Russ: Hi, I’m Russ Capper and this is HXTV, championing Houston’s innovators and entrepreneurs. And brought to you by PKF Texas, CPAs and advisors servicing Houston’s innovators for over 15 years. My guest today, Daniel Cotlar, COO of Apartment Butler. Daniel, welcome to the show.

Daniel: Thank you. It’s a pleasure to be here and thank you for having me.

Russ: You bet. Tell us about Apartment Butler.

Daniel: Apartment Butler is a company that provides services to people who live in apartments. Through an app, you can order housekeeping, pet care, laundry and dry cleaning. We come and through our partnerships with the property, we can get into your unit, take care of your services, and it’s almost like living in a hotel. Just like in a hotel where you have somebody around the building all the time, you don’t have to specially order and find a provider, it’s just taken care of for you.

Russ: That’s real interesting. How old is the company?

Daniel: The company is about two and a half years old. The CEO, Ben Johnson, has a background in banking and he was in business school when he thought of this idea. He would be the ideal customer for it. Our customers are busy professionals who prioritize their time and would rather have some of the more mundane stuff taken care of for them.

Russ: Sure, that makes sense. So, how do you get customers? Not one by one, right?

Daniel: No, we don’t. We’re fortunate to have these partnerships. If we had to do consumer marketing, it would be very expensive. Instead, we partner with the properties and they are very eager to promote us and encourage their residents to use us. Especially people who move in recently, they get a welcome package that kind of brings them aboard. This way, the property gets to offer this new amenity to their residents that is something that’s a competitive differentiation from other properties. So, the property helps to market us to their residents and we provide services to the residents.

Russ: Ok, and your customers today would be…?

Daniel: They’re the who’s who of property management of Class A buildings in town. I think we have 12 out of the top 15 property owners and managers in Texas, so we’re very well positioned for scaling that when the time comes, both inside of Texas and outside of Texas.

Russ: Real cool. So, what’s the competitive landscape? It’s real hard to have an idea that nobody else has yet, and maybe it’s not that important anyway, but what is the competitive landscape?

Daniel: It’s important. Our largest competitor is people just doing things the old way. When I think back to the progression of how services and products have moved online, you think first at products. Amazon took that on with the easy, one-click, sku’d products. That battle has been won. On the services level, on the services marketplace, those things are very, very immature. Most people don’t buy services online. They buy it in person because there’s a lot of difficulty in trusting your provider, understanding what they’re going to do, and just the payment process. So many things about this an immature market, so when I think of our competitors, it’s about people who have somebody they found and then they go through a lot more difficult process to pay the same amount of money, or more, to get their home cleaned or their pets taken care of.

Russ: I’m sure there’s sort of a trust barrier to overcome. A tenant in an apartment would say, “Wow, I’m just going to click this and a stranger is going to come in here and do this.” How do you get over that?

Daniel: The only way to solve this is to be very hands-on, for us as a company, to manage the quality of services. Part of the trust comes from the fact that your property, who—these are Class A, nice properties—have trusted us and that trust passes on to the residents. To say, these are people that the concierge is going to give them a key, let them into your room while you’re gone and make sure everything is fine. And then, we manage quality very closely. It’s rated, of course every time you get a service you rate it. In the old world, if somebody provided services to one customer and they didn’t do a good job, it’s not the end of the day for them, they have other customers. In our case, the service providers have to think of the entire building at a time and doing a good job. Because, if they get it wrong for one customer and they don’t make it right afterwards, they can lose the whole building, and so we really maintain a high level of quality and that’s better for everybody involved.

Russ: So, how many apartment dwellers today actually use the services of Apartment Butler?

Daniel: We are in 150, heading towards 200 buildings in Houston, Dallas, and just this month, Austin. What we are trying to do is, I’ve heard someone say, “nail it before you scale it.” So, we’re getting it right in the buildings we are before expanding dramatically geographically. Getting it right, to us, means making sure the experience is great, improving both the software as well as the actual service experience, and understand how to make sure to bring everybody on quickly and get the consumer resident adoption within the buildings we have.

Russ: What is more difficult to solve? Is it getting new apartment complexes? Is it founding employees? Are they actually employees or are they contract laborers? That could be difficult as well, right?

Daniel: Most of our providers, you’re talking about mom and pop operations, that can’t really scale. They do a great job at the services but they’re really not in the business of marketing, customer service messaging, quality, technology, all these things, and we take care of that for them. That way, it’s—so it’s been relatively easy for us to find service providers. It’s also been relatively easy for us to find properties. The reason I joined is to nail the consumer adoption curve, resident adoption curve. Once they try us, we have amazing tenure and low churn with our residents. It’s just a matter of getting in front of them and using that partnership with the property to make sure they know about the service their property is offering.

Russ: Ok, so you already mentioned Ben, the founder. Take us back to the beginning. I know you weren’t there, but how did this thing really get in gear?

