In this episode, Theo Hicks interviews Eachan Fletcher, founder and CEO of the property management and maintenance platform Nestegg. Eachan discusses all of the insights they discovered while developing Nestegg. Learn about Nestegg’s core features for property management and how they designed their solutions to fit the needs of their targeted consumer.
Eachan Fletcher Real Estate Background:
- Founder and CEO of Nestegg
- Worked as the CTO and VP of product at Expedia where he built and led multiple teams, developed award-winning products
- Based in Chicago, IL
- Say hi to him at https://nestegg.rent/
- Best Ever Book: anything written by Steven Pinker
Best Ever Tweet:
“When you build technology products, particularly as a startup, you have to be hyper-focused. It’s so easy and so tempting to make your product for everyone.” – Eachan Fletcher
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TRANSCRIPTION
Theo Hicks: Hello, Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks, I’ll be hosting today’s episode. Today we are speaking with Eachan Fletcher. Eachan, how are you doing today?
Eachan Fletcher: I’m super-good. Thank you so much for having me.
Theo Hicks: Absolutely, and thank you for joining us. I’m looking forward to our conversation. Before we get started a little bit about Eachan – he is the founder and CEO of Nestegg, which is a platform for property management and maintenance that makes being a landlord refreshingly easy; we’ll definitely dig into that. He also has worked as the CTO and VP of product at Expedia, where he built and led multiple teams, developed award-winning products. I actually used Expedia to book my recent trip to Cincinnati for work.
Eachan Fletcher: Oh, great.
Theo Hicks: He is based in Chicago, Illinois. You can say hi to him at Nestegg.rent. Eachan, before we get started, can you tell us a little bit more about your background and what you’re focused on now?
Eachan Fletcher: Sure. I’ve always been a tech guy, worked in technology all of my professional career, and I’ve always been fascinated by how technology and how data can help people with ordinary everyday frustrations that they’re often not even aware of… And I think my time at Expedia was one of the most transformative times of my career, where we spent a lot of time looking at travel, something that happens out in the real world, and we could better support that through technology and data.
I think we’ve fundamentally changed how people travel, and I think if you look at what we used to do – I think this probably dates me, I guess, to all of your audience… But I think everyone remembers the days of the travel agent, where you would have someone in a store, with a big, glossy catalog, and you would go there and say “I wanna go on vacation”, and they’d flip through some pages and they’d try to figure out where you should go, and they’d talk to you about prices, and packages, and [unintelligible [00:03:28].08] arrangements… And then you’d get some paper tickets. That was the big deal. And in that scenario, you had a lot of power and a lot of access [unintelligible [00:03:36].22] locked up into the hands of a small number of experts. If you look at what we’ve achieved in travel, we’ve democratized that by taking that access and that power and that information and disseminating it directly to the people who need it and who are benefitting from it.
Now, we don’t even think twice. There are people who’ve never used a travel agent, and people are going on more trips and more vacations than ever, than in any other time in history now, because it’s so easy, and it’s so accessible, and the information is available. We take it for granted, but that’s a major transformation, and it was amazing being part of that journey, and just seeing how technology just totally disrupted, but then lifted up an entire industry.
Then as a small real estate investor myself, I got more and more interested in buy and hold real estate investing and building up a small portfolio of my own, and then I started to hit some of those exact same frustrations – where is the expertise, where is the information, what are the great automated technology tools that help me build and maintain a profitable portfolio, and take care of my future income? I saw the same pattern emerge in real estate, that we addressed in travel… So that’s what drew me into this, and that’s why I founded Nestegg.
Theo Hicks: When did you found Nestegg?
Eachan Fletcher: We started in 2017, with a beta, in the Bay Area. In 2018 we got our proper round of VC funding, and any startup people listening will appreciate what’s involved in that. In January this year we launched in Chicago.
Theo Hicks: So it sounds like you applied the same concept — you’ve kind of already said this, but you’ve applied the same concept that you did at Expedia, finding what frustrates people and then creating some sort of automated tool that alleviates that frustration. Do you want to maybe walk us through how you specifically identified this particular frustration with property management and maintenance, and then how that went from just an idea to you actually start a business and creating a product that (as I mentioned) alleviates that frustration?
Eachan Fletcher: Yeah, for sure. Let me do my bit to summarize a good year plus of work, in a quick and punchy answer for you. I think everything starts with understanding the space and the customer. We used very practiced, standard market research, user research methodologies that we’d been using for years in the Bay Area and Silicon Valley to draw out insights about what’s missing and what’s difficult about property management today.
So step one was gaining those insights. Through various techniques, we found out that really the hard part and what was really missing was for people who were reasonably new to property management and who had reasonably small portfolios. I’m talking people 2-3 years into being a landlord, with less than 10 properties. That’s the ideal customer that we’ve specifically tailored our product around.
As a general rule, I think when you build technology products, particularly as a startup, you have to be hyper-focused. It’s so easy and so tempting to make your products for everyone – any kind of landlord, any kind of property, any size portfolio… But I think if you do that, you end up making a lot of very generalized features, that become very ordinary and common, and don’t necessarily exactly match someone’s specific frustrations.
