Proptech CEO Marc Rutzen explains HelloData.ai’s model

When Marc Rutzen started receiving questions from state attorney general’s offices about his latest real estate tech startup, HelloData.ai, he changed some things.

The government has stepped up its antitrust investigation into Rutzen competitor RealPage, which the Justice Department ultimately sued last month for allegedly fixing rents for the largest landlords in the U.S.

Rutzen and HelloData.ai co-founders Nico Lassaux and Tim Gamble started the company to try to do essentially the same thing RealPage does—give landlords market-based pricing recommendations at the exact moment a tenant signs a lease. (RealPage announced in recent days that it would let customers opt out of the “algorithmic pricing” service at the center of antitrust allegations, and has denied that its revenue management software is illegal.)

But Rutzen and his team knew they had to approach the matter differently when legal issues began to arise.

They figured they’d stay on good terms with government officials as long as they configured their pricing and property management advice based on what was already publicly available. They’d use AI to mine apartment building websites to calculate rents based on listings, advertised concessions and other public property records.

In essence, HelloData.ai aims to distill the work of dozens of multifamily acquisition analysts into calculations that can be done in minutes, taking the collected data and plugging it into formulas to determine market value in real time.

Rutzen — who lives in the Chicago area and serves as CEO of HelloData.ai — had already founded a multifamily real estate analytics company that integrated AI called Enodo, which was acquired by brokerage Walker & Dunlop in 2019. Lassaux and Gamble were his first and second employees, respectively.

After spending a few years at a brokerage firm helping to found Enodo, the trio decided to take it a step further and founded HelloData.ai last year. It has now acquired many of the landlords on the National Multifamily Housing Council’s list of the largest landlords in the U.S.

He and his associates financed the entire operation.

“Given that we’ve been in this for a year, we’re already doing a couple million in annual recurring revenue and we’re on a steep growth trajectory, it’s crazy,” Rutzen said. “I predict we’ll be at $6 million, maybe $7 million in ARR by the end of the year. After launching last year, it’s crazy.”

Rutzen shares more about how he avoided antitrust charges in the face of criticism of RealPage, his plan to grow the company and why it hasn’t raised any venture capital.

The interview has been edited and condensed for clarity.

How does HelloData.ai differ from RealPage in terms of recommended pricing?

We built a platform that goes directly to real estate websites, and also a few listing sites across the United States, just to get public data. We put it together in a very structured way to help you figure out where you should be pricing based on your competitors, but it’s all public, so I don’t know, for example, the true occupancy levels of any of these floor plans, and I can’t tell you what the tenant signed the lease for. I think that’s the problem, RealPage has all of this, so they can use it.

Even if the data you’re sourcing is publicly available, aren’t you giving the same information to the same people?

The fundamental difference is that if you were a commercial property owner and you wanted to go to all of your competitors’ websites every day, copy and paste into a spreadsheet and use that to inform pricing, you could do that. It’s just very labor-intensive. Acquisitions teams do it every time they acquire something. But it’s a couple of hours of risk assessment, and we do it every day, at a very granular level. What I can’t do is look at my competitor’s rent roll and see when their leases are up, see what leases they’ve actually signed, what the terms are; there’s no way to do that. What RealPage gives you, you can’t get anywhere else.

What are the challenges of building a product brand that serves as an alternative to an antitrust lawsuit against a company?

So we don’t use the term revenue management anymore. We don’t have a full revenue management solution. We have pricing recommendations, but they’re not integrated with the property management software that’s pricing on the fly. We were going down that path of integration and decided to pull out because of the lawsuits. So that affected us. We contacted the attorney general because we had the term revenue management on our website. Even though we didn’t have a revenue management product; we said we were working on it, it was in beta. They contacted us, and even just writing them back and saying we didn’t have anything, it cost money. I thought, “This could start to add up, we don’t want to use the term revenue management.”

How much capital did you manage to raise?

Zero. We did millions in revenue with just six people on the team. We started with three people and recently added more. We got some interest, but we said no every time. We fund it with revenue. We put in $15,000, each of us put in $5,000. That’s it. I talk to a lot of groups in the VC world, I tell them what we do and what problem we’re solving. They say, “What is revenue management?” And I say, “Oh my gosh, I have to explain the whole history of the industry.” No, thank you. That’s one of the reasons we stopped trying to get funded.

Why do you think the proptech industry has faced so much adversity over the past few years, and how do you think it can recover?

I hope that Proptech in general will come back, and it should. We have to continue to innovate. There have been a lot of big promises that have not been kept. It’s easy for Proptech founders to say, “Oh, real estate is so behind the times, they won’t adopt my technology.” But you’re talking about people who have made millions of dollars, so it’s a little silly to say that real estate is doing everything wrong because they’re doing it the old-fashioned way. Every market is different, and these Proptech solutions have tried to create a one-size-fits-all solution and skip the details or do too many things. Every market has its own unique appraiser, rules and regulations for everything that governs real estate. We try to be very, very specific and show that we’ve thought about how to solve problems.

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