Fraud & Bad Debt

Welcome back to HOT TAKES for MF’ERS. Our guest, Caren Maio , has a HOT TAKE:

The #1 and #2 problems in multifamily are FRAUD and BAD DEBT—and they're only getting worse.

WORRY NOT: She’s putting her money where her mouth is by launching Get 100 , the first VERIFIED RENTER NETWORK powered by CLEAR (yes the one from the airport).

Sorry for YELLING.

It might sound a little weird to stop fraud with biometrics but Caren also saw centralized leasing coming 11 years ago when she co-founded Funnel so let's hear her out.

Tune in below, and if you’re fired up by what you hear, subscribe on LinkedIn and help us reshape what’s possible in the multifamily world. As always: 15 minutes, zero fluff, and nothing but the spicy stuff.

Transcript

Hot Takes Episode 02 - Caren Maio

Sunny

Hi, this is Sunny and David on the show Hot Takes for MFRs, and we're joined today by our guest Caren.

Caren, give us your hot take.

Caren

My hot take.

Hi, everyone.

My hot take is that fraud and multifamily has yet to be solved until now.

So yeah, so we were talking about this earlier, right?

You know, jumping back into the game, which is super exciting.

I think we're still in early innings of PropTech, but hot take is that fraud is probably the biggest problem right now in multifamily.

And despite years of trying to fight it, it's only getting worse.

So here we are.

Very excited to introduce you all to 100 and talk to you a little bit more about what we're working on today.

David

No, this is great.

From putting my operator hat on for a minute, I could absolutely say fraud is still a problem.

I've spent the last couple of years evaluating every platform out there, testing many and seen still issues coming through.

It's not a perfect world yet.

So I'd love to hear a little bit about what's the unique take that you guys are tackling and what do you see as the future of fraud prevention?

Caren

Yeah.

So, you know, I think when I look towards the future, you know, I also like to take inspiration and look at other industries and arguably folks who have also struggled with either the same or similar issues.

And I try to look at, okay, how have they solved for it?

Right.

So like a great example is in the aviation and hospitality world.

Right.

And we'll talk a little bit more about Clear later, I'm sure, but Clear was a huge inspiration to me and to the team at large.

The idea of like the known traveler number, right, TSA PreCheck, leveraging some of those learnings and saying, okay, how can we point this at Mule Estate, more specifically multifamily?

How 100 is different.

We are trying to usher in a new world that eliminates bias, fraud, and friction in the screening process.

And we view it as an end-to-end solution.

Right.

So the idea of being able to tackle identity, financial, employment, everything end-to-end so that we're able to say, hey, this person is who they say they are.

They can afford what they say they can afford.

I mean, having that in one system versus in a piecemeal siloed, fragmented way, that's different.

The idea of partnering with Clear and bringing them into multifamily, that's different.

The idea of a verified renter network and saying, hey, we're going to take that page out of the known traveler number playbook.

We're going to verify that these people are who they say they are.

We're going to deliver them up.

We're going to turn this into a network of verified individuals.

That's different.

Sunny

Caren, I've definitely seen delinquency spike up in the last couple of years.

I think it's been a universal trend.

Like, you know, obviously running analytics, I see it all the time.

Our customers are really struggling with it.

Why do you think the problem has gotten worse?

Like it feels like it's definitely picked up more.

Like what's going on now compared to like five years ago that is causing this to be an even bigger problem than it is before?

Caren

Yeah, it's a great question.

I mean, a variety of things, but I'll, I'll, you know, I mean, I'll start with a couple that come to mind.

One is I think if we look at the vast move to, you know, digital, digital tools and solutions over the course of COVID, it was very much like, you know, you guys remember 2020, Q2 of 2020, it was a very frenetic, like almost sales process.

Like I remember I was at Funnel at the time and I think it was one of like our, I think it might've been our best quarter to date from a sales perspective, which is wild to think about, but there was this like mad dash, this rush to say, holy shit, we are ill equipped to handle online first or digital first communication, touring, et cetera.

We have to get up to speed.

Right?

So I think we might've corrected a little bit as an industry where we didn't necessarily think strategically, how are we going to build a platform or systems that talk to each other that help us move to a digital first world thoughtfully.

So I think some of that are like, we're experiencing the ramifications from that, if that makes sense.

I also think generally, like if you look at just the rise of like rent growth over the course of the past 10, 15 years, let's leave the past year or two, carve that out for a second.

But if you look at the past decade and a half and you chart that against income growth, you'll see rent growth, there's a pretty big Delta.

David

Interesting.

Yeah.

We think of through that clear partnership.

It's fascinating.

You know, the third parties in this space have always been the credit check companies, right?

The trans unions are those groups who do this for much larger scale than just multifamily.

