Democratizing Real Estate Through Fintech Innovation with Andrew Borovsky of Rent App

Episode Overview

Our Guest: Andrew Borovsky- From Tech Giant to Fintech Innovator with Rent Payment Technology

Andrew Borovsky is a distinguished figure in the tech industry, with a storied career that spans over two decades. His journey began in the heart of Silicon Valley during the dot-com era, a period that marked the beginning of his profound impact on technology and design. Initially starting as a product designer, Andrew’s exceptional skills soon led him to prominent roles at industry giants such as Adobe and Apple. At Apple, he contributed to groundbreaking projects, including the development of what is now known as iCloud, showcasing his ability to innovate and execute at the highest levels. His tenure at these companies solidified his reputation as a visionary thinker who could bridge the gap between complex technology and user-friendly design.

Transitioning from a successful career in established tech firms, Andrew embraced entrepreneurship, channeling his expertise into the fintech and real estate sectors. He co-founded a startup that was eventually acquired by Square, a key player in the financial services industry known for its revolutionary payment solutions. This experience was pivotal, immersing him in the fintech space and honing his skills in developing technology that simplifies and enhances financial transactions. His journey through the tech ecosystem has endowed him with a unique perspective on the integration of technology in various sectors, especially in creating solutions that address real-world challenges.

At the helm of Visible, Andrew Borovsky is pioneering the integration of Rent Payment Technology into the real estate market. His leadership is driven by a passion for democratizing access to technology, ensuring that financial tools are not only accessible but also empower individuals and small businesses. With Visible, he is focused on disrupting traditional real estate transactions, offering innovative solutions that streamline the rent payment process, enhance financial transparency, and foster greater economic inclusion. His vision is to transform the real estate sector by making it more efficient, secure, and user-friendly, thereby setting a new standard for how property transactions are conducted in the digital age. Andrew’s commitment to innovation and his deep understanding of both technology and real estate markets make him a pivotal figure in the ongoing evolution of fintech solutions.

Episode Transcript

Andrew Borovsky: This demographic tends to be a little bit older. So these are people who typically are not interested in SaaS software for managing payments. So what we saw is an opportunity to create a product that where we target the renter tends to be younger 80% of 25-year-olds in America rent. We’re like, let’s create a product that helps them make the payment, and they will recruit their landlord. So the way the product works is it puts the burden of the onboarding onto the renter. But the way that it works is the renter sends a rent payment to the email or phone number of the landlord, the landlord gets a notification, all they have to do is put in the routing and account number and that’s it. They don’t have to download the app. They don’t have to ever do that again, in fact. The payment stream to them.

Jacob Hollabaugh: Welcome to PayPod, the payments industry podcast. Each week, we’ll bring you in-depth conversations with leaders who are shaping the payments and fintech world, from payment processing to risk management, and from new technology to entirely new payment types. If you want to know what’s happening in the world of fintech and payments, you’re in the right place. Hello everyone, and welcome to Pay Pod. I’m your host, Jacob Hollabaugh, and today on the show we are, of course, talking fintech. But today we’re specifically talking about fintech as it relates to an industry that we are all a part of. Real estate, maybe you own, maybe you rent, maybe you own so you can rent to others but one way or another, we all take part in the real estate market in some way, big or small, and it’s a market that is ripe as any for innovation in how it operates and specifically how the payments, the ownership portion of it operates. So to discuss this world and some of the innovations that could change it for the better, I am very pleased to be joined today by Andrew Borowski, co-founder and CEO at Visible, the company building a financial network for homeowners. Andrew, welcome to the show. Thank you so much for joining me today.

Andrew Borovsky: Thanks for having me.

Jacob Hollabaugh: To get us started. If you wouldn’t mind, could you give me and the listeners a little background on your career and ultimately, what led to you co-founding Visible about a year and a half ago? I think I got my dates correct and wanting to build fintech within the real estate world, I’m guessing there was maybe a pain point in the past. How did you end up deciding in this industry, this world, that’s where I want to build?

