A new start-up called RentLogic has entered the New York City real estate market with a smart, simple idea wrapped around a proven business model. It provided a data product that rated rental properties on how well they were maintained. Unlike opinion-driven ratings sites like Yelp and TripAdvisor, RentLogic mines complaint and violation data from official government records, assessed them, and assigned every building a letter grade from ‘A’ to ‘F.’
It’s a clever idea and arguably much-needed. At the very least, it began to address asymmetric information exchange that has long characterized the real estate business. Put simply, your landlord wants to know everything about you prior to renting to you, but you know little or nothing about the landlord or the property itself.
RentLogic also was smart about its marketing. It hooked up with one of the largest rental brokerage firms in New York City, a firm called Citi Habitats, to match its database to its apartment listings. Pop up a listing in Citi Habitats, and you would see not only the standard apartment description and other details, but you’d also see a letter grade for the property and a summary description of violations and complaints. This was great exposure for RentLogic, and a differentiating website feature for Citi Habitats. And just to make sure that not too many landlord noses were bent out of joint, the two companies agreed that RentLogic data would only be shown if the property had earned an ‘A’ or ‘B’ rating.
All smart moves, and a win-win for both companies and apartment seekers. A ‘happily ever after’ story then? Not exactly.
Just eight days after rolling out the new ratings system, Citi Habitats pulled the plug and ended the deal, reportedly after receiving strong pressure from landlords. At least in New York City, landlords have lots of clout. While Citi Habitats makes it money from fees from apartment renters, it still needs access to apartment listings in the first place. And New York City landlords aren’t that into transparency, at least not about their own activities. Several landlords described the ratings system as “unfair” and “inaccurate.”
From a strategic perspective, RentLogic did everything right. In my view, its business model, drawing from official records, is far more defensible than sites like Yelp that aggregate largely anonymous opinions and turn them into ratings. But RentLogic missed one big item: the supply and demand imbalance in its market. RentLogic is trying to serve the demand side of its market (apartment renters), but given a shortage of apartments, the supply side (landlords) makes the rules. That complicates market entry for a disruptive market player, because with landlords closing down many distribution channels, RentLogic is left with selling its data direct to apartment seekers, a slower and more expensive path to growth.
But we’ll be keeping an eye on them to see how they evolve since more than one company has pivoted their way to a Model of Excellence. You can meet this year’s winners at BIMS. Here’s a preview, starting with TrendMD.
Meet TrendMD at BIMS
Want to find out why TrendMD won an InfoCommerce 2016 Model of Excellence Award?
This year’s winners will be showcased at BIMS, November 14-16 in Ft. Lauderdale. It’s a peer-to-peer forum complete with exclusive tracks on Data and the unique opportunity to hear from the MOE founders firsthand. Register now to attend!
Here’s just a taste of the brilliance behind TrendMD – be sure to attend BIMS to get the full story.
"It's difficult to fail if you actually talk to customers, " says Paul Kudlow, Founder of TrendMD. As he was going through medical school the last few years, Kudlow pictured his future: talking to patients all day, providing solutions, and working all hours. "It was still a massive transformation," Kudlow said, "I went through medical school and started residency—and then this came out of nowhere. TrendMD is a kind of Outbrain or Taboola for the medical world. TrendMD enhances content discoverability for readers by providing publishers with strong incentives to display relevant links to third-party content. We took that model and designed an article recommendation widget that's embedded in places doctors and other researchers use. Content producers can also promote their links on sites where the TrendMD widget sits.
"Unlike medicine, there's no playbook for startups," Kudlow said. "You kind of invent it as you go and see what fits. We offer value to readers. We're distributing content so it can get to the readers and give value to the authors. Before TrendMD, there was no way to push this kind of content to readers. Often we heard journals say that they get new readers through good SEO or posting content online," Kudlow said. "That's a bit like saying we printed the journal out it in one library hoping that people can read it."
Hear more at BIMS!