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An interview with Lee Lin, co-founder of RentHop
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It's moving time again! I've been thinking a lot about the moving process and the hunt for apartment lately. I'll move into my new digs next month and the movers arrive this Thursday. I can be a stressful undertaking, especially Around August 1st when the rush of students and new college graduates is hard to miss!
Looking for a little sanity in your apartment search? Enter RentHop - an innovative new service that allows would-be renters to browse free, no -fee listings in the New York City area. I had the opportunity to speak with Lee Lin, co-founder of RentHop.
Christa - The rental market in NYC has long been an ugly experience for residents. Is there a personal experience that inspired you to start RentHop?
Lee - It's still weird for me to call RentHop a startup. The site began as a quick weekend hack out of spite; I had a bad experience with a truly slimy apartment broker and wondered whether technology could have saved me a lot of stress and hassle. I would soon discover that Manhattan had plenty of collective disgust for the less ethical members of the profession, which fortunately has helped the site grow.
Of course, there are plenty of honest, hard-working brokers, but they spend the vast majority of their time prospecting for leads. Brokers are adding the most value when they are showing apartments or giving expert advice, not prospecting, and this is a problem not just in New York but nationwide.
Christa - How were you able to bypass the broker, who has enjoyed an ironclad grip on the rental market in NYC for decades?
Lee - When we first began collecting listings from landlords, a lot of them were reluctant to send us their availabilities. I realized early on that in order to succeed, I would need to become a broker, and that’s exactly what I did!
So yes, I am actually an apartment broker even though RentHop is partly an effort to cut out unscrupulous middlemen. Officially, I am a licensed real estate salesperson and a member of the Real Estate Board of New York.
Christa - Can you tell me a little bit about your professional background prior to RentHop and what led you to start your business?
Lee - My ventures in real estate began in Seattle when I was a software developer at Microsoft. In 2004, housing in Redmond was still very cheap so I purchased two condos, living in one and renting out the other. That might sound pretty crazy for a guy fresh out of university, but keep in mind in 2004, 2-bedroom townhouses in Redmond, WA were selling for $120,000, and the monthly mortgage payments were only $600. I got lucky. Microsoft grew by tens of thousands of employees while I was there and my first three tenants were all newly hired Microsofties.
My nerdy math and CS background eventually landed me a job at the hedge fund D. E. Shaw & Co., which has a reputation for creating computer-driven trading strategies. By sheer luck and coincidence, they put me in the group that trades mortgages and models real estate markets! I was writing computer algorithms to estimate the odds someone would pay their mortgage payments, which as an intermediate step required forecasting housing prices down to the zip code level of granularity. This was a great fit, because I learned a lot about mortgage products and real estate during my previous landlording and investing stint.
My co-founder Lawrence Zhou was also working at a hedge fund, Traxis Partners, and before that he was modeling commercial mortgage backed securities with Citigroup.
I guess we’ve seen the business from various angles, from software developer to landlord to renter to broker. We see a good mix of competing sites that are started either by pure real estate veterans that hire the cheapest programmers they can find, or by a group of techy programmers who haven’t been in the real estate trenches.
Christa - Your company is supported by Y Combinator. Can you tell me about that experience - what have been the best and the most challenging parts of that experience?
Lee - I applaud Y Combinator for the variety of companies they have funded this batch. I think there is this misconception that YC only funds certain specific types of startups, such as companies interested in creating online social networks or user-generated content sites. In reality, there are plenty of data points to the contrary, including Rent Hop. There are 27 funded companies this Summer attacking various markets and none of us are in direct competition with each other.
We meet up as a group at least once a week and I’m always impressed by the other founders; either because they had the brilliance to think of a cool new idea or because they had the audacity to create a new disruptive product in a market with lots of well-entrenched competitors.
The biggest challenge was convincing ourselves that Y Combinator was a good fit for RentHop. After all, our business right now is in New York but all the investor and founder events are in Mountain View, CA. We ended up going bicoastal for the Summer, and I fly back and forth between my pad in New York and our makeshift apartment in Silicon Valley. It’s been less than two months and I am already very glad to have taken the funding. Y Combinator provides a tiny bit of structure to the otherwise wild world of founding a startup. The motivational boost from the regular meetups goes a long way to improving our productivity. I’m sure we’ll also benefit from advice and introductions later to come.
Christa - Did you feel any fear when starting your own business? If so, how did you overcome it?
Lee - I actually liked my previous job a lot and I was scared to give it all up on a chance and dream.
Some people are pretty bold and will quit their jobs with nothing but an idea and vision. Others pull the trigger when they have a mockup of their product or a working prototype. In our case, we had a functioning website, business partnerships in place, press coverage, real users who were using our service, more traffic than some of our competitors, revenues in sight, and the investment from Y Combinator. With so much of the road seemingly paved, if we weren’t ready to go all out, then we couldn’t possibly consider ourselves entrepreneurs!
Christa - What advice do you have for people interested in starting their own businesses, particularly in the current economy?
Lee - First, I don’t recommend spending much time in the side-project / part-time phase. We did this for far too long and it was a bad idea. Had we gone all out earlier, RentHop would be farther along. Instead, my retirement fund is a bit larger. Maybe the best thing about the part-time period is that the co-founders test-drive each other. Making progress while everyone is juggling day jobs seems to be a good sign of dedication.
For anyone too scared to give up a job, consider how bad the failure scenario will be for you. Now think about the failure scenario next year, 5 years from now, and 20 years from now. If founding a startup is a life goal, is failing this year better or worse than failing in the future?
There are a few people who might want to hold off based on this theory: undergrads still in college, people waiting for vesting options, or people who need to build up a small nest egg. For just about everyone else, if a startup is on your list of things to do in life, today seems better than this time next year.
For more info: RentHop
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