Andrew Borovsky: Sure. I’ll give you a quick summary and feel free to dive into whichever parts you want. So career-wise, I’ve been in tech for about 25 years. I got my start in San Francisco around the dot com era, so I’m dating myself there a little bit, but started as a product designer working for Adobe and I was there for some time, then went over to Apple, also focusing on product design around the time where Apple released the iPhone 3G, which was the second iPhone, and I worked on a product that at the time was new, but is today known as iCloud. Then after working as a designer, and product leader of both of those companies for some time, I decided to try my hand at actually building something myself, also in the mobile space. So I was always interested in hardware. So I got together with a couple of friends of mine, who also worked at Apple and Adobe, and we built a company focused on basic services for the kind of emerging smartphone era at that time. This is late 2008, and we had that up and running for a while, Then four years later we sold the company to Square. So Square at that time, I think, was a two-year-old company known for the Square card reader, which allowed all these people to take credit card payments that previously couldn’t.

Andrew Borovsky: And we love that space again because it was hardware, which is rare even today. Working on hardware is not something everyone gets a chance to do. But I also love the fact that it was very tangible. Our customers were small businesses, we interacted with small businesses and learned about what they needed, and what they wanted to see in this world, Then we built an incredible opportunity. So that was my foray into fintech, focused much less on design and much more on how it works on product development. After that, I had an opportunity to join another company which is more real estate-focused, called Cadre. Cadre was a tech-enabled sort of real estate private equity firm based in New York. The goal there was to democratize access to one of the world’s most valuable asset classes, popular asset classes, which are commercial real estate. So on the pitch that I got from the CEO Ryan at the time was, “Did you know that all the richest people in the world are participating in this class of assets known as alternative assets, and no one else can get access to it, but it’s actually how the rich get richer. And what if we got together and tried to give regular people access to that asset class?” And there was a whole slew of technical problems that prevented people from being able to do it? It’s interesting when people talk about products for rich people, a lot of the time you get the sense that there’s like a guy with a monocle and a cigar. That’s like trying to keep people out on purpose. 

Andrew Borovsky: But what I found out as I dove into that world of private equity was that it’s just technical problems, as the entire industry runs on Excel effectively, and people share files and share ledgers via email when they name the Excel file, like today’s date, version 67. So it was really interesting because by then I’d been in tech for so long, I was like, okay, easy to solve. So I focused on building a ledger, creating kind of a marketplace within Quadriga that allowed people to go in and out of these assets, which were all prerequisites for allowing more people to be able to participate in the market. So that was about five years, COVID hit, I felt very exhausted and wanted to have a little change of pace. So I went back to Square, which by now has this behemoth product called Cash App. Sure, you’ve come across that. So one of the top neo-banks in the world. So the opportunity there was just so I worked on Cash App very early when it was in its infancy. At the time it was called Square Cash, but this was an opportunity to scale the product. So I spent about two years of that sort of COVID dark time working on Cash App, mostly in sort of this people management role, where we had a team that was ten people, we needed it to be a hundred or a scaled, recruited mentored folks. Then I got the itch again. So that was like a year and a half ago, and let’s build something new there, I got this idea, again, having spent five years in payments and five years in real estate by then that is there something at the intersection of both? And that’s that was the idea behind Visible and this idea of a network, a financial network built specifically for real estate.

Jacob Hollabaugh: I love that. And I love the analogy. It’s been we’ve had a few people building some tech for the alternative investment world on the show recently and has been a favorite topic of mine to hear about the democratization of access to things like that. And I love the analogy you give. There isn’t some evil guy sitting there being like, don’t let anyone else have access to this. It truly was that the few people that did were like, well, we aren’t tech people. So unfortunate as it is, we’re all very consumers and are all thankful for folks like you who come and common story from the world of tech into the world of finance and kind of have one of those, “Is this really how you guys do this?” kind of moments. We do this a lot better. And there is the fintech industry of the last two decades as it’s thankfully blossomed and brought a lot of those innovations to the common consumer and whatnot. So you’re at Visible now or launched a year and a half ago. Give me a quick overview of who Visible is and what the long-term goals are before we dive into the kind of first product launch that you’ve had recently.