How do you as a startup, as a founder approach a company like Clear, who I'm thinking about here in the Bay area, if you go to a Warriors game for a while, they were using Clear to access the stadium, right?

They're not just at the airport, they're expanding outside of that quite a bit.

So how is that process for you to go approach a Clear and ask, hey, want to be our partner?

Caren

Yeah.

So, I mean, listen, I think, you know, real estate, largest asset class in the world, right?

Like they, you know, they're very, you know, Clear is very sophisticated.

They're very strategic.

You guys have known me long enough to know that I am tireless.

I am relentless.

So point me at something and, you know, that was very much a focus around, you know, being able to convey the why behind, you know, what we're doing and talk about, you know, how big of a problem this is.

So yeah, certainly like time, blood, sweat, and tears to really position that and make sure it was, you know, it was a win-win, but they're incredible.

And this idea of a reusable universal identity, it's a vision that we share.

So I think it was just making sure the puzzle pieces snap together, but we're fortunate.

We've got some big believers over there.

Sunny

But it sounds like, you know, your kind of thesis here is that like, you know, a credit check and SS social security number, like it's something anyone can kind of produce, right?

And it doesn't have to be attributed to a person.

And it feels like maybe what you're creating is what you call this verified renter network.

And I'd love to know, like, how do you verify someone like, you know, at clear at the airport, like David said, like you, they do the eye scan, they do the finger scan.

It's instant, it's fast.

You get through a fast track client.

It's like way better.

I've been, you know, we all travel a lot for work, but like, it's been awesome.

Like, how do you imagine bringing that into a way into multifamily that feels natural for the prospects and also is adding this huge accredited value where you can stop having fraud?

Caren

Totally.

Yeah.

So I would say like, first of all, the name and the brand, right, certainly helps.

So like, I think being able to leverage and we do leverage clears technology to verify identities biometrically, the moment you see that clear logo, even as, you know, I mean, as a user, as a renter, it's like, okay, great, instant trust.

Right.

And being able to go through that process, it's similar to right, right.

To what you go through as an airport, excuse me, at the airport and being able to leverage clearest technology to say, okay, great, we're going to do the appropriate scans and checks to make sure that this person is who they say they are, make sure their documents are correct.

Oh, and by the way, if you're already a clear member, you get this even more expedited experience.

So when they're, but yeah, that's very much how we think about it.

So like, you know, I mean, at some point we'll, we'll show demos and all that.

And I can actually show it to you.

Uh, maybe subsequent podcast, uh, can be demo time, but it's actually pretty amazing.

Right.

So something that I'm excited.

Sunny

Cool, i’m glad we got the exclusive launch.

Caren

Oh, totally.

And I mean, it's, I mean, it's you guys, of course.

And then something end to end though, that would typically be done via documents, emails back and forth, photo taking, picture taking.

It can just be done from the comfort of your desktop or your phone, um, with just a few clicks.

David

Very cool.

How, um, uh, knowing you Caren, you've done your research with other owners and operators and digging into this pain point when people think about fraud, um, you know, again, putting my operator hat on it's more than just a bad prospect or delinquent rent, right?

This could end up in lawsuits.

I've seen wild things happen in apartment buildings, fires, floods, you name it due to fraudulent residents.

Um, I assume that's part of the pitch here, right?

You know, our operators feeling that pain or are they hungry for this type of thing?

Not just for that little bit of delinquent rent, but with insurance costs and other things going through the roof.

I see this all part of that puzzle.

Caren

David, I've never seen anything like, like when I, like when I tell you that every single person I spoke to, and I spoke to so many over the course of this past year where I was like, can you just tell me what your top three problems are?

Like, what are the things you have to solve this year?

It was fraud.

It was bad debt, which interrelated and then some third thing.

It was always like, Oh, the third thing, but it was always fraud and debt and the implications of that to your point, like the costs are incredibly high because it's not just the cost of a poor screening decision.

It's everything that happens after the fact to your point.

David

Could you tell me what that third thing was for everyone?

So I could go start a company.

I think it's my, it's my turn to make it happen.

Yeah.

We'll make that happen down the line.

Caren

Yeah.

But like, like, I mean, you know, I didn't need to tell you guys this, cause we've, we've all been in this industry long enough to know, like it's hard to get operators attention, especially right now.

Right.

Budgets are tight.

You know, folks are kind of bad, you know, kind of battening down the hatches a bit.

I don't know if I've ever been part of a product or, you know, solving for a category where it just, it was this hair on fire moment where it was like, Oh my God, we need, we need to find a way out of this mess.

We need a viable solution.

David

Got it.

As you obviously clear being the big announced partnership when you guys went live, what, as you think through the property management space, what other integrations, partnerships, what else are you guys looking at for your, your launch?

Caren

Oh, that's a really good question.

You know, I'd say we've got a lot of those like kind of table stakes, partnerships baked.

