Andrew Collins On Raising $68 Million To Reinvent How You Live With Roommates

Andrew Collins is the co-founder and CEO of Bungalow which is a residential real estate platform that provides renters with a more convenient, flexible, and communal living solution. The company has raised $68 million from Khosla Ventures, Founders Fund, Maverick Ventures, Cherubic Ventures, Coatue Management, UpHonest Capital, Wing Venture Capital, CAA Ventures, Atomic, Nine Four Ventures, and A-Rod Corp.

In this episode you will learn:

• Why not start a residential real estate company in the winter
• The value of being on the front lines yourself, at least to start
• The importance of thinking about both running plays and passing plays
• The thinking behind his investor choices
• Andrew’s top book recommendations

 

SUBSCRIBE ON:

For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.

Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here). Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.

About Andrew Collins:

Andrew Collins is the co-founder and CEO of Bungalow, the largest co-living network in the country.

Andrew was inspired to create Bungalow with COO and co-founder Justin McCarty after experiencing first-hand the difficulties of finding an affordable apartment and establishing a community when relocating from Philadelphia to San Francisco.

He identified a gap in the residential real estate market and seized on the opportunity to create turnkey, accessible rental options for people looking to move to new cities without an established personal network.

He brought his vision to life by launching Bungalow in 2017, helping thousands of people across America find great spaces and the right roommates to build a home.

Andrew graduated with honors from Princeton University with a degree in sociology and earned his M.B.A. from Wharton School of the University of Pennsylvania.

Connect with Andrew Collins:

• Linkedin
• Crunchbase
• AngelList

* * *

FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a very interesting founder. I think that we’re going to be able to learn quite a bit about co-living, and also how to build a company with that in mind on a hyper-growth type of speed. So without further ado, I’d like to welcome our guest today. Andrew Collins, welcome to the show.

Andrew Collins: Thanks, Alejandro. I’m really excited to be here.

Alejandro: So born in Oklahoma. How was life there?

Andrew Collins: It was fantastic. Oklahoma has an incredible, rich, vibrant culture in Tulsa, and also an amazing childhood growing up. American football obviously is king. Really fun in every way.

Alejandro: There’s something really interesting here, which is that you come from a family where they are serial entrepreneurs. I guess that’s maybe where you got exposure to how you were able to dream something and bring it to life. What did you get from those years, and from that exposure that your family gave you into the world of entrepreneurship?

Andrew Collins: Yeah, very much so. From the moment that I can first remember, from age five on, I knew that I wanted to start my own company. I thought that was what everyone did. My father, one of his siblings, my mother, are all serial entrepreneurs in their own right. Being from Oklahoma, it was more in the oil and gas and trucking industries, but spreading the whole gambit. I think that then shaped and formed my life and my broader career trajectory. I was constantly, even from the moment of doing lemonade stands in middle school, which sounds very clique, to then spending hours in the Oklahoma Law Library as I was thinking about opportunities around where do we unblock that next business opportunity in high school. That then shaped my career, and always focusing on those learnings and getting those management skills that would one day position me well to start something on my own.

Alejandro: You went to Princeton, so why sociology?

Andrew Collins: Princeton is a liberal arts school. I studied economics and sociology there. It was interesting. I thought I would do e-con through from the very beginning, but I fell in love with sociology after taking a 101 course. Sociology is the broad-based group dynamic of psychology. It’s understanding why groups behave in the way in which they do. What are ways in which you can drive and influence that or the ways in which you can support that? Interestingly, the management theory courses that I took in subsequent years, all of the underpinnings and the primary research for those were the sociological impacts that I then had in Princeton.

Alejandro: Then, after Princeton, you moved to California. There was a company there that you worked for, called Medallia that changed the perspective. Also, you got involved being in Palo Alto and all these incredible ideas that people were bouncing back and forth. What’s so incredible here is that you started when there were around 50 employees, then they scaled it up to over 1,000 employees. How was the experience working there, and what is it like to be part of a rocket ship like that?