Andrew Borovsky: The first thing that’s worth noting is we have a great team, and what I did is I just basically looked back in time at the last 20 years, and I picked a bunch of people that I enjoyed working with the most and who were like, who are the smartest people I’ve ever worked with? That’s the team, and I’m very fortunate. My co-founders are like, I reached out to each one of them one by one, I said, hey, let’s build something together. Every one of them quit their job and did this. So that’s awesome. So it’s folks that I worked with at Cadre and worked with at Square. So that’s awesome. And the idea was just like looking at everything related to real estate. So first of all, residential. That’s because I love consumer products at the end of the day. Cadre was awesome but essentially like an enterprise product. Commercial real estate just has all these nuances around it that make it less consumer-friendly. But everyone can relate to the nightmare that it is to buy and sell a home effectively in this country. And it’s the part where you buy a home once you move in is the pleasant one. But the transaction is like a disaster. And you look at the way that all the money movement I mentioned buying, selling, but borrowing against your home, renting your place out, investing in real estate again, like residential real estate, all of those processes are fundamentally very slow, complicated, and expensive. There’s a fee load. For every one of those transactions I mentioned, there’s usually a fee load associated with them. 

Andrew Borovsky: It’s not counted in dollars, it’s counted in percentages. Right. And the quintessential moment is when you’re doing the closing on a house and you find out all of a sudden that the cost of this house has gone up anywhere from like 2 to 5% because suddenly you’re there at the closing and there’s like six people you never met are all hanging out, and they’re there and they’re doing something, and you have to pay each one of them. Then they leave, then you’re like, in a home, but you’re a little bit poorer. So the idea was to take that apart and understand where is that fee load coming from, where is the complexity coming from, whether is it complex, or whether are people charging you for the perception of solving complicated problems. One of our investors, Sam Lessin, mentioned this a lot, which I love, which is “When it comes to real estate, you’re paying people to get out of the way.” So the idea was really to take that apart and look at each use case one by one and figure out if there’s a technical solution to it.

Jacob Hollabaugh: It’s fascinating. I can already tell you I’m a fan and I’m sure anyone just from a consumer standpoint is a fan because anyone who’s been through the home buying process, rental process, the whole thing, every part of it knows it comes up a lot. Talking about different verticals within the financial world on this show, how many of them are so entrenched in all these traditional systems and everything that we have to fix and update. But this one is one that truly touches all of us in some way. We all live somewhere and pay for it in some manner and whatnot. But before we dive into maybe some of the future, all the different products, let’s talk about the first one that you’ve rolled out now, which is the Rent app, I think it was fairly recently that you officially rolled this out. Why was rent payment with all these different touch points you want to eventually work on in different pain points you want to solve? Why was rent payment the first tool you moved on? Was it one of the easier ones you thought to fix? Was it one of the biggest pain points? What was it that led you to “This should be number one?” And tell me a bit about what the Rent app does.

Andrew Borovsky: I get asked this question a lot by friends and family, like rent payments, why are you focused on rent payments all of a sudden? So there are two answers to that question. One is that just macro. We built some core technology that allows every aspect of real estate management to be better. Then we have to pick a use case like What do you focus on? Is it lending right? Is it for a second mortgage? Is it investing? And rent payments came up because the team looked at where we were a year ago. And it hasn’t changed since. So you have high interest rates. Then the price of residential real estate in the US hasn’t corrected. It’s a bizarre thing. We just got more expensive period. And you saw as a result of that, just like a huge kind of collapse in transactions across the board in first mortgages. It was just because many people all of a sudden couldn’t afford a mortgage, but secondary mortgages and home equity loans, etc., like borrowing against your house. That became complicated too, because since the real estate hasn’t corrected, a lot of the banks were like, well, how do I value their reluctance to get into something that may potentially correct down? So we said, let’s focus on something that makes more sense from a macro standpoint. So what do you have if people aren’t buying homes there are more people renting. 

Andrew Borovsky: And if you own a home and you have a great mortgage on it, like maybe before you want it to sell, but like now you’re not selling, you’re renting it out because there are a lot more people renting. So it made sense as something, an area of real estate that we can get into where we’re not being pushed up by all these kinds of market forces effectively. As a small company, you have to pick your battles. Then the second piece that became interesting was that once we dove into it, we realized that there were a lot of interesting things happening in US real estate, specifically rental real estate, that reminded us a lot of what we saw at Square. So a third of all real estate in the United States is for rent, which is a lot. That’s about 43 million units. But the really interesting thing is about half of that inventory is for rent by what we’re calling kind of owner landlords. Or you’re also here, which are mom-and-pop landlords. So what it is, it’s this wonderful piece of America which are these effectively small business people that have a side hustle that they usually refer to as of an income property. It allows them to augment their income in some cases if they have more than 3 or 4 properties, actually allowing them to live off of that rental income. And what you’ve seen there is, even though there’s a lot of these people, there’s about 12 million Americans that do this. They’re wildly underserved. They’re under the radar. If you own 2 or 3 properties, you can’t exactly like roll into a bank and call yourself a real estate company. 

