For the past year or so, the real estate market and surrounding environment has been, to put it lightly, volatile. Due to this volatility, and the rapid rate at which changes have come and gone, entire segments of the industry have been created. Others, destroyed.
While it is important to keep note on the individual, time-sensitive trends taking place across the market landscape, the growing importance of resident-centric business is a trend that seems to be taking place at a higher, macro level.
Although those companies serving the real estate and property industries obviously need to emphasize owners and operators in their products, sales and workflows, the growing population of renters has also resulted in a shift towards loyalty and resident services.
Stake is one company attempting to do just that, and the fintech accomplishes this through a number of products. The company’s first launched with a product to give renters cash back for positive actions, like paying rent on time or signing a lease renewal early.
Since then it has grown to provide free online banking, simplified rent payments and automated savings accounts, and today announced raising a $12 million Series A round.
Rowland Hobbs, co-founder and CEO of Stake, spoke with FinLedger about the ways it is using that and previous capital, and how putting renters first can save owners and operators at the same time.
Q: First off, can you just describe Stake and the services you offer?
A: Stake is cash back for renters. And we help owners and operators of rental properties deploy loyalty services to be able to get the actions they want from renters. That may be signing more leases, reducing delinquency or increasing renewals. Whatever they can think of that comes with loyalty, we can help improve. Then the renters get full banking services from us, starting with cash back and all the way through to FDIC-insured checking accounts and our Stake Visa debit card.
Q: I saw you previously founded two startups, a design firm and photo sharing service. What sparked you to start this company and focus on real estate and renters?
A: I appreciate you digging into those. That’s fun. So in between those startups and Stake I was a management consultant, and I’ve worked with many large banks and also helped them with loyalty platforms as well. One of the things that’s really interesting that would come up is two stats. One, more Americans are renting and renting for longer, and banks are having a harder time being able to reach those renters and help them.
When you look at somebody’s share of wallet, 30% of their costs are going to housing. Yet when you look at loyalty and you look at the big categories like shopping and travel, these are eclipsed by housing. So to me the biggest thing both for the consumer and for the real estate industry was, ‘Hey, why isn’t loyalty in this? Why isn’t there a win-win solution that’s come to bear in the real estate industry?’ That’s what I wanted to step into, to see if we could solve it.
Q: Obviously you’re really into loyalty, so I want to ask in your mind what loyalty really means and why you focus on that so much personally?
A: I think that there’s two sides to why loyalty is so interesting. Where it can be so much more effective for a business, one-of-one is that keeping a customer is better than finding a new customer. I’ve always been fascinated by that. Marketing costs a lot of money. You’re always spending on somebody else’s platform, right? It’s spending on Google or Facebook and helping them get wealthier instead of investing in your own business, investing in your own consumers. If you look at the transformation that has happened in big industries over the last 20 to 25 years, it’s all come where they’ve been able to come up with solution and invest in their customers to create a better experience and it really keeps people more sticky to them.
Q: You previously raised a $4 million seed round last year, how did you use the funding to further your goals?
A: We invested in a full banking platform with that. We began with proving that renters would respond to cash back, and owners would pay for it when we were going up to the seed round. Then we went further with the cash back and invested in creating the Stake Visa debit card and payroll, where they can deposit their paychecks into the Stake checking account. They can earn cash back on Stake Visa debit. So with that seed round we created a full suite of banking services, really the first banking services for renters that are out there, that target the needs of renters and help them build savings.
Q: When you look at renters, what are the biggest areas where they are underserved in the current market?
A: Savings. American renters have less than $400 in savings on average. Yet the things that are provided to them are a lot of debt services, loans and things that really don’t help them build savings. A lot of focus happens to go on home ownership, but the thing is that you have to have savings first before you can get to homeownership, right?
So starting at square one of the hierarchy of needs. Let’s get renters to be able to build more savings, what we call a return-on-rent, and build up more ways to be able to save. That might be saving to be able to fix the car, or buy a new car, and then eventually if you’re on that financial journey of buying a home, but the first step in any financial wellness is being able to have a rainy day fund and build that savings. We reward folks for renting, and we reward folks for building those savings. We give them more ways to to earn cash back.
Q: Looking at the business, how many owners and renters do you currently work with and what regions are you in? And what does your team size look like?
A: We’re working in 20,000 homes across the U.S., and in over 25 states today. But our two biggest states are Georgia and Texas. We’re at 17 members today and adding six folks that we have open positions for right now.