Make It in Brooklyn pitch contest winner Bixby acquired by Hello Alfred
We caught up with Smukler to hear about the journey from a two-person to a 14-person team, and acquisition by one of the hottest real estate companies in the world’s hottest real estate market.
August 13, 2019
When news broke last month that real estate tech startup Bixby had been acquired by real estate tech leader Hello Alfred, it marked a special milestone for DBP’s Make It in Brooklyn initiative. Bixby, a startup founded in the Brooklyn Navy Yard by Mark Smukler and Alex Ohebshalom, builds software that bundles all the needs of property managers and residents into one easy-to-use app. It was also one of the startups at the forefront of the Make It in Brooklyn program. Bixby won our 2018 Smart Cities pitch contest, and was invited later that year to our Real Estate Tech Breakfast, both of which, Smukler said, were major moments for the company. We caught up with Smukler to hear about the journey from a two-person to a 14-person team, and acquisition by one of the hottest real estate companies in one of the world’s hottest real estate markets. They made it in Brooklyn.
Downtown Brooklyn Partnership: So, tell us who you are!
Mark Smukler: I’m a co-founder and CEO at Bixby. We provide a web and mobile app for building operators and managers. You can basically think of it as Slack for a building operator. The way Slack facilitates working amongst teams, we do the same thing, except building operators have different needs.
DBP: What do people message about?
MS: Historically, you’re using pen and paper, so when something goes wrong at the building, you have to go to the building, print out a notice, stick it on the wall. There’s no hot water for an hour. Nobody sees it. It’s a waste of time. The real value we provided was we created a hub: maintenance requests, messaging, rent collection, maintenance fees, package notifications, employee scheduling, incident reports, anything that goes into managing the asset and communicating with tenants, you can do through Bixby.
Tenants are now more discerning. They expect more. So how does an owner with a Class B building that’s pre-war stand out? You’re not going to build a lounge on the roof. What can you do? Can you provide a digital platform that makes it easier to send maintenance requests, make rent payments?
DBP: How had this not already been invented?
MS: It’s not new, just nobody has done a good job of it. Older companies exist but, a) they’re web-based, they’re clunky, and have a terrible user experience. And b) we’re transitioning from a mindset where your core business is maintaining the asset to one where it’s actually serving the tenant and making sure they have a great experience. A building owner is probably not going to be thinking to put a smart intercom product in a building if they’re still taking a check in the mail. They’ll be okay with the crappy intercom they’ve had for 50 years if they still have a problem collecting payments in an efficient manner. But tenants are now more discerning. They expect more. So how does an owner with a Class B building that’s pre-war stand out? You’re not going to build a lounge on the roof. What can you do? Can you provide a digital platform that makes it easier to send maintenance requests, make rent payments? And where we really found traction was the service marketplace. You might not have a washer/dryer in the unit but there’s a dry cleaner around the corner. We can partner with that company and allow tenants to place orders. So that’s what we focus on, that’s how we differentiated.
DBP: The big news today, of course, is that Bixby has been acquired by Hello Alfred. How did that happen?
MS: Yeah, a really exciting time for us. I’m not from this industry and it was a real uphill battle for us. Hello Alfred had a really different story from us. Two women, management consulting backgrounds. Met at Harvard doing their MBAs, came up with this concept, flew to San Francisco, won TechCrunch Disrupt, attracted a lot of funding. We’ve known about Hello Alfred for a long time. We’ve spoken to them several times and we have overlapped clients. But we never really felt it was the right time to merge our businesses. And then something happened almost simultaneously for both our companies. Bixby is a SaaS (Software as a Service) company that provides software to building operators. Now that we had really matured on the building technology side of things, we wanted to focus our attention on scaling the service side of the business. Interestingly, Hello Alfred took the opposite approach. They started with service offering and did such an amazing job with it. Then, they started turning their attention to the owners and operators. We went technology first, they went service first. They began the process of building out that SaaS platform, we began the process of building out the service marketplace.
DBP: How did it happen? Was there a phone call? Did you meet at an event?
MS: We met about 18 months ago. We were at a PropModo event and I met Jess [Hello Alfred’s cofounder]. There was so much we didn’t know at that time. Sales cycles, contract values, market size for a product like this. At that time I sat down and had coffee with her and said, “We have enough proof of concept to keep going tomorrow. And every single day we move up and to the right, which tells us we can’t stop. But we still don’t know how this business is going to become a billion dollar company.” She probably walked away from there saying, “They lack confidence in what they’re doing,” but for me it was that the proof is in the pudding, and I hadn’t seen the proof yet. And that’s how we approached the business, for better or worse.
DBP: So what changed?
MS: We found the proof in the service offerings, and that’s when it became real. We can “advertise” and recommend services, we can know our customer well enough that we can tailor our service offerings to them.
DBP: Give me some examples besides laundry. Gyms?
MS: The move-in and move-out is a big one. Whether it’s finding movers or storing your stuff, you need a lot of help and people are willing to spend for the comfort and convenience of not going through that labor. That’s where we monetize the most, to the extent that we were making $100 per unit per year versus the $12 per unit per year previously, and most of it was coming through that move-in event, a one-time event.
DBP: Ok, so let’s fast-forward to when the deal actually started?
MS: Six months ago we go to market to raise a new round of funding. Every time we go to raise money, I look at the competitive landscape and say, “Does it make sense to raise more money, or is there a company that’s complementary to us to help achieve our goal?” Around that same time, Hello Alfred announced Powered by Alfred, which was their product for the building operator and to expand their market focus from Class A luxury to providing service to a greater portion of the market.
