When CoStar Group acquired Apartments.com for $585 million in early March, it was quite the endorsement for the 17-year-old website. But the company hardly has the field to itself.
In addition to the listings on venerable Craigslist, a dizzying array of apartment-hunting websites already exists, from HotPads and StreetEasy (both acquired by Zillow, for $16 million and $50 million, respectively) to ForRent.com, Rent Jungle, PadMapper, and Rent.com. And new companies are constantly joining the raging battle to connect would-be renters with apartments.
In an unusual twist, three of these recent startups are based in Wisconsin—Abodo in Madison, and RentCollegePads.com and Find My Spot in Milwaukee. All three have had promising beginnings, and are now scaling up their businesses after early successes with customers.
Why so many competitors? The underlying reason is that trying to corral apartment listings from landlords is a mind-boggling challenge. No company has yet truly figured it out. “I’d say there’s probably no clear winner today, and there’s definitely room for smaller startups to disrupt the current” market, says Neil Doshi, managing director and Internet and interactive media analyst for CRT Capital Group in Pleasanton, CA.
In fact, the stories of the recent Wisconsin startups fit the classic scenario of frustrated entrepreneurs setting out to fix an issue they experienced personally. Abodo, for instance, was founded in February 2012 by three University of Wisconsin-Madison grads who felt that apartment hunting in Madison “just plain sucked,” as Abodo’s website so eloquently states. “The reason you keep seeing [apartment rental startups] pop up is the problem hasn’t been solved,” says Alec Slocum, Abodo’s co-founder and CEO. It’s easy to buy a TV or music online, or to stream movies from Netflix, he adds, but it’s hard to find the best apartment.
The three Wisconsin companies aim to make that process a lot easier. How they fare over the long run will depend on ensuring their technology is solid and getting traction with both property managers and renters, Doshi says. Concentrating on a specific market segment, like off-campus housing (with RentCollegePads.com) or corporate relocations (as with Find My Spot) will also help, he says.
Here’s a detailed look at the three startups and their prospects:
Abodo
As college students and then as graduates of UW-Madison, Abodo’s three founders—Slocum, Chad Aldous, and Adam Olien—searched for 10 apartments between them in Madison. In most of those searches, they ended up ditching Craigslist and apartment-hunting websites, and simply walked neighborhoods on foot looking for “For Rent” signs. “We thought there had to be a better way,” they write on Abodo’s website.
One key, they realized, was making it easy for landlords to list properties online. But in their company’s early goings it took a lot of “sweat” and “pounding the pavement” to sign up the landlords, some of whom had only advertised in street pamphlets, not online, Slocum says.
“Using a pamphlet that sits on the street corner to reach college students that are on computers and on smartphones just doesn’t make sense anymore,” Slocum says. “To reach those people you’ve got to be where they want to be. That’s been the value proposition [of Abodo] from day one.”
The co-founders made phone calls, sent e-mails, and—perhaps most importantly—strolled right into property managers’ offices. Slocum says he personally visited Mullins Apartments’ downtown Madison office 26 times before he won their business. Mullins is now one of Abodo’s biggest customers, Slocum says, with more than 40 rental houses and about a dozen apartment complexes, according to the Mullins website.
That hard work paid off. Within a year, almost all the major landlords in Madison were listing their properties—and 50,000 renters had used the site, Abodo says. In Madison, that puts them way ahead of the big players. A recent search found 713 listings in Madison on Abodo’s website, compared with just 65 on Apartments.com.
The co-founders originally set out to