Andrew Collins: It was incredible. As I reflect on that time, a lot of my friends were going to New York. This was 2010. Making that move out of San Francisco, I always owed that to those times in childhood when I knew I wanted to become an entrepreneur. I thought, what better opportunity set than to join a fast-paced startup where I could learn directly from the founders around what does it mean to scale? What does hypergrowth look like? Andy Rachleff of Wealthfront has a great blog post about this, which is by joining a fast-paced, high-growth startup, you have an opportunity to have a slingshot effect on your career for a couple of different reasons. 1) The pace of learning, just because of the out-sized responsibility that you’ll be given as a young entrepreneur or as a young person, is extraordinarily high, much higher than you’d gain if you went to a much bigger firm. That certainly panned out for me. Then I think the other opportunity is by aligning yourself with a highly successful organization that then has a multiplying effect on your career from external parties as well. I was so excited to join them and move out here and learn what does the world of Silicon Valley and high-tech, high-growth startups look like. Then Amy Burga, in particular, set up an incredible founding team. You knew you walked out of an interview and did well with Amy if you walked out with three or four business books; certainly, Growth Mindset, by Carol Dweck, and usually Good to Great, or Tribal Leadership, as well. That ethos of scaling and building was so engrained within our operating rhythm. It was a lesson that I’ve taken with me since.

Alejandro: Those high-performance teams and these types of cultures, what do you think are some of the fundamental building blocks that they are sustained by?

Andrew Collins: Everyone says culture, and I think that ultimately comes through. For us, both at Medallia and what we pulled to Bungalow, to focus on deep-seated curiosity and growth mindset, is understanding that the problems that we will face are generally problems that people haven’t seen before. So, it’s how do you create scalable frameworks that allow you to then be aligned as an organization, and how are you going to work through those and come to an agreement? There is also a level of comfort with ambiguity, that hypergrowth, hyper scaling. I remember our group within Medallia rewards literally three times in four years. So, you have to have comfort that the status quo and where the organization is built for today does not necessarily mean the same thing that’s going to drive success within six months and certainly not within two years from now. That also gets back to this importance on always questioning why is a process or a team implemented in the way in which it is. Just because that is the way in which it has been done does not mean that it’s optimized. So there’s this constant iteration and tight feedback loops not only with your customer base around how do you improve your organization and your product, but also internally with your own teams so that you’re making sure that you’re moving as quickly as possible. 

Alejandro: For the people that are listening, what does a successful, tight feedback loop look like?

Andrew Collins: Great question. One of the pieces that we’ve made sure we put in place from the very beginning is ensuring that you have clear data and analytics and basically BI tooling throughout the organization that’s looking not only at outputs and your ARR retention rates, contribution margin and key quality metrics that you might be having. But also, what are the input metrics that then drive those? That allows you to take action much more quickly and potentially identify challenges before they start. I’d say there’s also a really big qualitative effort here. It’s through the structure of your one-on-ones, through the structure of your meetings with your team. It’s creating a culture of feedback. [0:10:03], a fantastic book, as I’m sure most of your listeners have probably read. But really ensuring that culture of feedback, starting at the top, and making sure that I am asking for that feedback in every single meeting is important to be able to drive toward a better outcome for all.

Alejandro: Got it. Here you were at Medallia for four years. Then all of a sudden, you make the decision to go back to school. What happened there?

Andrew Collins: Yeah. It comes back down to the rate of learning. I was blown away at the problem sets, the responsibility, and the challenges that I was given at Medallia. I learned immense amounts, but at Medallia I was focused within customer experience and the customer success group. I helped them build out and pro-lead a retail vertical where we had a lot of exposure to the different go-to-market strategies, so I felt very strongly about my sales and marketing backgrounds or business development characteristics or skillset. I had no exposure to finance, accounting, and some of the more quantitative pieces of marketing. So I wanted to gain those from business school. I felt like going back to business school was a phenomenal way to accelerate learnings that a generalist would need to then go and start an organization. I think the other core point was moving from Oklahoma to Princeton, and then from the East Coast out to San Francisco, and I didn’t know a soul when I made those moves. I found the first 9 to 12 months of finding my friend group to be difficult. I had seen new members on my team at Medallia wrestle with those same challenges. I felt there was potential business opportunity around community and unlocking friend groups and helping people feel grounded from the moment they move into a new city. But I had no idea what the business venture would actually be. I wanted to go back to business school to give myself the time and space and opportunity to tinker around with a few different ideas as well.

