Spark Up Series
Guest: Sofia Vyshnevska, Co-founder and Chief Operating Officer (COO)
Company: PropertyMate
Headquarters: New York City, New York, United States of America
Industry: Real Estate / Property Technology
Summary:
Sofia is one of the Forbes top 25 Ukrainian women in IT that has recently raised $ 1 million funding for her startup, helping people to purchase a new construction house in the U.S.
In the podcast, she speaks of her experience in the PropTech industry and shares insights on launching a successful SaaS project in real estate. This industry is booming in the U.S. in the aftermath of COVID-19 pandemics, creating amazing opportunities for founders to find their unique niche in the growing market.
In addition, Sofia gives the readers some sound advice on working with investors, marketing strategies, personal growth, and other topics that concern people in business.
Key Themes:
- unexplored potential of conservative “red ocean” industries for SaaS development;
- the review of the real estate industry in the U.S.;
- dual impacts of COVID-19 pandemic, as concealing both risks and unexpected opportunities for business;
- instrumental role of startup accelerators for launching a project;
- peril and promise of fundraising activities;
- virtual team management and organization of offshore collaboration;
- challenges of growth and scaling;
- most effective marketing strategies in the short- and long-term perspectives;
- personal qualities necessary to bring your startup to fruition.*
* Some passages of the original interview were slightly refined or expanded with the aim of facilitating the reading process. This in no way affects the accuracy of ideas and facts presented in the primary source.
“I Can Say I Do a Bit of Everything”
Q: Can you describe what is PropertyMate (PM) all about? What is the company, what is the structure of the company? How do you actually make money right now?
A: First of all, thanks for inviting me. I am very happy to be here. PropertyMate is a one-stop shop to buy a new construction home in the United States. Basically, it is a platform where you can find, compare, and buy a house in a newly constructed building.
New construction is a distinct market in the U.S. that is most challenging for a customer in terms of searching and purchasing convenience. There are a couple of places within the giant real estate platforms like Zillow or Trulia where you can find new buildings for sale. But still, it is a very tiny part of the entire industry.
Q: What is your current role on the project? What is your involvement? What is your position?
A: I am a co-founder, but I also take a COO position. So, I am responsible for operations, for the team, for the product, you know, all those day-to-day duties. I can say that I do a bit of everything.
Q: Do you feel efficient and productive in this role, or do you plan to outsource something?
A: I do feel efficient. Of course, I am delegating a lot of stuff to my team. At the very beginning, I and my co-founder Bohdan did most of the work ourselves. But now we have great teammates that we can rely on. We are working and acting as a real team. And that's great!
Remote Work Culture for Doing Business in the U.S.
Q: What is the team structure right now? As far as I know, most of your team are based in Lviv, Ukraine, as long as your company’s HQ is in New York City. So, you don't have any employees in the U.S., do you?
A: Not exactly. Our product team is based in Ukraine right now, indeed. Everyone works remotely. But this does not affect efficiency, in any way. We have gone to great lengths to develop and master remote work culture, so that now all is running like clockwork, smoothly and uninterruptedly.
For special occasions when the live collaborative effort is indispensable, we have co-working spaces (offices) in Lviv and Kyiv, where the main “strike forces” of our team currently reside. We also have employees from Kharkiv and Dnipro cities.
On the whole, I think remote work culture is a great thing for business today and SaaS in particular. It makes things easier for both proprietors and employees. Its entire potential is yet to be discovered and appreciated.
Q: However, as far as we know, you have some workers located in the U.S.
A: They are not workers, exactly. Strictly speaking, we have partners among the real estate agents, but they do not have the status of in-house employees. They collaborate with us as independent contractors on mutually agreed terms. They are really located in the U.S. because their services require perfect knowledge of the local real estate environment and fluctuations. Otherwise, this would be meaningless.
At the same time, soon we are going to hire our first in-house staff agents located in the U.S. This is a big decision because many legal, financial, and cultural issues are to be taken into account.
Q: You intrigued me! And what will it be?
A: This will be a position of a real estate agent lead. We need a person that will be in charge of coordination and guidance for all the real estate agents that we work with. It is sometimes very exhausting and complicated, to micromanage every partner, especially if you don't know the entire lowdown of such a socioculturally peculiar and diverse area as Texas.
