From being an energy investment banker to a successful entrepreneur, Ben Johnson, Founder and CEO of Spruce, took the leap and became the leading home services provider to apartment residents. Since launching in April 2016, Spruce has grown to service over 500,000 apartment homes in 17 markets. Find out in this #TechandTacticsTuesday episode about their revenue model and the amenities and services they offer that can boost your tenant retention in a major way!
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Ben raised $8 million to get this business launched and the rest is history. What was the strategy that worked for him to fund this company? Where did he get his idea and what gave him the confidence to leave his career and make this happen?
Key Points From This Episode:
- Ben started out his career as an energy investment banker in Houston, Texas.
- He shares why he decided to leave his job and become an entrepreneur.
- What is Ben’s advice to those who are also planning to take a leap and start their own business?
- Ben raised $8 million in Series A to get this business launched.
- Ben talks about how Spruce works and the services they offer.
- Many residents like to know that certain amenities and housekeeping services are available should they need them.
- What is their services’ cost to the property and how does it affect the NOI?
- The property doesn’t have to pay a large annual fee to subsidize its services to the residents.
- Spruce’s revenue model is based on efficiency.
- Spruce works with local, small, and medium-sized service providers that already bring professional service providers.
- Ben talks about how Spruce contributes to tenants’ retention rate in a major way.
- What size of communities can avail of Spruce’s amenities and services?
- Ben talks about seamlessness and how they apply it to their process.
- What are some daily habits that have helped him achieve this level of success?
“The real question for the operator is, ‘What is the cost to the property?’ Because I know from working in this industry now for several years it has to make dollars and cents. That means that we have to be NOI positive for the building in order for Spruce to make sense. Our offering is not one where the property has to pay a large annual fee to subsidize these services to the residents. Spruce’s revenue model is based on the efficiency gain that we can create in the building.” [00:11:09]
“The property manager gets to create this value on their property and they don’t have to pay. Now, what this has turned into is something that is very interesting. It changes the relationship of the resident from a financial relationship to an emotional relationship. Because now, when a resident is considering moving to another property it’s not just the, ‘Oh, do I get a couple of free months of rent?’ or ‘Can I save this much money?’ Right? We’ve created an emotional trade-off that must be made. [00:13:35]
“A resident that uses Spruce two or more times is 60% more likely to renew their lease.” [00:14:39]
Links Mentioned in Today’s Episode:
About Ben Johnson
Ben Johnson is the Founder & CEO of Spruce, the leading provider of home services to apartment residents. Residents living in a Spruce-powered building can easily book more than 40 different chores, ranging from full housekeeping to washing the dishes or watering the plants. Since launching in April 2016, Spruce has grown to service over 450,000 units in 15 cities.
Prior to Spruce, Ben worked for ING Capital in the Corporate and Investment Banking Division. Working with clients in the Americas, Europe, and Asia, Ben led transactions in project finance, asset-based lending, and export credit agency (ECA) finance. Ben is a graduate of the University of Texas at Austin (BBA) and the University of Chicago – Booth School of Business (MBA, with Honors).
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