Alejandro: Obviously, it is interesting because Wharton is a community that I know very well. Most of the people either go to a consulting firm or maybe even banking, and here you are, you decide to go to Facebook. Probably, people were surprised. So why did you make the decision to go to Facebook?

Andrew Collins: That was undergrad, too, to be honest, was the exact same. Again, it comes back down to [0:12:58] and what are the careers and life’s [0:13:05] by any stretch of the imagination, but I think you can think about, in the same model that we planned our business, and think about where do we want to be ultimately? Then back-fast from there figuring out where the skill gaps that I want to then unlock, and what do we think are the job opportunities for businesses or companies that can then fill in those gaps the best. For Facebook, I wanted to see 1) back on that community piece, what is a world-class visual community looks like at scale, and 2) my professional life at that point, and especially since college had only been exposure through Medallia. Medallia was amazing moving from 50 to 1,000 employees, but I wanted to see what do the inner workings of a world-class mature big tech company look like so that I could then take some of those learnings as I ultimately wanted to start a company down the road.

Alejandro: So, what were those learnings that you took with you?

Andrew Collins: The big one was, I was thoroughly impressed at how much the culture and values and hiring bars still showed through. That was when there were about 10,000 or 11,000 employees. This was pre- Cambridge Analytica, as well. You could just tell the excitement in the alignment, and the pace was really wild. I think they also had this amazing culture of moving very quickly, testing, learning, and iterating. That was impactful for me to see that these same values that I held very dear at Medallia that I thought were amazing could still be replicated and executed on an excellence level at a company of that scale.

Alejandro: Then, after Facebook, you went to Atomic. This is where you started to shape up the idea of Bungalow. One thing that is really interesting to me is, here you are in your teens or even earlier than that looking at your family of serial entrepreneurs, and it literally took you years to finally take the leap and start Bungalow. Why do you think it took you so long? I mean, man, you definitely planned things in advance, Andrew.

Andrew Collins: [Laughter] Careers aren’t necessarily linear. For me, it was around wanting to ensure that I had the suite of skills that I thought that it would take to be successful or to give myself the confidence that I had to 1) test and iterate a company idea, and 2) be able to attract and lead a world-class team. I think there are certainly a lot of cases of very young entrepreneurs who have had this amazing product idea and technical product who’s been driven enormous success behind them, but I think the idea of a drop-out of college, start a company, is actually the rarity. If you look at the data, the vast majority of venture-backed founders are in their late 30s. I think a lot of that is ultimately because people want to build that skillset and are better positioned to start and run organizations once they’ve experienced some of these high-performance cultures as well as some things that haven’t worked. You can take those learnings into how you apply that to organizational structure and building.

Alejandro: In your case, at what point did you see that most of those checkmarks were met and that you were prepared to go at it?

Andrew Collins: I think as I was exploring opportunities out of business school. For me, it was interesting. I was evaluating either going and being the first business hire at a very early-stage startup. I was evaluating starting my own organization, and then getting to know the Atomic folks, Jack Abraham, Andrew Dudum. They’re all operators in their own right. I saw an amazing opportunity to come in and continue to iterate, evaluate, and grow the idea that became Bungalow and also gain this amazing mentorship from folks who are serial entrepreneurs and operators in their own right. That allowed me to accelerate my learning. That certainly reflects on my career and reflects on today, and where I am currently optimizing on learnings and surrounding yourself with people that can accelerate your own career growth and learning is invaluable, and I think absolutely what separates those who win from those who fail. 

Alejandro: An interesting question that comes to mind — it seems that you have been able to surround yourself by the right people at the right time. This happened from the guys with Atomic. This happened with the investors that you have also been able to onboard. How do you know that there’s stuff there that you don’t know, and how do you identify those people that can fill out those gaps for you?