Therefore, this new proxy will take all the job on the communication and supervising operations regarding the services in our company delivered here in the U.S.
Q: That sounds serious. We talked only about real estate agents thus far, and our readers can think they play a central role in your business. But I guess developers, managers, sales representatives also did their part to make your company what it is. What about them, in terms of structure, roles, and positions?
A: Of course, these guys make the core that keeps our product commercially meaningful. Formally, our main frontline cohorts are a design team, a marketing team, a product team, and a concierge team.
Q: Concierge team? I did not come across this term in its application to PropTech.
A: Concierge team is a group of highly professional customer support managers that work with clients directly. You may call the advisor helping you to choose a building based on your needs, preferences, and financial capabilities. As soon as you make your mind about a purchase, they will support you all way along in the deal-making process.
Q: Correct me if I am wrong, but this looks like a sales team's job.
A: In some way. Yes, they operate as a part of a sales department, but their role is more tailored and customer-specific. You may call them a special task force among sales agents. The latter acquire the client base and make cold calls, while the former join game when we have a likely and potentially loyal customer.
Q: Looks like you approached your staff planning thoroughly. And what about the size of your company? In terms of the number of employees and their functional distribution, how many developers, managers, salesmen, and other specs do you have?
A: 30% are developers, 40-50% make the sales team. The remainder is shared between the product, marketing, and operations departments. These rates are approximate and shifty, of course.
From First Dreams to the First Project
Q: Now let's step aside from the PropertyMate for a second. You really impressed me, and now I would like to know something about you, Sofia. As a person.
A: Like what?
Q: Anything you would like to share with us. Your personal journey, how did you come up to be a startup founder and that sort of thing.
A: Oh, this is a big question! Then we need to go back as far as my school days. No, even to preschool times!
Since my childhood, I used to behave and act as a leader. I always felt that deep in my heart I am a captain and not a second-pilot. I loved to take the initiative (as well as the responsibility) for new endeavors. To explore uncharted territories and to create some new valuable things.
Q: It sounds very ambitious... and challenging, I would say.
A: Of course, this is a hard way of living. Perhaps, the hardest one. The cost of failing is high because you are in charge of the entire undertaking and of other people who trusted you. But this is the way where you can achieve the greatest outcome and most fully realize your inner potential.
Q: I see. So, you went into business straight from high school, didn't you?
A: Almost. I took my time to work for a couple of companies. But I was quick to realize that it was not my journey and I would never be happy being a small (or even a big) cog in a machine. This was not the way I wanted to live my life, the one, the only.
And the Universe heard me very soon. After some time I met Bohdan Hnatkovskyy. Now he is a co-founder at a PM. But to me, he is, first of all, a friend and a guide that showed me that launching a commercially successful startup is an achievable enterprise, and there is nothing impossible or scary here.
Q: Did he work for some company as well at that time?
A: No. When we first met, Bohdan was already an active startup founder. He has been at this since his 13 or 14 years, I think. Actually, I got hired at his company in Ukraine as a customer success lead.
I am lucky – and grateful – that Bohdan shared with me his vision on the lifestyle and doing business. It is not surprising, since his startup Brainify focused on personal growth and self-development. So, Bohdan was very inspiring when talking about those things. And his worldview has fully resonated with my feelings and expectations.
Q: In short, you got each other out of all this.
A: Yes, we found out that our objectives coincide: to create something new, life-changing, and valuable for people. And when I say “something”, I certainly mean a SaaS platform, because this was the area where we already had some expertise.
Q: And you have founded Propertymate...
A: Not so fast! It doesn't happen like that in life, you know. First, there was another startup, quite premature and inelaborate. It died away almost at the beginning. But with time I see that it was a precious experience.
Startup Accelerators as a Stepping Stone
Q: Your current startup recently raised a million dollars. It is a huge success, especially taking into account it is the very first one. How did you manage it?
A: First of all, we don't think that raising $1 million is such a big deal. To me, this is the way things should happen when you launch a startup that has potential. This capital just shows that investors acknowledged our product and put faith in it. In fact, it is Bohdan who should take credit for this achievement, as he is responsible for fundraising in our duo.
Q: Sounds like you are not going to rest on your laurels.