Andrew Borovsky: So you end up across the board what they deal with, even though they’re effectively a small business owner, the tools that they have, and the data that they have access to is no different than just owning one home effectively. And there’s no better example of this than rent payment. So 80% of all rent collected by these folks is analog. So cash is king, half of all rent is collected as cash, which blew my mind. Then followed by checks and money orders. So digital payments and you can talk about Zelle and Cash App, my former product, and wires property management software, like all the other digital methods, are less than 20% of all payments. So that to me was like, oh, okay, cool. This is exactly what we had with Square 15 years ago when small businesses couldn’t take credit card payments. So there was this obvious problem that you could solve by just moving people to digital rails. And we like that because if you solve that problem, then you can start building a suite of services around these. What do they need next? Which usually boils down to things like capital, or being able to find all the sorts of financial transactions beyond collecting rent that are related to this real estate that we have. So we saw that basically as just like a wonderful beachhead into things that we want to get working on later.

Jacob Hollabaugh: Those numbers are a little staggering, because one of the things I wanted to ask about was, how are people currently doing it that you’re going in and replacing? And I expected the numbers, the cash to be king, but not that big of a king within that area, which is wild. So are you more focused really on then the homeowners’ side of things than the actual renters themselves? Is that the target of getting in with those folks first?

Andrew Borovsky: That’s the end user. I think at the end of the day, we want to capture this owner-landlord. Because we think we have a lot to offer to that group of people. But what’s interesting is Rent app is squarely aimed at renters. What’s interesting is a lot of the adoption challenges that other digital products and digital payment products have had, is that your typical owner-landlord, they’re just not super incentivized to switch to some software for collecting rent. And it is really like a function of if you own 2 or 3 units, like, you might as well do checks and cash. It’s small enough that you can manage it. It’s free. It’s the lowest common denominator user experience. Everyone understands how to use those products, So anything more complicated than those two payment methods is like basically a burden. And of course, this demographic tends to be a little bit older. So these are people who typically are not interested in SaaS software for managing payments. We saw an opportunity to create a product that where targeted the renter who tends to be younger, 80% of 25-year-olds in America rent and are very savvy and love fintech apps. So we’re like, let’s create a product that helps them make the payment and they will recruit their landlord. 

Andrew Borovsky: That’s the thesis. So the way the product works is it puts the burden of the onboarding onto the renter. But the way that it works is the renter sends a rent payment to the email or phone number of the landlord, the landlord gets a notification. All they have to do is put in the routing and account number. So numbers at the bottom of a check and that’s it. They don’t have to download the app. They don’t have to ever do that again. The payment stream to them from there on. So because we’re competing with cash and check, the product and the landlord side have to be as easy as cash and check. Then the final thing I’ll say is the way that you get the renters to participate in this and be your Salesforce, quote-unquote, is if you pay rent using the Rent app, and by the way, the product’s free for both sides completely, if you pay rent using the Rent app, you build credit and it just happens magically. So for the renters, that’s really how we’re recruiting them is, “Hey, are you paying rent with check and cash, and is that annoying? Don’t you wish you were building credit as you’re making this like a large payment? Because eventually, you want to own your own home? Cool. Download the Rent app and pay your rent by using the Rent app for free and you’ll build credit.” So that’s the value proposition, very simple.

Jacob Hollabaugh: A bunch to dive into on that then because you mentioned the credit aspect last, I’ll just ask, go on that one first, then backtrack through there a little bit. But that was the part that stood out to me and makes sense now that I hear you explain, like using them as the sales force, the real thing you got to market is what is the driving benefit to those people first. And it’s obvious once you say it, but is one of those things, obvious things that hide in plain sight like so many of us. If you pay your rent with cash, that’s probably your biggest expense in the one that would drive a credit report, and have the biggest impact on building that for those people in their 20s and 30s, even so, is this kind of first or only thing on the market now that kind of allows those folks to transition over and do that, or are there other options for them to be able to capture that in any way, or is that it sounds like that was the big selling point to these folks? It’s not only easier for you and what you’re more native and used to, but it also brings this huge other benefit. Is anyone else out there offering that, or is there any other way for people to get that?