Andrew Collins: A lot of self-introspection, to be honest. I also think this culture of feedback is incredibly important. Lean on your peers; lean on your mentors; lean on the people that surround you to give you that feedback and pair that with your own introspection. For me, it was important as we evaluated, starting this, our Series A investor that we brought on was Keith Rabois. The reason why we selected him was his incredible experience within marketplace organizations and operating experience that we thought would give us an unfair advantage as we scaled Bungalow — being able to compare ourselves to the DoorDashes, the Opendoors. At this point, as a Series A company, holding ourselves to that same standard, accelerated the way in which we operate as an organization and allowed us to move much faster than some of the competitors. It’s really introspection.

Alejandro: For you guys, what ended up being the business model of Bungalow?

Andrew Collins: The business model of Bungalow — quickly, Bungalow has quickly become the largest co-living company within the U.S. The ultimate business model for us was, we recognized that there’s this excess inventory of existing single-family homes, brownstones, large apartments and that even in these incredibly tight real estate markets, the three, four, five bedrooms plus homes are actually still quite difficult to rent out as a homeowner. We were able to step in and act as an alternative to property management for homeowners. We take care of all lease-up, furnishings, maintenance, and be able to increase their yields significantly. Then for residents who are built out of our own — my empathy for the residence experience. I’ve moved around a bunch as we talked about. Finding that community, finding that network of friends when you first land is quite difficult. I was fortunate to live with a few amazing roommates along my journey, and most recently when I moved back to San Francisco. I felt like there was an opportunity to improve that experience. For the resident, we’ll find these beautiful homes. We furnish them incredibly nicely. Then we help you find other great individuals to live with. We’ll rent individual bedrooms out within those homes creating tight-knit households, and then take care of all the headaches. So, housekeeping, WIFI, utilities are all set up from the moment that you move in. Then we run member events across all the properties as well. So, you get this great network of not only your housemates but also the broader community of a few hundred and eventually a few thousand remits within a market to dive into and hit the ground running from day one.

Alejandro: Great definitely was something that was present during the early days. Tell us about this.

Andrew Collins: I would say that for anyone out there who is trying to start a residential real estate company, do not do it in the dead of winter. There is real seasonality to this business. Our first couple of properties that we brought online; we’re tinkering around trying to understand what’s going on. I did everything from acting as the leasing agent to maintenance or class to changing locks on doorknobs. I think I still have a toolkit and a doorknob in the trunk of my car right now, two years later. But I think there’s real value in learning the intricacies and the nitty-gritty and what works in framing, talking to customers, doing the entire sales cycle yourself is what allows you to understand where the friction points are in the process. And how can you, as an entrepreneur and a leader, make that easier both for your customers as well as for your teammates. That proved invaluable. The other piece, January, February, March, once the market and seasonality started to take off, it was apparent to me that I had seen on a very micro level a handful of properties that uneconomic, the community, the resident experience, the demand that was created, there’s a massive organization there. That is one of the pieces that tends to get lost for entrepreneurs. You’ll have a lot of external parties saying, “This thing, this idea, this product, whatever it is, is fantastic.” But you, as the entrepreneur and as the leadership team or as the first employee, it’s critical that you see the traction, you see the proof point that gives you confidence that you want to spend the next ten years of your life doing this and feel like you can build something that makes a dent in the world. I think those early days, for me, were incredibly helpful and proved to be invaluable for us, as then, you get pulled into the nitty-gritty, and it’s coming back to that confidence that gives you the excitement to them go out and recruit and bring in your close your friends, bring in amazing executives, bring in incredible investors as you can see that traction working and gaining in your own hands.

Must Read: Steve White On Raising $300M To Grow His Cannabis Business To Over 1,000 Employees

Alejandro: When you’ve surrounded yourself by the right people like you were saying, bringing all these people and having them push and be behind the trenches with you, what does alignment look like, and how do you get people to rally toward a bigger purpose?