So to talk through what we did to make that real, as an example – when we identified this sub-segment of landlords, these reasonably new people with small and medium portfolios, we’ve found a handful of main pain points that they had.
The first one is one of cashflow – these are people who are just starting out in their real estate investing journey, so often they’ve really leveraged themselves a lot to get their first few properties… So cashflow is tight month-to-month; exactly when expenses hit, exactly when [unintelligible [00:07:43].22] things like that matter. So that was insight number one.
Insight number two was they don’t have an existing network of trusted contractors that they know to deal with all the maintenance, that they know will do a good job, will charge them a good price [unintelligible [00:08:01].09]
And the third one just comes down to confidence. Without access to the expertise of someone like a property manager, there’s so many things they don’t know they don’t know, if that makes sense. We’ve designed that product exactly around those three features. And when we did some initial research – because obviously, step two is always go out there and find today’s solutions and try to figure out why people aren’t happy with today’s solutions; why these pain points are still pain points, and if other prop tech companies exist, if other real estate companies exist… And what we’ve found was all the guys out there already doing things for small, independent landlords – they were really focused on the online things that are the beginning or the end of every lease.
So finding a tenant, listing the property, background checking potential tenants, signing a lease… Those kinds of things are – I hesitate to use the word “easy”, but they are now becoming what I would consider a commodity. You have so many options doing things like that. But once you have someone in your property, and then they’ve got a [unintelligible [00:09:07].04] you are on your own. That is your problem, and you have to find a contractor you can trust; you have to figure out when the tenant’s available, when the contractor’s available, take care of the scheduling, make sure it gets done, make sure the contractor gets paid, make sure the work is reasonable… There’s a lot to it, and we didn’t find anyone really taking that pain away, so that’s what we did.
So the features that we’ve rolled out so far maybe to touch on that as the core of the platform is about that maintenance. Once you have a tenant in, they’re there for 18 months, two years, 2,5 years, and during that time you’re gonna have 4-6 small to medium maintenance jobs go wrong. That’s what’s gonna happen, and you need to be able to resolve those quickly.
So our product – we like to think of it as kind of like the help desk for landlords. A tenant will report a maintenance issue to us, anytime 24/7, we diagnose that issue, figure out exactly what’s wrong, we figure out a price for it, and then we notify the owners. So as a landlord on that platform, you’ll get a notification in our app to let you know there’s a maintenance issue, we’ll let you know what [unintelligible [00:10:15].19] you’ll see a before image, you’ll see our diagnosis of the issue, our recommendation, and a price to get it fixed. If you want us to go ahead with that, all you need to do is tap the button and then we take care of everything.
We find the right contractor – we have a big network of contractors that we’ve onboarded, that we’ve verified, background-checked; we track the quality of their work, we stand behind every job they do, and we take care of the scheduling, the timing of the contractor with the tenant, with making sure the job gets done. We take care of paying the contractor, and then maybe charge your credit card once you’re happy. That way everything is taken care of with a tap; all those dozens of phone calls – down to a tap. We stand behind all the work we do for 14 days, we actively monitor repairs to make sure they stay fixed.
That’s the core of the platform, and that takes away that major pain point of “What do I do if something goes wrong?” Because today if something goes wrong and you’re a small rental owner, your whole life is thrown into disruption while you desperately search around for someone who [unintelligible [00:11:16].11] deal with it. So we take care of that.
Then the other major features are around this cashflow issue, which again, is unique to newer landlords or smaller portfolios. We have several features for that. One is we’re doing some very differentiated things with rent collection. We are the only platform who will pay you your rent in advance. So if you use rent collection through us, we will guarantee you available funds in your account, right upfront on the first, even if we don’t collect from your tenant until the 10th, or the 15th, or the 5th, or whatever. And that just takes a lot of monthly crunch that happens every month [unintelligible [00:11:58].00]
The other thing that we’re rolling out right now is a feature we call “Fix now, pay later.” As I’m sure you’re aware, a lot of traditional property managers will execute on small repair jobs and then take their money for the invoice out of a future rent check. So we’ve taken that one step further, where we’ve allowed you to spread that over a number of rent checks.
So instead of having all $300 or $400 come out of the very next rent check, and then have a potentially tight month, you can choose to spread that over 2, 4 or 6 different rent checks, and then just have a small, manageable amount come out each time… Almost financing your maintenance over time for rent collection. We think that little things like that – it’s easy to do with smart technology, and it just takes a major burden off of rental owners, and that’s what we’re all about.
Theo Hicks: It’s funny, because those three particular pain points you’ve just addressed are addressed by those three features you mentioned: the maintenance, paying the rent in advance, and spreading the maintenance costs out over time – those are the three main issues I had with the property management company I worked with. Every time I was like “Oh, cashflow issue.” “Oh, fix now, pay later? That’s great.” I definitely wish I would have found a service list this when I was first starting out, because those are definitely three major pain points that I had.
So right now you said you launched it in the Bay Area, and now it’s in Chicago. So if I’m an investor in Tampa, Florida, for example, I can’t use Nestegg.