Andrew Borovsky: The first thing that should be mentioned is that this is a result of a positive move by the reporting agencies. The three major reporting agencies are trying to open themselves up to more payment types. So you’ve seen in the last couple of years them being increasingly open to tracking things, everything from rent payments to also bill payments and using that to build history. I think I’m sure they have layered motivations there, but it’s great because basically when you’re young, that tends to be the case. And a lot of young people don’t even have credit cards. So what they do is they pay utilities and they pay rent. So the agencies are trying to capture more of that data early on. It’s not easy to interface with them. So there’s some technical work that goes into actually doing the reporting, gets back into that kind of Excel world. There’s a certain very archaic way in which they collect that data, and you have to be compatible with it. They’re slightly different from one agency to another. So you have to integrate. What has happened is because of the fact that they’ve been increasingly open to it young people want this product. If you do a search for the sort of like build credit with rent, you’ll find a couple of products that do this. 

Andrew Borovsky: They tend to be paid and it’s not cheap. I think the average product, I’m not going to name any names, but the average products like five bucks a month extra that you pay for just the kind of privilege of being able to report that payment. And it goes up from there if you want to include utilities. So again, going back to the fact that we’re trying to compete with cash and check we did the integration, and we’re not charging our customers for it. So it’s completely free built into the product. We’re one of the first few products that allows you to report rent payments. And we’re the only one that’s free.

Jacob Hollabaugh: Makes sense. And to go back to another part of it, it’s fascinating having is one of the couple of companies that when we think peer-to-peer payments, Cash App, Venmo, Zelle, or big three names, I would say that come up to most people right now. And I do know from some other folks who have rented and everything has been offered to go that route versus the cash one, or as far as just it would be the obvious thing of like if we want to go from cash to peer, these exist. Why are those not able to be used right now? Is there any reason why one of those companies wouldn’t say, the same way you looked and said like, this is a big market as far as how many people are making these payments and everything they already do peer-to-peer payments? Is there any reason why they either couldn’t or haven’t maybe tried to enter this world on their own, or why the Rent app would supersede anything they would try to do in this world?

Andrew Borovsky: So this is where we get into kind of the plumbing of all the financial networks in the United States. I’ll try and keep it at a high level as possible.

Jacob Hollabaugh: Be as technical as you want. That’s the bread and butter of this show, so feel free to go as deep into it or not as you prefer.

Andrew Borovsky: I’m sure your listeners know some of the answers to these questions. Essentially what happened is something like ten years ago, peer-to-peer services appeared on the market. It’s longer than that if you count PayPal. Paypal is the first company that allows you to move money from person to person. But I think really in terms of consumer apps that made peer-to-peer ubiquitous, it probably started with Venmo. Cash App followed Venmo, then improved on that model and ended up rolling faster than Venmo. I think largely because Venmo was acquired by PayPal. And when you get acquired by a big company, just like innovation just dies off a cliff whereas Cash App was able to continue adding features to that product. But what happened is it was not easy. I was there at Square when we first launched Square Cash, and I count myself in like eight different Mastercard meetings and I think two different meetings with Citibank and Bank of America of like probably 60 that have happened where our what happened is those products were launched, and then the banks and the credit card companies were like, what? what’s happening? Because essentially what we did and what Venmo did is we used those rails without permission, or at least we used them in a way that they were not intended to be used. So technically, you’re supposed to ask permission. But of course, as every tech company asks for forgiveness, that’s what happened. 

Andrew Borovsky: So I was on this kind of forgiveness tour where we’re like, okay, please let us use this. Don’t kick us off your rails. But in exchange, they ask for things. The things that the networks ask for typically is they don’t want peer-to-peer rails to compete with their rails, the card network rails. So the obvious sort of delineation that happens is okay, it’s okay to send your friend money for lunch, like 20 bucks. But if your friend is like a dog walker and you’re paying them to do this, then technically that’s running a business and we want businesses to be run over credit card rails. Why? Because businesses have to pay the 2.75% fee. So what you’ll find today is if you’re running any kind of business on Venmo or Cash App, sooner or later, those companies will detect you’re doing that. And of course, it’s not that hard to detect because it’s like if you’re paying the same dollar amount every month, you know? So at some point, it may not be right off the bat, but at some point, the person taking business payments will get an email from one of those services that says, hey, we need to get Venmo for business. 

