How This Product Manager's Bold Business Model Pivot Turned Struggles into Success

Sure. Um, Yeah, I think I, I think I have a really good example for that. Uh, in the early days of my, of my of my startup, uh, about a year in, uh, we, I started realizing that we, uh, we're really struggling to grow in the, in the pace that, that, that, that we set for ourselves. The goal was to, uh, get to a certain level, uh, number of, of clients, and, and it was pretty obvious we're struggling not only to, to getting new clients but clients who are staying with us less time than we expected or we were hoping for. And, and that caused a pretty serious uh issue and concern for the company and We're at the point that I need to decide whether we are continuing to fight and struggle in, in that area of, of growing uh new clients or maybe we'll do uh some sort of change or pivot or business model change or find some other way to go about it. And The, from some, set of events that I can explain a little further, um, maybe, but it's not very important for the sake of this story. I, I got, we got, I got the idea of basically changing our business model in one way which is instead of uh managing our apartments for clients that were apartment owners, uh, and maybe they were away for the units for a little bit and, uh, for a few months and we operated for them and then they came back. Instead of doing that, we decided, why won't we as a company go and lease apartments ourselves, become In a way, our own client for that regard, uh, and, and operate it ourselves and, and removed a lot of the friction that was caused by, uh, by the old business model we were doing. Uh, which was a huge risk because this is what we were doing, we knew how to do it well. We were not growing as fast as we wanted, but we were growing. It was working, um, but the, the other option was very, very appealing and What I decided to do was, uh, to sacrifice at least a piece initially of this, uh, of this client growth and try the alternative model and see if it works out well and I That's exactly what I did. I, uh, we said, I, you know, instructed everyone that we're going to do that kind of split and do this experiment of this, this, uh, a few leases that we'll take ourselves, um, and we did that and it worked really, really well to the point that we almost completely got out of the. Client space, uh, almost instantly. We still had a lot of things that were already in the works that we invested in, so we kept them because we, we didn't require a lot of attention to get, you know, to keep growing the client space, but, but this new thing was working so well that we focused almost entirely on that. So this, uh, this was, you know, a sacrifice of one thing, but it was really, really successful in, uh, in what we did instead.

Uh, sure. So, first of all, the, it was a pretty complicated decision to make financially because the, the unit economics are entirely different in those two models. In the model of, of an existing client, uh, of an existing homeowner, then we almost don't have to pay anything to ramp up a new unit other than maybe set it up a little bit and, uh, and, and we're often Running. In the other model, we're leasing the unit ourselves. We have to furnish it. We have to do a lot of expenses. There's some dead, dead time. We can't operate it until we finish setting it up and until we get our permits from the city and uh so, so there was a lot of financial questions that need to be answered to do that right. Um, so, I, first I think I ran all, all the numbers. We did uh a financial model of, of these two options and, uh, in order to compare what was working better, at the end of the day, it's the, uh, you know, short-term and, and short-term and, and long-term profitability of, of the business, maybe of the unit economics. And so what I found Was that, yes, in the short term, it will require some capital to invest per apartment that we were maybe short of and we need to figure out how to get that, but within just a few months, it was uh gonna pay back for itself and at that point, we were gonna be able to make much more than what we did in the other model just because uh our Our expenses were almost fixed and our revenue was then almost everything whereas in the, uh, in the other model, we were taking a percentage of revenue and just the numbers after a random, it became obvious that if we can pull off the, uh, the, our, our model and obviously with the right numbers and the right margins and if, if such deals actually exist, it's going to be, uh, much more profitable and stable for us in the long run, which is also very important.

That's a great question. So, first of all, uh, uh, the, the, the fact that we were, uh, it might sound obvious now, but the fact that we were leasing properties, uh, for, you know, a a regular lease of 12 months rather than being a very short, a very long-term lease or, or buying the property even. Um, this was, this was on purpose. This was to keep the flexibility of being able to still get out at some, uh, at some point if things were not working well. In addition, we were trying to always, uh, to, in the beginning, I tried to only sign leases that I had some way of exit them with a limited, uh, Amount of, uh, of risk, meaning maybe I'll have to pay a month lease or, or, or two, but I will be able to get out and, and not stay there for a whole year if I don't have to. So, um, we mitigate the risk with, with, with legal ways by, uh, by shortening the, the time of obligation, um, and by, um, what's my third thing and um. Oh, and, and by, by starting small and slowly expanding, uh, meaning we didn't initially already, uh, change our portfolio entirely to only such units. We started to start small, we took like 5 or 10 units in one building, then another, and we let it run for a couple of months, see how it goes, and then we, we thought it was working well and we kept increasing and increasing.

That, that, that's a great question. So first of all, on, on the client side, on the people we're trying to get, I already knew how hard or, you know, easy it was to do because we were trying to do this for months. Uh, so, that, that's true that, that are so many homeowners, but the reality is that convincing someone that even if their house is, is, is clear for a few months, that you will come in and be in their home and, and, and, and they even, even if they were thinking about it and, and, and other people would Stay in their apartment, it's, it's hard for people to accept it. On the other hand, the, uh, these communities of apartment complexes which we were targeting, uh, many, very often have, um, a lot of free occupancy. They have their own targets of, of leases that they want to, to, you know, to close and their own metrics, and we found out that, uh, with, with initial research of, you know, just calling many different apartment complexes in, in the different cities we were, we were already in. Um, and we found out that there's, uh, they're actually very happy to hear about such a thing because to them, we are someone who comes in and maybe takes 5, 10 leases off their hands, uh, just, uh, immediately, which maybe gives them their quarterly goal in almost, uh, immediately. So, we found that there was, uh, much more, uh, willingness to, to entertain the idea of doing what we're trying to do from the apartment complexes versus, uh, versus the, uh, the homeowners we were, uh, having a hard time to find. And of course, we Because there was always a question of how easy would it be to continue growing, but from the initial reach outs we did and the initial research, we found we already had so many options and it was so much easier than, than with the regular clients that we saw, that we immediately saw there must be something there. So we'll start somewhere and, and then we continue growing it, but we already had so much um so, so many things lined up that wanted to explore the option that it was, uh, we already got a good intuition that it's, uh, it's working very well in that field. OK.