A: Yes, this investment is far, far away from the picture of real success as I envision it. This is just one of the first steps. Moreover, it is not even the main step for providing us with an effective start.
Q: What was the main step then?
A: I think it was participation in the acceleration program Techstars in Austin, Texas. This was exactly what made investors take us seriously and listen to our ideas attentively.
Techstars is one of the biggest startup accelerators in the United States. Before getting there we were invited to a couple of other similar projects like Y Combinator or 500 startups, both times in San Francisco, California. We have been among their runner-ups for two years. We also tried our hand at TechStars NYC in New York City but has not been accepted. This was rather frustrating, but we did not give up, - and here we are!
Q: Techstars in Austin was the platform where you were the most fortunate, right?
A: Yes. But if you like to know about all our adventures in accelerators, we need a special conversation as I have lots to talk about.
Q: Maybe, some other time. But in short, what is the key lesson learned from this stage of your business journey?
A: In short, it is just as in any other undertaking. You have to know what you are doing, to get some practice and experience in it, and then not to be afraid to go ahead and take action. To make a step, and another step, and one more. Just don't give up even if you have stumbled. Because you will.
You need to be very purposeful and hard-working. Consider any setback as feedback from life showing where you can improve, implement it, and try once again. I don't know any other way to succeed.
In Search of Funding
Q: What is the most important thing in fundraising? Does it all come down to having a good idea worth to be presented to investors?
A: In an ideal world. But in reality, it does not matter what you are doing if you are incapable to communicate your vision effectively. So, I would say, in dealing with investors you need to become a good sales specialist in the first place. Or to find such a person. Even if you are ingenious Wozniak, you need your Jobs to impress others with the flight of your idea.
Q: How does the process of fundraising look like, technically?
A: First of all, you have to create a pool of potential investors by searching and establishing connections among venture capitalists. You may start with reaching out to angel investors, financially backing small startups, or try to find sponsors among your friends and acquaintances. Maybe someone you know has just raised money and can get you starter support.
But this is a very tall order to persuade a potential investor. For example, we have gone through 120 interviewers before one of them said “yes”. But this “yes” has been worth the entire effort.
This does not mean that your financial issues are resolved with the first approval. But after getting the first investor, things become much easier. You become more confident, and other investors get more benevolent when they hear that some of their colleagues already showed trust in your project.
Selling Proposition Trials
Q: That would be a great piece of advice to our readers. Now, going into detail, what was the selling proposition you pitched to the investors about PropertyMate?
A: To answer this properly, I will take the liberty to give you a little tour of the real estate industry.
Real estate is the biggest market in the world, and all the more in the U.S. At the same time, it is still operating very, very traditionally. Only a tiny part of it is digitalized for now, while most of this industry still operates the same way it did 50 years ago.
Moreover, when it comes to the new construction buildings where PM actually stands, its market share is much smaller compared to resales. It is a very sweet point for us, as well as for any company or startup that is going to enter this market.
That is why we did not have problems with creating a selling proposition that would work. We just looked for the market need and shaped it along the way. We talked to investors, listened to their questions, and got insights on how to adjust our project for making it more compelling at the next round of negotiations.
As I already stated at the beginning, despite high demand very few companies effectively operate in the new construction niche. This is in part explained by the fact that this sector is very complicated for doing business in a traditional way. You need to collect a great deal of information and do a lot of manual paperwork. Therefore we saw an opportunity here to create a SaaS platform that can become a unicorn solution for this sphere.
Minimum Viability Product
Q: How did you get your hands on it? I mean, what did you start with, to have something concrete and measurable to present to investors and potential users? Was it MVP placed on sale or offered to sales agents, or just the idea?
A: We started with a concept that had been pivoted two or three times before we could present something comprehensible. This all was during our trials at different accelerator programs. The fact that we engaged with TechStars, 500 startups, and Y Combinator, gave us some kind of recognition that has made it much easier to raise money.
But what was even more valuable, we have established a network of connections with excellent product development specialists. This gave us access to expertise that allowed us to make our MVP and master it through several iterations. I think this is a good thing for a startup when a product makes a pivot.
Outbreak of COVID-19 as a Deus Ex Machina
Q: But the bad thing was that you have graduated from TechStars just before an outbreak of the COVID-19 pandemic... How did it affect you?