Andrew Borovsky: When Venmo for business will come with a 2% fee so that it’s there’s parity to a credit card network that you would otherwise use for this type of payment. That limitation was not enough for them because then they’re like, okay, cool. So Mastercard Visa was happy with that arrangement, but the banks were mad because how are they going to make money off of all this? So they didn’t like shifting all of this volume onto fintechs. So they created a product to compete with all that. That’s another product. Zelle is its sort of network. That works bank to bank. Zelle is meant to compete with Venmo and Cash App, and I should say is doing it quite well. I don’t know the most recent numbers, but it’s staggering. Now, the volume of dollars that moves through Zelle. So what’s interesting is Zelle can be used for business payments because it’s like the banks created their own little thing. So where does that leave you? But Zelle has other problems. So Zelle is a generic payment platform. You can download the Zell app. Have you ever tried the Zell app?

Jacob Hollabaugh: I do it strictly through the desktop and web browser because the one time I did I was like, this isn’t great and I can do these on my computer. Yeah. So well.

Andrew Borovsky: What’s weird about is you download the app and it tells you to download the Bank of America app. So you’re like what? So it’s implemented because big banks built it and implemented it the way big banks do has a very inconsistent experience and different limits. One of the biggest issues is why Zelle can’t be used for rent payments. You’re not going to get hit with a fee, but there are a lot of people who have like a limit that’s like 1000 or $1500, basically because it’s a generic transfer network. So you could be used for all sorts of fraud. So they cap the transfer amounts. So that’s where you see the biggest problem landlords that want to use Zelle. They have to take multiple payments usually two payments a month. So that wrecks their like accounting. So that’s where you have the biggest issue. Of course, Zelle also doesn’t support autopay and doesn’t support credit building. So that’s another kind of reason why we stand apart from it. But those are the biggest the biggest thing. The other thing I would highlight is that there have been a lot of articles about Zelle and it’s like if you lose money on Zelle, it’s great if it’s instant, but if you lose money on Zelle, if you send it to the wrong address, there’s no one to call.

Andrew Borovsky: It’s gone. The bank’s like, oh, it’s Zelle’s problem. Even though you will do it through your bank’s UI, actually there’s no one to contact. The money is a black hole. Whereas we’re like, let’s have a phone number. You can call if there’s a problem and we have email, chat, etc. So that’s the other piece we try to improve. And basically across the board the advantage that I think we have is if you’re building a vertical solution for a particular problem, in this case, it comes with a lot of these nuances. You want high limits, you want to have autopay, you want to build credit. You want to have customer support because you might want to resolve certain issues. So that’s where the strength I think of the Rent app comes from in the space. It’s tailor-built for this. You’re not going to be using us to pay your friend for lunch. You could try, but that’s not how we’re structured.

Jacob Hollabaugh: That would be the one time you’d find the app cumbersome or whatever. If you’re like, I guess I could make a payment then cancel and whatever. If I had to for some reason, I could find a way. But that all makes sense. And I’ve got to ask, we alluded, I think, to this a little bit earlier, but no fees for the landlords, for the renters, anything, it’s free to use for both sides to make it that true, equivalent to the cash payment that they’re used to. So where does the incentive then lie for Rent app and Visible? And I think you would maybe alluded to it earlier. Is it just potential that this is the first of many tools, this is the first of many things we can offer these people, and we’ll capture our value down the line? In the first one, we want to show these people we actually can do this thing for you and build the community, or is there something else happening behind the scenes that I’m not seeing?

Andrew Borovsky: The Rent app is like an acquisition tool to use crude terms where we’re trying to build a community of folks who are transacting. Then what we could do is we can use those transactions to enable them to do other things. The most basic one, I think I’ll talk about landlords and owners. We now have hundreds of folks on our platform who are collecting rent, and we ask them, what do you want to do next? What’s the number one thing you’re looking for? It’s access to capital like what anyone ever wants, essentially. So that’s a kind of a North Star for us by the end of this year. If you’re collecting rent on our platform, and by the way, this is our second month of existence, so we’re very young. But, by the end of this year, we’re going to reach out to sort of our top owners on the platform where we now have a record of them collecting rent for like six, seven, eight months. And we have cash flow. So this is where you go back to this cadre business. How they underwrite a large multifamily building. They look at cash flows. It’s like a business. So we are going to look at our sort of top businesses. 