Andrew Collins: It starts with a clear vision. It starts with thinking through and pushing on that vision around where do we want to be in 5, 10, 15 years? Then working backward from that. I think one of the things we do really well as an organization and speaking about step-function changes and step-function improvement, Dan Levin, former president and CEO of Box outlined it as: it’s important that you think about running plays (doing a football reference) and passing plays as an organization. In a company such as this, fighting for every single basis point on unit profitability and on contribution margin is incredibly important. You need to have the team rallied and focused on that as every dollar counts as it allows us to then provide an amazing and affordable, accessible price point for our customers in a residence. But, at the same time, you need to ensure that you’re also looking at, “Okay. What are the step-function changes and strategy in the product or in the capital structure that will also then allow me to go and capture 100,000 properties and help half a million people over the next handful of years?” I think being thoughtful and diligent and breaking down where do we want to go and then taking backward from that around how are we going to get there? You’re certainly not going to have all of the intricate steps and all the intricate answers as to how you’re going to do that. It allows you to break the problem down into big chunks and de-risk along the way, and then rally your team and your investor group around “This is the alignment of how we drive forward.” Then prove out that progress in a very clear way along the way as well.

Alejandro: You were talking about investors. How much capital have you guys raised to date?

Andrew Collins: We’ve raised 68 million total.

Alejandro: It’s interesting because a business of this nature, you have the real estate component, you have the hypergrowth combining with technology. What are some of the expectations that typically an investor — let’s say in your guys’ experience doing your A round or B round, what were some of the expectations that you were encountering from those investors?

Andrew Collins: I think it’s a lot around understanding alignment and vision and where do you want to take the organization? We are fundamentally setting out to tackle two of the biggest problems I think of our generation, which is housing affordability and loneliness. The market for that is near limitless. We’re starting, obviously, here in the U.S., but it’s really a global problem. Getting excitement around how we as an organization can potentially make that shift and make that dent and help solve two massive problems was one piece that our team and investors and potential investors felt it was important that we share that same vision and excitement as well. Then, one of the big differences around me and my co-founder’s DNA is, we’re really marketplace and technology people. Some co-living companies are more real estate-focused. For us, as we thought about the investor base and we thought about our partners that we wanted to build, especially in the Seed, Series A, and Series B is focusing in on those world-class marketplace investors and operators. Keith was one. Matt Mazzeo and Couto joined us at the Series B. Khosla at the Series A. We found that our target list of who we were looking for were best-in-class operators and investors within this type of organization. Those were also the ones that tended to be the most interested, as well, because they had pattern recognition around seeing similar companies such as Airbnb have tremendous success. I think that selection process and alignment were helpful, and it was clear to go into these fundraises with the knowledge base of, “This is the type of person I’m looking for.”

Alejandro: Got it. It’s also interesting that your guys’ model and you were alluding to when it comes to marketplaces when we think about technology and marketplaces that the transaction would happen online, but in a model like yours where you’re building that network and community, also some of those transactions and interactions have been offline with the community that you’re building. Can you expand on that online and also offline type of ingredient to make a community or marketplace of this nature be successful?

Andrew Collins: I think that’s the exciting part. We’re not just building a widget that is purely digital, but we are building a product that our residents spend the majority of their lives in. That offline component is incredibly exciting. I think we live in a world where digital products can help enable and streamline the offline world in ways that you wouldn’t have necessarily even thought about five years ago. For instance, we have built a whole resident onboarding and leasing flow that can now be done totally digitally, totally self-serve. As we think about deployment of meet-and-text and building a best-in-class customer experience, we focused on building route optimization software that helps us be able to efficiently clean, organize, show, and maintain these properties that are all decentralized and spread across LA and the Bay Area, which are both huge markets. But I think the other core component there that’s important is, unlike a SaaS business, we do have real [0:32:05]. It’s important that we, as an organization, a company, and a leadership team are thoughtful around what are those uneconomics and how do we set up the business so that it withstands the test of time in that we’re able to continue to deliver enormous value to our customers, both homeowners and residents? I think it’s actually a lot more complicated and harder problems to solve, but one that is deeply interesting and really exciting.

Alejandro: In this case, let’s say you go to sleep tonight, Andrew, and you go to sleep for five years. Then you all of a sudden wake-up, and you wake up in a world where the vision of Bungalow is fully realized. What does that world look like?