A: When the normal rhythm of life started falling apart in March 2020, we have just appointed a number of funding rounds with investors. Most of these meetings were to be canceled. That was a really hard time to raise money.
But the pandemic has also provided a windfall gain where we did not expect. The subsequent events triggered growth and even the boom of the new construction market in Texas where PropertyMate operates.
Our first city was Austin, then we expanded to Dallas and Houston. Now we are going to San Antonio, Phoenix, and other major cities of the state. Due to a favorable fiscal environment, many big corporations like Tesla, Google, and Amazon, now move to Texas from California, New York, and other regions of the U.S. Their need for big offices spurs the demand for new construction buildings enormously. This trend was reinforced during the pandemics and lockdown when people became less dependent on geography.
The point is, numerous newcomers that moved to Texas did not know what was going on here in the real estate sphere. They were unaware of the quality of apartments, what were the best neighborhoods, and so on. Most of those people were used to a certain level of comfort, so they sought assistance in buying new construction homes that would be a match to their needs and expectations.
Q: Why did not they address the resales market? I can't believe that everyone in California and New York is so picky that only a completely new apartment can satisfy them.
A: You are right. But the reason is the same: pandemics. The resales were stuck because people didn't want to sell their homes in the situation of complete uncertainty about the future.
Q: It seems like COVID-19 provided a golden opportunity for your startup.
A: Indeed. The new construction market exploded, and it especially exploded in Texas. The real estate prices raised by 50 and more percent. That was a great time for us to be here with a solution to help people with the most affordable option.
The Blue Ocean with a Reddish Hue
Q: Let’s come back to real estate and the reasons why you have chosen that market. As far as I know, it is usually considered an incredibly red ocean, very conservative, very overpopulated, very competitive. Along with most of your team being outsourced in Ukraine, this looks not the best-case scenario for your startup to get on its feet.
A: Your question already contains the answer. Real estate is a red ocean as an old-fashioned conservative industry. But when it comes to the PropTech SaaS market, i.e. the digital realm of real estate, I would never agree it is a red ocean.
On the contrary, it is a big, big blue ocean. I think it is easier to dive into business as a startup from this market than wherever else. There are lots of processes that are inefficient and outdated, and just waiting for an innovative solution to be adjusted.
As to our Ukrainian teammates, that has never made a problem. We are a company that is based in the U.S., with all the legal and procedural issues met. We just have people working with us remotely from Ukraine. Given the current post-COVID tendency towards virtual teams, I think the remote format will soon be a rule rather than an exception.
Value and Recognition
Q: And still, did you choose real estate only because of its enormous market gaps?
A: Not just that. As a super-huge market where most of mankind are stakeholders, it gives a chance to make something really meaningful, impactful, and bringing a lot of value to help people with their residential needs. Choosing the place where you will have to live the next 10-15 years, raise kids, send them to school, live through your through and joys, - it is not a small thing, I'm telling you. This means, if I help people to make a great choice, I will feel I have done something worthy to live for.
Q: Did you feel it already?
A: Yes, we constantly receive positive feedback from our clients, how helpful we are, how convenient the interface is, or how great it is to have everything in one place, to know about newly emerging constructions, or to compare the pros and cons of different builders. Some say we helped them to make a purchase very, very fast. And so on.
I would say, it is a beautiful feeling to get a confirmation that you are creating something genuine and beneficial.
The Road Ahead: Challenges of Growth
Q: I think such a success should have inspired you for even greater achievements. What is the main challenge for the further growth of your business? Is it sales, or fundraising, or product development, or marketing?
A: It is scaling. Although we have obviously found a market fit for our product right now, there is nothing to be sure of in this world. Nobody knows where we will stand tomorrow. But our expansion plans are ambitious. We are going to access markets in 20 more cities within the next 1,5-2 years.
Q: I guess one million dollars may not be enough for that scope.
A: You are right. We have started another fundraising round because we need lots of resources if we want to scale up as fast as intended.
But money is not the only problem caused by growth. The real challenge is the need to hire many more people here in the U.S. We will have to get a fully staffed team in every new city.
PM will continue to use partnerships with real estate agents, but we will need in-house teams of marketing and sales professionals. This implies much work on hiring people in the U.S.
