, you have to make sure you have a story to tell, and especially in a space like real estate, the, a lot of models of have. Gone through this and tried to save people money, but they try to save the seller money. There’s a lot of models that have been successful in raising money. And I think a lot of investors got burned by the seller focused models. And I think where our lead investor in our, our, our syndicate of investors that came into this round, I think they were blown away by the focus on the buyer. And the unique observation of creating a digital experience. Like we believe that everybody should be able to buy a home online. And if you look at the behavior of what people want, people don’t want an agent following them around all the time. They don’t want to be peppered and inundated. And, I was reading a memoir of Charles Schwab and he actually said in the early days, the people from Merrill Lynch used to say like that brokers were salespeople and they were selling you a stock and his belief was. We’re here. So buyers tell us what stocks they want to buy. And we think that same idea will come to real estate buyers, know what they want searches ubiquitous. So how do you automate all of the other collaboration between the agent and the consumer where you can unlock a dramatic amount of savings for them? And then bring that same level of savings to every other product and service. You’re going to build a multibillion dollar business to the likes of the Schwabs of the world, each trades of the world, the travel companies, the world, but build the tools of what people and how people want to interact and consume not how it was done before.
Andrew: And so give me an example of the problem beyond the August, you know, like specifics beyond the fact that you were trying to raise money in August, where was that an issue that you were able to then either, persuade investor or find someone else.
Thomas: I, I think if you hear the survivor bias of, of many successful startups of, you know, we got a hundred nos and then there was the one yes. Or the 200 no’s in the one. Yes. And I think in the early days know, VCs look at thousands of companies a year. you know, some claim that they talk to five, 10,000 companies a year. but when you look at it, they have to quickly make an assessment and you can easily get bucketed. so in our case, people bucketed us as, Oh, another tech enabled brokerage. but we, we cut through that. We learned very quickly from the early meetings, and we made it very clear of what our model was and how we were differentiated.
Andrew: By making sure that you said everyone else that you’ve been talking about is focused on the seller. Our angle is the buyer. And if you shift the conversation that way you put it back on your, I’m your wherever, it makes more sense for you.
Thomas: Right. Yeah. And our lead investor, obviously they were in, they were an early seed round investor in encompass, which is now a $6 billion, you know, you know, unicorn, and they had interviewed in their new viewpoint on savings, oriented brokerage. They had probably met with 30 or 40 companies. and we stood out cause we were differentiated from the buyer. We had positive. A positive contribution margin. And we have the ability to go into other services as we grow. and it was working in the toughest real estate market out there. So as being the most competitive, not the, the toughest given the overall market’s been strong in the United States overall, but it’s the most competitive, so we’ve proven it in the most competitive market. So if it works here, it’s, we we’re big believers. That’s going to work everywhere in the early signs. They’re a part of that fact.
Andrew: Your website used to be on preview.app. And then ..
Thomas: Yeah. So we, yeah, we originally started, so obviously, you know, we couldn’t get preview cause it was taken. so we started preview app.com. and in the early days most people said where’s the app. And we thought, you know, Idealistically, we’re going to build this app. Cause back in 22, 2015, 2016, everybody was building apps, not sites. And we built a mobile optimized site to save money, going back to our operational discipline. and when Russell Sinclair joined us as VP of product, he was like, The apps, confusing people like it keeps asking where’s the app. And like, we can’t afford an iOS engineer in here. So like, we should probably try to get preview if we can. So, so we said, Russell, if you can figure it out, go get it. And, you know, Russell’s originally from, you know, he grew up in Canada and we found out that preview.com was owned by a. Cannabis company in Canada. and the cannabis company used to be a medical devices company and hadn’t updated their site and there’s still, I think, flash on the site. So Russell’s like, clearly they’re not using this. So he was up in visiting family in Canada, went to the office of the company and. And we negotiate, we negotiated a purchase of it. So, yeah, I don’t remember if we paid Canadian or us dollars, but, I think we only spent like four or 5,000 on it, which in today’s, which in today’s world, it’s it’s I think a, I think the team did a great job, negotiating it, but, you know, kudos to, to Russell for. Got one, having the idea for it to go out and get our five letter domain. But, but also to actually go out and negotiate it and go find it.
Andrew: Is it a little confusing for people that it’s preview spelled P R E V U.
Thomas: not really most people like it’s, it’s easy to say. It’s like, it’s like preview, but it’s shorter. so it’s, it’s so far, it hasn’t been too much of an issue. I get asked constantly, like where did you guys come up with the name? and my cofounder chase, you know, makes fun of me all the time of like, Oh, why don’t you tell them the story where it derives from a French verb? but it actually does come from a French word, that refers to expected or planned,
Andrew: Is it like an active French word when you were living in Geneva? Is it a word that people would actually use?
Thomas: I don’t remember ever using it, but I guess I was also only using, my friendship, grocery stores and in restaurants, but, but it, it is a, like a past participle of, of a specific verb. So, it’s from a verb called … but then the actual past participle is preview.
Andrew: All right. And the website is now preview.com five letter domain. Name, a score for just a few thousand bucks. Congratulations.
Thomas: thank you. Thank