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MyNewPlace, a new apartment rental service, officially launches today with a national footprint and six million reported listings. The San Francisco company goes head-to-head in an established market with competitors such as Rent.com and Apartments.com.
We recorded a podcast with founder John Helm for the recently resurrected "Inside Silicon Valley" podcast. But here is the quick-and-dirty on the business.
MyNewPlace works with mostly large apartment building owners (for now) to create detailed listings of their available rentals or leases. MyNewPlace only gets paid when a landlord finds a renter as a result of the web site.
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How does MyNewPlace track this and get credit? It's a bit of an honor system. Renters go back to MyNewPlace and confirm that they've signed a lease or rental agreement. Then the company charges the landlord an advertising fee of $375. What incentive is there for the renter to tell MyNewPlace about the transaction? MyNewPlace pays renters a rebate -typically $100 - when they report that they found a place through the Web site.
This is not a typical Web 2.0 crawl-and-aggregate business. MyNewPlace needs to establish relationships with each of the apartment owners and work with them to create detailed and useful listings. The task gets a little easier once they've populated the database with most of the big buildings. But there is a significant up-front investment of time and money - hence the $8 million in funding that the company took last month.
"It's a very expensive proposition,'' Helm said. "We actually had to go out and manually build that database and input much of that information by hand.''
Helm is a veteran of the space, having founded All Apartments in the 1990s and eventually selling to Homestore in 1999.
Why dive into the same space again?
"The industry itself hadn't realy evolved beyond where it was in the late-90s,'' Helm said. "It was an advertising-based revenue model with classic Web 1.0 search functionality.''
Helm watched Rent.com find success with a pay-per-performance model where the apartment owners only pay when their properties are rented. But MyNewPlace hopes to improve on the search experience for the renters, by adding maps and other features.