Andrew Borovsky: What we’d like to do is create a magical experience for them to grow. So when they say access to capital, if you own three properties, you’re it’s like it’s your first property is hard. By the time you have your third income property, you usually have figured it out. And if you have friends, I’m assuming everyone has a friend that has an income property. That tends to be their story, but by the time you figure it out, you’re like, man, I want to keep doing this. So you want to buy that fourth one. And the financing market for an income property is tough, especially if you’re small again, like 3 or 4. So there are huge opportunities there to make that experience much better. A lot of these folks go to, I would argue, predatory lenders, that’s called hard money loans, where essentially it’s these private loans that tend to have high-interest rates and they’re short duration. So you take like 12-12 month loan at a very high interest, just stabilize this property, maybe do a renovation. So huge opportunity there to disrupt that and make it much more transparent, much more reasonable terms. And it’s much easier for us to do that and to underwrite these businesses if we’re seeing kind of cash flows. 

Andrew Borovsky: So we want the cash flows to be free. We don’t want there to be any kind of impediment to people transacting on the platform because of fees, because that data is then used to create much more valuable products down the line. And this is again, another Square playbook. We started with just allowing you to take credit card payments, which were the cheapest option at the time. And we grew to pre-IPO like 5 million merchants. Then at some point, we were like okay what do you want to do next? And I was like payroll, Time sheets, Square, Capital which allowed you to grow your business. So I’ve seen this before and it works well. And there’s a wonderful synergy between your customers who are like these small businesses that are run by wonderful people that just want to who. And in this idea that you’re giving them superpowers, you’re giving them tools that the big private equity guys have to make decisions and you’re allowing, giving them all that power is just a nice feeling. So there’s a mission component to this as well, right where you’re doing a good thing and you’re building a business as part of it. That’s always the best outcome.

Jacob Hollabaugh: I love that. And you mentioned in the telling of how things went for the other, the initial peer-to-peer companies that came online. Have you experienced any of the kind of pushback that companies like them did as far as the industry stalwarts? And again, as I mentioned, like in the intro and you’ve highlighted throughout this conversation, real estate is super ripe for innovation because there are so many very outdated practices and systems and everything else, and very installed companies and everything. So have you felt that pushback yourself, or had anyone trying to come and be upset that you’re bringing digitization, and democratization to this space?

Andrew Borovsky: This is certainly not within rent topics. I think we’re moving money over ACH rails effectively. We’re not stepping on anyone’s toes. So we’ll see. You never know. Where people spring out of the woodwork, there’s also a regulatory piece where, unfortunately, the regulation in the United States tends to be applied very unevenly, I should say, not unevenly, it tends to be very retroactive. Just look at crypto. It’s like after everything blew up the government stepped in. It was like, hey, maybe we should do something about this. Then they tend to overreach. I’ll broadly speak. So not just within rent, but in real estate. When you talk about that kind of crappy experience of buying your house, there are some pieces I’ll name a few pieces along the way. So title and title insurance, title search a couple hundred bucks, title insurance can be thousands of dollars. Do you need it? Is it if you think about it, it’s a bizarre concept that you’re being insured against the possibility that during the closing process, it turns out that the seller is not the owner. It seems archaic.

Andrew Borovsky: And again, it dates back hundreds of years effectively, to when this country it was very super not clear who owned the building. That’s not a problem anymore. We’re not in the Wild West. So that’s a piece that’s painful. Employment verification, You probably heard about this. That’s another kind of common requirement. You have to do all this paperwork and it tends to be very archaic. I can speak to myself like I’m in my 40s. I’ve run multiple companies, and I’ve been at companies. And it’s like if I’m the CEO of a new company and that company is less than two years old, I am a homeless person as far as the bank is concerned. They’re like, “What?”

Jacob Hollabaugh: You’ve been self-employed for the last five years from the same company. What do you mean?