Daniel: This is a real bootstrap story, early on. I think it started from the real life experience of Ben trying to do this and understanding the challenges. This a very difficult, hands-on, messy type of product we’re offering. Housekeeping is not something that—historically, is something that’s behind the scenes. You only notice when something goes wrong. Our challenge and what we’ve been working on is ways to make it really exciting and a wow and something that stands out as an experience. What I’m really excited about recently, since the investment and since the round, is we built an amazing team. It was already good, but now I’ve brought over the best product person in town, someone who worked for me at Home Depot and Blinds.com. We brought in our ops person from Uber, and now our head of development, we’re now going to open a development office, from Funware.

Russ: Wow. So, how many total employees today?

Daniel: We have between 10 and 15 employees.

Russ: So, Daniel, I’ve known you for a long time. I know your background; I think it was CMO of Blinds.com for many years. What about this, how did you end up at Apartment Butler?

Daniel: My background at Blinds, and the company is Global Custom Commerce, when Home Depot bought us after my being there for 12 years, they bought us to be the division of Home Depot that would handle custom products, hard to buy things. And that’s why we built the company. We could never be Amazon, but what we could be is something that is a niche for anything that is complex. The company is doing great now and it’s continuing to do great. I stayed on for four years after the acquisition. I left and I was doing mentoring here in Houston at Station Houston with startups. I must have seen 10s—certainly 10s, maybe more, startups in Houston and this was the most exciting one I saw. The connection for me was that this is once again the same thing. The services world has not transitioned because it’s hard to buy, but this is a chance for us to make services just as easy and comfortable and trustworthy as products were. People say you can’t buy blinds online and people say you can’t just pick a housekeeper, but we’re going to do it.

Russ: I’ve featured Blinds.com on the show probably at least three times. It was so obvious from the beginning that the company had it down how to measure and how to install something that seems easy but it’s not.

Daniel: It’s not. My friend and mentor, Jay Steinfeld, who is still there running things for Home Depot, he had an amazing ability to simplify the complex and try to really understand, from the customer’s point of view, how could things go wrong, how can I make this simple?

Russ: Really cool. I think, at the same time, I think you were at Station when JR was there introduced you, and Blair Garrou and Mercury Fund. I mean, this is a major Houston story.

Daniel: It’s a perfect Houston innovation story. I’m very grateful and I’m a beneficiary of the ecosystem. I was one of the early—I think at Station, founding investor, and hung around Station a lot. When JR and I were talking one day, he was like, “you really need to talk again to Ben.” I had met Ben several times during mentoring sessions and was so impressed with the business, but I wasn’t ready to jump into anything. When I started talking again and I learned that he raised the seed round from Mercury, an investor who I have a lot of respect for, Blair, I said, “this is a little interesting. I’m going to learn more.” So, I jumped in.

Russ: Where do you guys hope to have the company five years down the road?

Daniel: It will be nationwide; it will have tremendous adoption within the buildings that we serve. The way our model works, and something I didn’t covered yet, was that where we really rocket is when there is coordinated demand. These services, more than half the cost of the services is lost or it comes from the driving, arriving, marketing, all this BS that kind of takes away from the efficiency. If you can collapse it down into being, we’re serving an entire population in a very coordinated space, or a lot of that population, you can gain tremendous efficiencies that you can keep, you can pass on to the consumer, you can create new products. For example, we’re offering now $10 a day, or $12 a day to come and make the beds, and/or just clean the bathroom. These are things you can’t—little micro services like that, you can’t offer products like that if you have to come to somebody’s house and go drive back. It’s just not as cost effective. We’re going to be offering a lot more services, different things, things involving other service lines than the three we are in, and we’re going to be in a lot of buildings and we’re going to be very present in those buildings.

Russ: When you say the three you’re in, what are the three you are in?

Daniel: Pet care, housekeeping, and laundry and dry cleaning.

Russ: Ok, you’ve been part of a major Houston success story start up, you got involved with a major Houston incubator, a major Houston investor. You must think this place is somewhat special?

Daniel: I think Houston is special. I’m a third generation Houstonian so of course I think it’s special. I think part of what makes it special is that it’s also small enough where you can really know and trust and the community can help each other. I think of some of the investors like Mercury Fund, who invested in us in this $2-million-dollar round, they’ve got an amazing track record. I’m an LP at Mercury and that was actually the reason I decided to join when I heard they were getting involved. It meant a lot. I think Houston is a place where it’s a little less crowded, and if you have a good idea and you have a good team, you can get the attention of investors here and raise money.

Russ: Daniel, I really appreciate you sharing your story and good luck.

Daniel: Thank you. Thank you very much.

Russ: You bet. And that wraps up my discussion with Daniel Cotlar, the COO of Apartment Butler. And this is HXTV.