Eachan Fletcher: You can use us; we have a whole bunch of property management features that give you regular reminders about key dates and tasks, information about your units, a chat feature to allow you to keep in touch with tenants, and give them notices and things without needing to exchange personal details… So you can use all our property management features, you can use all our rent collection features, but our maintenance is — right now we have pretty much all of Illinois, pretty much all of Indiana, Wisconsin area, L.A. and San Francisco. And that’s because we wanna take our time to make sure in every city that we switch the maintenance feature on, we wanna take our time to make sure that we’ve got only the best contractors in that area locked down, and we’ve taken the time to make sure to verify them, make sure that they’re trustworthy and they do great work, because eventually we put ourselves on the line, and our reputation on the line through their work.
And of course, we negotiate volume discounts with these guys, and that could take some time, too. So we try to pass on some savings to our owners as well.
Theo Hicks: Alright, Eachan, what is your best real estate investing advice ever?
Eachan Fletcher: How about this one – if I could go back and tell myself something to do differently ten years ago, I would have said be more aggressive, and I would have taken on more properties sooner, and I would have grown my portfolio more quickly. But I think starting out can be expensive and it can be scary; particularly when you’re starting out from a reasonably comfortable financial position, you’re gonna buy a couple of properties that you’re never gonna live in, you’re gonna carry a lot of financial risks and a lot of overheads for a while, and you may even have to make compromises on your current lifestyle, but boy, it’s worth it in the future… And I think especially if your long-term plans are based on 401Ks and things like that, I’d say you should grow a portfolio at any opportunity you can. Don’t wait for the perfect deal and the perfect time. You’ve just gotta make your start. The sooner you make your start, the more comfortable you’re gonna be later in life. That would be what I’d say. You don’t have to go to 27 real estate events and read ten books, you’ve just gotta get a unit and try it.
Theo Hicks: Exactly. Alright, Eachan, are you ready for the Best Ever Lightning Round?
Eachan Fletcher: Yeah, for sure. Let’s do it.
Theo Hicks: Okay. First, a quick word from our sponsor.
Break: [00:16:04].16] to [00:17:01].29]
Theo Hicks: Alright, what is the best ever book you’ve recently read?
Eachan Fletcher: Best ever book I’ve recently read… I love anything by Steven Pinker. I think he’s an extraordinary genius, and sees the world a very different way. I think it really helps you understand the Universe you live in through the eyes of people like that.
Theo Hicks: Blank Slate?
Eachan Fletcher: Oh, Blank Slate. Yes, there you go. You’re familiar.
Theo Hicks: Yeah, I’m very familiar with Steven Pinker. If your business were to collapse today, what would you do next?
Eachan Fletcher: You know what – I would do the same thing again.
Theo Hicks: There you go. Simple.
Eachan Fletcher: I think this is a huge opportunity that touches everyone, where you live, and how you enjoy a home.
Theo Hicks: What deal did you lose the most money on, and how much did you lose?
Eachan Fletcher: That’s a great point. My answer is probably not the one you’re looking for… I’ve always done pretty well on the real estate side, but I’ve lost a lot of money investing in a handful of startups, and I think that is one of the things that goes along with startups – in the first six months or so there’s a very high chance of failure, and there’s a very small chance you’ll change the world. And I think it’s worth taking those chances, because eventually you change the world.
Theo Hicks: And then lastly, what’s the best ever place to reach you?
Eachan Fletcher: Oh, I’d love to hear from anyone who likes what we’re doing and wants to know how we can help them. Just go to Nestegg.rent.
Theo Hicks: Alright, Eachan, I really appreciate you coming on the show and sharing your journey with us, and as well as your new business, Nestegg. Just to summarize a few takeaways from me – I really liked how you broke down the steps to starting a business, and again, this is in the perspective of founding a property management automated technology business, but this could be applied to real estate as well. Number one is gaining insights and understanding the space and the customer.
Then you also mentioned that when you are building a new technology product, you wanna make sure you’re being very hyper-focused, as opposed to making general solutions that don’t necessarily address a specific problem, or can’t address a specific problem that a specific person has. And then the insights that you gained were a cashflow issue, the network of existing contractors, and then the confidence that’s lacking in not necessarily knowing what you don’t actually know.
Then step two was finding the competitors and figuring out why people aren’t happy with the solutions. Based off of that, you came up with Nestegg. The three main features were the maintenance, so it’s basically a help desk for landlords, and you went through the process of how you’re able to basically handle the entire maintenance process for the landlord.
Two is the cashflow issue. Rather than getting rent a month later or two months later, you’re able to pay rent in advance. So they’re paid on the 1st, even if you guys haven’t collected that rent yet.
And then there was your “Fix now, pay later” new feature, which allows landlords to spread the costs of the maintenance over a number of checks, as opposed to it coming out of next month’s rent.
And then lastly, your Best Ever advice, which is advice you would give to yourself ten years ago, which is to be more aggressive, take on more properties sooner to make sure you’re growing your portfolio much quicker.
Again, I really appreciate it, Eachan. I really enjoyed this conversation. Best Ever listeners, thanks for listening. Have a best ever day, and we’ll talk to you tomorrow.
Eachan Fletcher: Thank you.