Andrew Borovsky: It’s like we don’t even know what the thing is. And that’s a bizarre situation. It’s like super-unqualified people can get qualified, then super-qualified people don’t get qualified. It doesn’t make any sense. That’s another piece that’s painful. I’ll name another one just to throw it in there because of the thousand dollars on any transaction appraisals. So you’re setting that up like you’re waiting a week for some guy to come by your house with like an old camera and to take photos of it from all these different angles. Then he runs a comp search against other buildings in the area that have similar attributes. And that just doesn’t make any sense because he’s not doing anything special. It’s not an inspection. It’s like an appraisal with a bunch of photos. And there’s now, thankfully, some great technology where you have an amazing camera in your phone and it’s geo-located, and you can just walk around your house and take all the pictures and submit it, like, why am I paying $1,000 for this? So to answer your question, I mean, I kind of three pieces of the transaction in this case, like buying a new home. 

Andrew Borovsky: Well, guess what, there’s a lot of people that make money doing those things, doing appraisals, doing title insurance and title verification, doing employment checks and collecting all those PDFs, etc. So is there going to be pushback 100%? Because what’s going to happen is the entire industry. And that’s why we haven’t had innovation. That entire industry is like, well, what do you mean? This could be a lot faster, easier, and cheaper. They have an embedded interest in basically saying a lot of these archaic steps in the process need to be maintained, and it goes all the way through. There’s just not a lot of incentive. Remember, the banks paying for none of this. So if you shifted that liability for some of those fees onto the bank, maybe you’d see some move forward. But right now, because the burden is entirely on the consumer, and the consumer is largely powerless, You really can’t make any changes.

Jacob Hollabaugh: It’s fascinating. And definitely, I’m glad you and such a great team are working on these problems for all of the consumers out there. The last question then I guess is, given the companies you’ve worked at before and the different paths they’ve gone everything is the end goal for you with Visible pure disruption, displacement of legacy companies, or is there potential to integrate or help transform when you look way out in the future once you’ve hit all the checkpoints of the many different tools and areas you want to hit, is this it’s Visible forever? Or is this we can show the path and then, yeah, we would integrate with some of those other legacy companies and systems and help them improve what they’re doing?

Andrew Borovsky: This is just something I’ve learned from other companies I’ve been at, is where probably the best example of this, is that you have to focus on the customer what the greatest experience is for the customer, and how to make their life better. Because at the end of the day, you’re working for them, and if you’re not delivering value, then they’re not going to become a customer and use the services. So I think with an eye towards that, whatever helps us deliver this experience to our end user, our end customer, I’m game. It doesn’t hurt. Sorry. It doesn’t help them. If I go and I start blowing things up in a way that’s not super helpful. Then we get shut down for one reason or another like we’re not around to move things forward. I think at Square, we’ve been very pragmatic about the types of partnerships we pursue, the kind of proactive communication with the regulators, partnering with card networks and banks. I mean, I mentioned some of the issues, but that put some of the problems that are caused by maybe banks or credit card networks, but it’s not like they’re trying to make like going back to the monocle man. They’re not trying to make things worse. They’re protecting their businesses. And I think if you show them a way in which we can all benefit from moving things forward, they’re usually game we’ve seen at. Right at the end of the day. Visa was an investor. Bank of America, Citibank at the end of the day allowed us to move money instantly over debit card rails. Everything I’ve seen, I think gives me a lot of hope that things are. At the end of the day, we’re all going to move things forward together.

Jacob Hollabaugh: Well, Andrew, this has been a real pleasure. For those listening who may want to check out the Rent app, and learn more about Visible, follow you. Where’s the best place for them to go to learn more?

Andrew Borovsky: So rent.app, is very straightforward and you’ll find all the information you want there. If you’re paying rent, if you’re collecting rent, again, just go to the Rent app and you’ll see a link for you if you’re doing collections. And I’m not super out there, I guess I’m on apps like Twitter. So you can look me up, Andrew Borovsky. I think you could just Google it.

Jacob Hollabaugh: I think we finally hit the stage where everyone is now saying X then like, do I need to say formally, Twitter or not? I feel like we finally got to the point where we’re very close to not even referring to Twitter. We all understand. So love that we’ll link to those in more in the show notes below. Andrew, thank you so much for your time and knowledge today. I’ve greatly enjoyed it and hope to speak again sometime soon.

Andrew Borovsky: Thanks for having me.Jacob Hollabaugh: If you enjoyed this episode and want to hear more, head on over to soarpay.com/podcast to subscribe to your podcast listening platform of choice. That’s soarpay.com/podcast.