#75 - Sean Mitchell

**Craig Cannon** (0:00)
Hey, how's it going? This is Craig Cannon, and you're listening to Y Combinator's podcast.
Today's episode is with Sean Mitchell. Sean is the co-founder and CEO of Rezi. Rezi helps landlords find high quality, long-term tenants in 48 hours. And they were part of the winter 2017 batch. You can find them at rentrezi.com. All right, here we go.
Why don't we start with just a brief explanation of what Rezi does, and then go back to what you applied to YC with.

**Sean Mitchell** (0:30)
So Rezi is, we're a rental marketplace with the mission to make renting better. We use our technology and we use finance in order to provide products that allows us to do that. Our first product is a product called Upfront, which is essentially a solution that gives landlords an option where they're guaranteed to lease out their vacant apartments and gives tenants the ability to lease apartments from us in under 10 minutes.
So when we applied to YC, which is, call it winter of 2016, we were focused on the rental space. We knew that there had to be some sort of risk transfer from the landlord to either us, or some other party. But we didn't really candidly have a great handle on what the model should be. So at the time, we were kind of toying around with the idea of, okay, well, what if we gave landlords protection from the downside, like if a tenant doesn't pay their rent?

**Craig Cannon** (1:36)
Yeah, and to put a finer point on that, the risk transfer has to happen because that's your value proposition. Otherwise, no one cares.

**Sean Mitchell** (1:42)
Yeah, right. So let's think about it from the landlord's perspective. So a landlord principally has two risks with a vacant property. A, the vacancy risk itself, so the lost income and the carrying costs from owning that asset every single day. If they're not generating income, that's a loss. But then when they lease the property out to a tenant, will the tenant pay the rent? Will the tenant damage the unit? Will the tenant be disruptive to other tenants who live in the building? These are all considerations that they have to have.
We got fairly comfortable with how to solve that second problem. I think what changed during our time at YC was we decided to take the next step forward and solve the first problem. Prior to YC, we looked a lot like effectively a software solution that gave you better due diligence or better screening for your tenants. And I think while we were in YC, what we realized was, okay, what if instead of saying to the landlord, hey, if you use our tool, you'll have a better success rate with screening tenants. What if we said to the landlord, okay, you never have to worry about a vacant unit ever again?
Yeah. And would that be compelling enough of solution that you can make a business out of it? And completely candidly, we got to YC January 4th.
I told the team I wanted to pivot the strategy probably on January 6th, and we went to office hours with our partners, kind of told them, hey, yeah, you know what you let us in for? The thing you let us in on, we're not going to do that anymore.
We're trying to figure out what we want to do. And I'd say by the end of the month, we had decided on this strategy, and we actually closed our first transaction at the end of the month. So it was a whirlwind January in 2017

**Craig Cannon** (3:48)
And we got to go into the financing in particular, but what was a particular revelation that you had to shift?

**Sean Mitchell** (3:55)
Yeah, it was how big of a problem can we solve?
I think everyone in leasing and anyone in the rental space is familiar with the problems and pain points in the leasing process. Tenants have terrible user experience.
Frequently, there are agents, whether they be brokers or other parties, who don't have skin in the game. So the landlord who is effectively at risk of finding a bad tenant or not finding a tenant fast enough and losing money, they don't have a partner who is in that same risk. And so those two problems were pretty apparent. And I think what we, the quote-unquote, aha moment was what if you could create a scenario where, for the landlord, that risk didn't exist anymore. And if you could offer that product, and we knew it would be enormously complex to offer, because you have to solve pricing, you have to solve funding, you have to solve technology. But if you could do it, could you then meaningfully improve the tenant experience where tenants have the ability to lease properties in minutes versus waiting days and sending all of their sensitive personal information in typically very unsecure ways?