Four years ago, John Hinckley recognized that the apartment industry was behind the times when it came to applying technology to its businesses. So after exiting his previous startup, IRIO Mobile Marketing, which aimed to bring texting into the real estate space, Hinckley decided to find a solution that would help apartment properties leverage technology.
The winning idea came in May 2011 when Hinckley attended an Indianapolis 500 race with a friend.
“He was talking about this company that gives you reward points for your favorite college football teams,” Hinckley said. “The more Instagram pictures you posted, tweets you shared and games you check in at, the more points you get that can be used to buy gear.
“I was like that’s brilliant.”
So Hinkley teamed up with co-founder Michael Ivey to found Dallas-based startup Modern Message, a platform that rewards apartment dwellers for paying rent on time, sharing messages or posting photos on social media. The company was founded in January 2011, before Hinckley really knew what he wanted to do with it. Then, after realizing the potential to gamify the apartment living experience along with finding his business partner, Modern Message came together.
The company has nearly 100 property management companies as clients, with reoccurring revenue above $1 million.
Here’s a look at the company.
How does Modern Message work?
JH: Basically it leverages audiences to getting engagement online. If residents are talking and sharing their experiences, that’s going to lead to more leases. The platform is creating a fun way to get engaged with the apartment. We’re trying to make it a little more exciting by make a points reward system. If they pay rent on time, share experiences, etc., they can get points that can be used to redeem gift cards.
MI: We sync with property management systems. So when you sign a lease, our system sends you an email and you can opt in. We sync everything against the rent roll. You just have to authenticate into the app. We have a Web-based and mobile app. We have a bank of providers that are on our platform. Basically properties no longer have to handle physical gift cards on site. It’s fully automated. We also have a bank of action items (for which residents can be rewarded), but properties can also add their own and decide how many each is worth.
What do rewards look like?
At a certain point in time, say when you reach 10,000 points, you can choose to cash out now or play to earn. Typically, 10,000 points start at $5. The biggest gift card providers are companies like Amazon, Mastercard, Starbucks and other large national brands.
How are you funded?
JH: I sold my share of my previous company to my business partner for over $250,000. I took that money and put it into starting this one. Then we raised a full angel round of $300,000 and a second round of $200,000.
MI: For the second round, we found an investor we liked (Silicon Valley Growth Partners) that had knowledge we could benefit from.
How do you make money?
MI: We get paid on a month-to-month basis. We charge a flat fee of 50 cents a unit. With larger companies, we’ll negotiate.
JH: We also have a large chunk of business in student housing where rates are charged by bed.
Tell me about your traction.
MI: We’ve been very lucky, client growth has been into the triple digits each year. In 2015, we grew by 400 percent. We began this year with six employees, and we’ll begin next year at 12. Our clients include Asset Campus Housing, Greystar, Alliance Residential, Lincoln Property Co. We have 100 different management companies under contract that manage up to 400 properties each.
MI: We’re going to keep growing the number of people we hire. Product-wise, we intend to maintain growth rate on the client size. We’re also going to expand the number of products we deliver, which will have a pickup on revenue. We’re focused on things that fit inside our product. So we’re pulling resident leasing incentive offers into our platform in such a way that it will be automated. That’s something we’re rolling out in the next couple of weeks. There’s also a chance for us to move outside of the apartment industry.
Danielle covers technology and startups for the Dallas Business Journal. Subscribe to our new TechFlash email newsletter.