We've got, obviously it's not just identity, but it's financial, it's background.

So obviously we have those partnerships.

I'd say longer term on the, the partnership front.

You know, it's something that I want to always look for kind of the, the win-win partnerships where we could either make it easier for an operator to get on board, leverage us, utilize our solution or give the renter a bit more value and their experience with us.

Right.

So like, how do we deliver, again, it's these frictionless experiences on both sides.

So I'd say we've been heads down partnership mode for a while.

So now I'm excited to maybe move more towards like, cool, let's, let's get these things, let's, you know, let's get this thing in people's hands and, and, you know, and start growing.

David

It sounds with the clear partnership too, are you guys going B to C out of the gate?

Are you going B to B both?

What, what, what, what are you trying to tackle first?

Caren

Yeah, I'd say like our focus right now is B to B to C.

We have a lot of operators who, you know, obviously clear was, you know, like a big feather in our cap, but I think the product of saying, Hey, listen, you don't need to kind of piecemeal identity versus income versus background versus document verification.

You get everything under one roof.

You know, I think a big part of what kind of where we're trying to do with that is really been kind of, you know, like stands out to the operators, you know.

Sunny

You've been involved with like a lot of early stage businesses in prop tech and like, you've definitely earned your stripes.

And like, one thing I want to know is like, you get to start over and you get to do this any way you want.

Like, what do you want to do different this time?

Caren

That's such a good question.

There's so much I want to do.

Like, listen, I mean, I'm not here to be like, Oh, I did everything right.

And here, here I am again, doing everything right.

Hell no.

Like we made so many mistakes and I'm sure I'm going to make, and I'm sure already have, right.

That's par for the course.

I will say though, a couple of things.

Generally, like as an entrepreneur, I think first time around you're experiencing everything for the first time.

So everything feels, and maybe this is just me, but this is certainly how it felt.

It felt bigger.

Like when something went poorly, it was like, Oh shit.

Like it felt like the end of days.

And it was like these bigger swings were like, I couldn't really like embrace the rollercoaster all that well.

And it would like rock my day versus now it's like, Oh, I've been here before.

I recognize you.

And like, sometimes there's a way to like, okay, cool.

We can take a different action.

And you know, something I did wrong before now we can do it right.

Or sometimes it's like, it's, it's a moment in time.

It could be a bad day.

It could be a bad hour.

We'll ride this out.

And like, I dunno, I'm finding it easier to embrace the ups and downs of entrepreneurship.

Does that make any sense?

Sunny

Yeah, definitely.

Every day is a fricking like fire.

And you sometimes I just, the whole week has been terrible for me.

And I'm just like, Oh God, you know, what is it?

And like, I think that's one thing I'm trying to get better too, is just like, you know, you roll with the punches.

Like not everything is the worst thing in the world.

It's just like, you're so obsessed with your own company.

Everything does seem like the worst thing in the world.

Caren

Totally.

And it's like this fear.

Like, I feel like if I'm being totally honest, like first go around, I feel like I operated and sometimes led from a place of fear of like, this is, Oh man, we can't lose this.

We can't lose like this fear of like almost missing out or this fear of like, we had to win every deal.

Um, and now I'm operating from a place of like opportunity.

I know that sounds corny, but it's like, I've been through shit before.

We're like, we lost you.

Like the thing that like I was worried about happening happened.

And like, Oh, by the way, we're still here.

Funnel's thriving.

I'm still at like, everything is okay.

And I feel like once you just have enough, like shots at goal, or you have just enough under your belt, whatever analogy you want to use, you kind of realize like, Hey, like it's all good.

And I can embrace the ups and downs and lead from a place of confidence versus fear from a place of opportunity versus loss.

David

I hate to use this word, but maybe it sounds like we're all maturing a bit.

That's a scary thought.

Caren

But could we all be growing up?

Is that possible?

David

I hope not.

I really hope not.

Well, okay.

Last question.

And this is going to be a bit weird on the podcast because OPTEC is next week when we're recording this.

And I don't know if we're going to get this out this week before OPTEC, but Sonny as a vendor at OPTEC or any conference is going to be buying everyone drinks.

Sunny

Sure.

David

Caren, I suggest everyone, they buy you a drink.

So what's your drink of choice at OPTEC?

Caren

You're the greatest.

So if someone could procure an espresso martini for me, it is the drink of the 100 team for sure.

I would be so grateful.

David

Awesome.

So espresso martinis for Caren.

I like it.

Maybe NAA espresso martini bar for all customers of 100?

Caren

I like that.

You're giving away my secrets over here.

I like that.

Awesome.

Yeah.

So yeah.

I mean, espresso martinis next week.

I'm in.

David

Perfect.

Great.

All right.

Well, thanks everyone for listening.

We appreciate it.