Marcela Sapone, CEO & Co-Founder at Alfred, joined the Daily Beat for an interview. We discussed how her startup seeks to use technology to transform the future of living.
Daily Beat: Can you please describe to our audience what you’re building at Alfred?
Marcela Sapone: We are a resident centric management platform that helps owners achieve maximum net operating income. Residential real estate is the largest consumer product in the world and the product experience should be as seamless as pressing a button to call a car. We are the number one app powering a seamless residential living experience – all the utilities, experiences and amenities are brought together at your fingertips in an Alfred-powered building, which in turn allows managers to be more efficient and successful.
Tenants aren’t simply looking to rent four walls; they are looking to rent a lifestyle and an experience. The Alfred platform helps landlords achieve this new paradigm.
Daily Beat: Who are some of your clients?
Marcela Sapone: We began working exclusively with Related Companies, which was a great first partnership because they are best in class when it comes to high-end management and resident experience. Today, our software is running in close to 150,000 apartments in 44 cities. Most institutional and many regional owners and operators are our clients; everyone from Brookfield, JP Morgan, Invesco to Greystar.
Daily Beat: I know that Adam Neumman is extremely bullish on your firm and the multi-family sector as a whole.
Marcela Sapone: Adam Neumann made a substantial investment in our company because he saw firsthand the importance of tenant experience vis-à-vis real estate. He recognized that we are a leader in the future of residential. We don’t take leases, but instead offer unified resident technology to run a property and a marketplace of amenities, and community programming that are now table stakes for residential communities. The evolution of offerings available in commercial real estate is now accelerating in residential and we are excited to help owners and operators take advantage of this opportunity to recognize new yield.
Daily Beat: Aside from the obvious tax reasons, why do you think he recently invested in the multi-family asset class?
Marcela Sapone: Doesn’t everyone want to be the next Sam Zell? Multi-family is a bigger, untapped market when compared to office. The level of hospitality now required in apartment buildings, and rental communities simply didn’t exist a decade ago.
Daily Beat: What’s your pitch to a landlord?
Marcela Sapone: They own the building and we make their assets more valuable by delivering higher revenue and a lower operating budget through technology and amenities. We offer software and services at a fair price that guarantee owners and operators make more money. Specifically, any properties that adopt the AlfredOS technology for residential communication and engagement create proven cost efficiencies and introduce new revenue streams that increase yield.
Many of our customers are our investors as well because the pitch of our business is simple. Less than 1% of the budget to operate a building is going towards technology today – which is crazy compared to all other industries. Adding technology and a consumer lens to traditional businesses with steady cash flows is good business. For example, Compass took brokerage and made it consumer first with a greater emphasis on technology and centralization. Lemonade took a consumer-friendly, technology-first approach to insurance. Alfred is bringing consumer-first technology to property management.
Daily Beat: How does Alfred’s technology increase Net Operating Income?
Marcela Sapone: Our technology increases an owner’s top line in three ways: efficiencies, new revenue, and higher renewals. First, our technology streamlines digital lease signing, tenant communications, rent payment, amenity booking, and package fulfillment. We integrate every key process in the building into a single unified platform. This automation cuts man hours. It also provides data that drives better outcomes.
Here is a very specific example: we often know 4 months before a lease ends if a resident is going to renew based on how they engage with the building. Our app serves up a digital renewal, or confirms they plan to leave, which allows the apartment to be listed early. This allows us to lower the effective vacancy rate by shrinking the amount of time before a new tenant is found. Second, we offer the most comprehensive resident rewards and services, which support an increase in amenity fees, which we split with the landlord. And lastly, we also offer marketplace services, events, and programming that increase the average lease duration by 30%. Knowing your neighbor and strong habits become a reason to stay in your community.
Daily Beat: What type of data are you able to gather?
Marcela Sapone: The key of course is the technology that allows us to provide an incredible amount of data about one’s properties and portfolio comparing it to other operators. This allows us to reap the benefits of tremendous cost efficiencies and make recommendations on increasing yield. It’s not only doing everything online and on your phone instead of on paper, but our workflow lets you have fewer people on site to reduce expenses. We specialize in finding elements of property management that can be remote, which allows the services from building staff to be better and cheaper.
Daily Beat: Difference between residential tenant management and office?
Marcela Sapone: The idea of having a tenant engagement platform seems to be pretty similar across both asset classes, but if you are on the commercial side, the business owner decides, not their employees. Ultimately, tech-enhanced opportunities will increase rent.
When it comes to multi-family, on the other hand, the residents themselves are more willing to pay for convenience and quality. Think of it like an Uber effect for the most crucial services of living that covers things from insurance, moving in, to pet care. These are all part of the Alfred app when a tenant signs a lease. The opportunity is an ongoing relationship with the resident by making a completely seamless transition through the leasing, home setup, and renewal process – we can introduce the right services and assistance at the right time.
To illustrate, when a tenant moves in, we help make the transition seamless. We provide support to help coordinate their move, set up their renters insurance, and ensure a handyman is available. They can start their normal routine immediately for services like pet care, groceries, laundry, dry cleaning, and everything we were initially known for. We then take it a step further by helping them make connections with their neighbors through our curated experiences and clubs, so they feel at home and part of the community immediately.
Daily Beat: Is tenant experience in the domain of the landlord or consumer?
Marcela Sapone: When it comes to residential, you are looking at a much smaller space and units come in all different shapes. We tend to focus on managed communities, which can be single family rentals, student housing, or multi-family (high-rise and mid-rise). If you’re a property owner with one building and 20 units, it’s actually even more imperative that you use technology, because it’s unlikely that you have a fully built-out property management function like a full-scale owner.
Daily Beat: I remember that when you started the company at the height of the gig economy, the focus was on providing services like cleaning services and food order directly for tenants. Is this still like a major focus of the business?
Marcela Sapone: No, we have grown up by working closely with the real estate industry. We learned a lot about what the residents value and how to earn their trust. I know we inspired services like Walmart that just made an announcement that they’re expanding their in-home, delivery service. We created that category. However, we don’t want to be a service company, but to be the service technology evolving the entire industry of service professionals in property management. I look to companies like Salesforce as inspiration. They created an entire ecosystem and introduced the concept of a CRM, which is hard to imagine a business not having today. In 10 years we think it will be hard to find real estate that doesn’t use technology to serve the end user.
Daily Beat: What do you tell the landlord who says that proptech is all hype and they’ve been disappointed with other companies they’ve worked with?
Marcela Sapone: I get that. We’ve been around for seven years and worked with the best of the best owners / operators within the industry in a real and meaningful way. Our cap table is full of our customers, which is proof in the pudding. I think a lot of proptech companies fail because they lack an understanding of how real estate works.
An average multi-family building with 250 units might be generating $5 to $6 million in rent a year, but there is $50 to $60 million of commerce that’s flowing through that building. The more trust you build with tenants, the longer they stay and the more services you have the right to touch. We help owners take a bigger share of that wallet and play a more meaningful role in their life. In this post-COVID world, the home is the center of everything. We view this as the perfect window for the real estate community to take advantage and increase the size of their TAM.
Daily Beat: Are you selling enterprise SaaS to landlords?
Marcela Sapone: Yes. That’s our core business, and I think our focus on building deep technology has been an evolution that not everyone might have realized. We’ve gone very deep with our customers to digitize property operations. And while property management will always require some headcount, there is a lot more technology can do for owners and operators. I know we offer the absolute best software on the market for tenant engagement that increases real NOI through cost efficiencies and top line growth.
*The interview has been edited and condensed for clarity.