Q: Why do you consider this challenging? Is it about salaries, or the labor market specifics, or pandemics, or perhaps the legal issues?
A: You know, I think this is just because we have never made it before on such a scale. Just because of that. Without experience, facing something unknown is always a bit uncomfortable.
But when I call it “a challenge”, I never mean it as something negative. On the contrary, it is great, because learning or trying something new is always a step forward and a basis for further growth. Especially if you are a business owner and a leader.
Q: So, the next great milestone for you would be to help your in-house sales and marketing teams in the U.S. with onboarding, right?
A: In terms of recruitment, right. In terms of business, this is an expansion to the new construction markets of at least 10 other locations in the U.S.
Looking into the Future of Real Estate
Q: With such ambitious plans, I think you have already made profound market research for the United States. How do you perceive the real estate industry in this country? What are the key trends, issues, challenges?
A: As I already said, it is growing, especially in our segment of the new construction buildings. More and more people work remotely, so they choose places that are most fiscally favorable, economically affordable, and environmentally clean, such as Texas. For such people, PropertyMate is a perfect choice right now.
Q: In terms of business operations and technological process, how does it look? Previously you called it a very conservative industry with everything still done by pen and paper. Apart from such unicorns as PM, is digitalization a real trend or rather a sporadic happenstance?
A: The trend exists. The thing is that it has just started. As far as I know, new startups emerge almost every day, especially in the residential real estate and commercial real estate markets. Enthusiastic founders try to digitalize anything they can. So the competition is expected to be huge when it gains momentum.
Q: So, does it mean a blue ocean will soon turn bright red, making chances of new startups pretty slim?
A: There is always a chance, at any time and in any industry. You just have to find a fit for the market need. It does not work immediately the first time. I have said we pivoted several times until we found our path. The first pilot was intended for builders, the second one targeted real estate agents. Only with the third version oriented on home buyers, we got a shot.
As to this particular market, all of the startups usually follow the same paradigm. They find a process that can be digitalized, then try to cut in the existing process, and finally, gradually supersede it by offering a smarter and easier solution.
I think a great example is Opendoor, a company allowing you to buy and sell homes almost instantly. You need not visit an apartment physically to examine it because you can get a virtual tour by opening an app.
A lot of such things can be done nowadays with the help of PropTech products. And much more are on the way. I see that there are huge opportunities ahead in this market.
The Efficiency of Marketing Strategies
Q: I don't know if you can disclose this information, but in terms of marketing and advertisement, what tools do you consider most sufficient and valuable for your business?
A: We mainly use Google Ads, and I feel it is the best tool allowing you to test your market positions and get fast results. Yes, it is quite expensive, but real immediate outcomes are worth it.
Q: Anything besides Google Ads?
A: We take great care of SEO optimization, watching and raising our organic traffic. For the real estate sector, I think SEO specialist is the main analytic position for any SaaS company. Unlike Google Ads, bringing stable high organic traffic is a long game. But we started playing it.
Q: What about social media?
A: No. Maybe we will address this strategy later, but for now, it requires too much energy, resources, and planning for effective implementation.
A Piece of Advice for a Startup Founder
Q: This will be the last question. What advice would you give to someone trying to start a real estate, or actually any startup today, in 2024?
A: Good question! Looking back to where we started, I would just advise you to never give up, just do what you know is right, and... just to start, actually. To make the first step is the main thing. A new journey means something unknown, scary, and out of your comfort zone. But just take a step and proceed. The path will reveal itself.
As to personal qualities, being passionate and hard-working are two wings of equal importance. This is because launching a startup is a tough and complicated path. I won't pretend it is easy.
But at the same time, it is very, very exciting, joyful, and eventful. On this path, you will meet many people that will enrich your life as friends, partners, teammates, teachers, and just important companions.
I would also say that you will have to make countless decisions. There are no good or bad ones because every decision can teach you something and give you wisdom and power to proceed further.
About the Project
Spark Up is a special series of first-person interviews with the rising stars of the SaaS world. The founders of young auspicious startups from the most different industries reveal the full story of their success, with all its peaks and valleys. Here you will find unique information about the deep background of various markets, the pitfalls of launching a startup and how to tackle them, as well as useful tips on team management, marketing, and fundraising from experts that came through this all successfully.