Andrew Collins: I think two of the pieces that we’re really excited about are around making a dent within loneliness and accessibility within existing markets. The Bay Area, LA, and the top global markets around the world, simply just cannot build new housing quickly enough either because of cost or regulatory environment. We got excited because we can repurpose these properties to be much more efficient and dense, and therefore, the cost of a bedroom, on average, within Bungalow is 30% less than that of a studio apartment, which that opens up accessibility for new grads, for young professionals to be able to access these cities, and also access all that these cities have to offer because their income is no longer being 55% [0:34:02] housing cost. On average, ours is less than a third. Seeing that vision realized globally is one piece that I’m excited by. The other is, I think we’re just on the tip of the iceberg. They’re starting to speak about the loneliness epidemic. The former Surgeon General of the U.S. just said that it is the next great physical health epidemic within the U.S. It’s the same toll on your physical health as smoking two packs of cigarettes a day. Baby boomers, on average, had three close confidants that they felt close enough to that they could talk about job troubles or relationship challenges. Millennials, on average, have zero to one. I think just in the same way that online dating has no longer been — it’s been destigmatized. I think in the eHarmony days, roughly 2% of marriages came from online dating. Now, it’s over a third. I think you’re going to see the same shift toward technology, helping people who are new to a city establish and find their friend group quickly. In five years, I’m excited to have Bungalow be at the forefront of both of these issues and making a strong dent on this around the world.

Alejandro: On that loneliness, Andrew, what do you think is the main trigger behind it? Do you think it’s technology that it’s isolating us, or what do you think is behind the loneliness?

Andrew Collins: The Wall Street Journal had an interesting article that came out that showcased that chronic loneliness was actually on the decline until the release of the iPhone. Then once the iPhone was released, you can see this dramatic spike and continuation of trends line up and to the right, which you hate to see. I do think even though we’re more connected than we’ve ever been before digitally, we are losing that touch with our friend group in the offline world. That is a big component. I also think migrations towards jobs and new opportunities are — anecdotally growing up in Oklahoma, very few of my friends left the Oklahoma and Texas area to go to university. Now, when I go home, ten years later, I [0:36:37] all around the U.S. from LA and San Francisco to Denver to Austin. I think that as the world has become more global in nature, our networks have shifted, and we’ve become comfortable with moving more frequently and further than ever before.

Alejandro: Got it. Makes total sense. It’s amazing, the trends and how things are shifting and so quickly because, with technology, the speed of things is incredible. One of the questions that I typically ask the guests that come on the show is, knowing what you know now — it’s been an amazing run and an amazing journal, your entrepreneurial journey. If you had the opportunity to go back in time and have a chat with that younger self coming out of Wharton that was already clear about building a business at some point, what would be that one piece of business advice that you would give to that younger Andrew before launching a business and why knowing what you know now?

Andrew Collins: That’s a great question. I think it’s around some of the points that we’ve already made, which are grit and tenacity. The highs are incredibly high; the lows are incredibly low. But I think it’s around making sure that you’re excited and have the confidence around what it is that you’re building that pull you through that. I think the other component is having a co-founder or someone that you can lean on in the trenches. I’m much more of a team-sport person, so building something with others if very much my style, and I feel brings out the best in me personally. I cannot emphasize that enough, and I think it has incredibly unlocked to find that co-founder. I wish I’d found Justin earlier, but it also came out perfectly. It’s optimized on learning. Always push yourself outside your comfort zone. Surround yourself with people that can push your thinking. I think ultimately, Carol Dweck’s Growth Mindset is exactly right: everyone can learn how to do incredibly challenging things, and you learn by reading enormous amounts, by being able to surround yourself with people who have seen different challenges that might be similar before and then taking a cultural approach to tackle those problems. It’s a ton of fun.

Alejandro: I love it. For the folks that are listening, Andrew, what is the best way for them to reach out and say hi?

Andrew Collins: You can reach me at [email protected].

Alejandro: Amazing. Andrew, thank you so much for being on the DealMakers show today.

Andrew Collins: Alejandro, thank you. I really appreciate it.

 

* * *

If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at [email protected].

Podcast: Play in new window | Download

Subscribe: Apple Podcasts | Google Podcasts | Spotify | Stitcher | TuneIn | RSS | More