In 2018 I slept in the office, on an air mattress, for 100 nights, approximately.
DBP: So they were getting into what you’re doing. Were you worried?
MS: I wasn’t concerned because we’d become so good at what we do. I reached out and said, “It’s been awhile since we spoke. I’d love to meet up and grab coffee.” And when I went in there this time it was a different story. It was, “We know exactly what we’re doing and we’re doing it really well, but we love what you guys have done and if there’s a way to work together we’d love to talk about that.” What they came back with was, “We’d love to partner, but we’d also love to see what a potential acquisition looks like.” It wasn’t something that we were considering. But we’re open to discussing anything.
DBP: Was it exciting?
MS: It’s always nice to be wanted, right? We’ve had several acquisition offers, but there were a lot of reasons why this one was more compelling than the rest: Jess and Marcela, the founders, and their leadership being one; the branding, marketing, communication that Alfred has created being another; and then the service offering and operation that they’ve built and us knowing how difficult that is and how important it is to our business. That’s why this was different. I knew we might not come to terms. We put a lot of hard work into this, we’re not going to give it away. And it took a while. You think these things happen overnight. Very much not the case.
DBP: Was there a purchase price?
MS: There was a purchase price, of course.
DBP: Can you tell it to me?
MS: I can’t disclose, but it was a great deal for both sides.
DBP: Can you wink if you’re getting a new apartment?
MS: Haha, I’m not planning on moving right now. My lease ends in November, so we’ll see.
DBP: How would you describe the feelings you’ve had in the last few days?
MS: It’s incredible. You know the percentages: 9 in 10 startups fail. It’s so hard. You go through so many ups and downs. Starting the company is easy. Growing it is hard. Selling it is damn near impossible.
Really, the only way to get to where we were was by actively participating in the community.
DBP: What’s it like to have let go of your company?
MS: It’s really bittersweet. It’s mine and Alex’s baby. There’s so much blood, sweat and tears put into that thing. But, now I have a new baby, a much bigger baby. I’m so excited to be part of a large organization. We’ve been a small company for so long, since me and Alex started at 1776 in the Brooklyn Navy Yard. We were so lean. We finally broke even this December. We never burned more than $50,000 in a month. To an extent it came back to, “We need to know what the monetization is going to be and that we have a real business here.” A real business makes profits for its shareholders.
DBP: Were there nights you couldn’t sleep because you were too stressed out.
MS: In 2018 I slept in the office, on an air mattress, for 100 nights, approximately. Alex, my cofounder would come into the office and would hear me walking barefoot in the kitchen to get coffee and he’s like, “Slept here again?” There was just so much work to do and there weren’t enough hands. We grew from 50 buildings to 2,500 buildings and didn’t hire any more people. It’s not healthy. Especially in the last year, my mental and physical health took a lot.
DBP: Tell me about mental health, because a lot of people in the tech world don’t talk about that.
MS: There were a lot of days where I couldn’t get out of bed. There were so many problems, so I just hid.
DBP: You couldn’t get out of bed, however, your bed was an air mattress in your office, so you made it work.
MS: The air mattress is actually funny because it had a hole in it, so I would wake up every few hours on the floor and I would hit the button and then a few hours later be back on the floor. The mental health is hard and it’s tied to the physical health. I stopped exercising, I was eating like shit, and I didn’t realize how tied they were. It compounds. Everything else in my life went to the wayside. I haven’t had a girlfriend in four years. I was totally 100% married, committed to this. You need to hit rock bottom to make that turn and I definitely felt I hit rock bottom for myself. First I started meditating. Then I got back into yoga, which had been a big part of my life in the past. And then I started running again and it changed my mental health
DBP: From what to what?
MS: From really depression to optimism. From, “Can I do this?” I’m a great founder but I’ve yet to prove myself as a great CEO. I started the business and built it from nothing but that doesn’t mean I’m the person who can grow it and manage it, and I was petrified of whether I could make that turn.
DBP: Let’s talk about your Brooklyn roots. You were actually a winner of one of our Make It in Brooklyn pitch contests.
MS: We were the winner of the Make It in Brooklyn pitch contest in 2018. It was the Smart Cities contest. We weren’t the coolest company, not even close. But I think that we were a real business. We were very, very fortunate to have a lot of people who listened to us and opened doors for us. That pitch contest was validating. We got a ton of phone calls and emails after that and it changed the game for us in terms of sales at a time when we needed it. We had had trouble breaking into the Brooklyn landlord community. It’s different from the Manhattan community. We were really doing very, very well in Manhattan, but the outer boroughs, less so. That really opened Brooklyn up for us.
DBP: You were also at DBP’s Real Estate Tech Breakfast. What was that like and did anything come out of it?
MS: The Real Estate Tech Breakfast was a great way to hear from the big developers in Brooklyn and it started with listening. Listening to the needs of the owners, operators and residents, and then responding. When it comes to sales, especially, empathy and listening are the number one skill sets. People will tell you exactly what their issues are. Don’t talk about anything else except how you can solve those specific pain points, and you’ll win the sale every single time. It’s shocking how many people that work in sales don’t really get that. And, really, the only way to get to where we were was by actively participating in the community.
We’re really excited about Bixby, of the work they put in to get where they got, and of the authenticity with which they’re able to speak of the journey. Connecting companies, creating an environment where businesses can thrive in Brooklyn, is the goal of the Make It in Brooklyn program, and we’re happy to see a success come out of it.
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