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Welcome. It's episode number 61 of the Rent Roll your podcast on all things rental housing. I'm your host, Jay Parsons, and as always, talking about multifamily SFR and btr and happy Thanksgiving week, everybody. Hope you're enjoying some downtime with family and friends or you're maybe listening to this after the holiday. Perfectly acceptable, but thank you for making us part of your day. All right, so today's episode, a lot of fuss around AI these days. It's being blamed for the job growth slowdown. And at the same time, it's supposed to be the future of apartment leasing and management. Every prop tech company out there is talking about AI right now. And so every owner and manager has to have at least some baseline understanding of these things as well. Of course, we just had NMHC Optics conference last week, big proptech conference for the multifamily industry out in Vegas. And so I felt like now is a good time to talk AI. Now, I am not a technologist whatsoever, and to be honest, I hope not the only one. But sometimes I get, I feel a little burned out on this topic sometimes just because it feels like there's so much noise around AI and technology. And I don't want to contribute to the noise, but at the same time, I don't want to just ignore it. I think that'd be foolish, of course, since it's becoming more real every day and it's only going to accelerate. And so we'll try to make it real here. We'll talk about where AI is today in the rental housing space, where it's going, and also a little bit of what impact that could have on the economy and therefore on rental housing demand as well. And our guest today is somebody who knows this space very, very well, Tyler Christensen, the CEO of Funnel, the AI and CRM software used heavily in the apartment business. Tyler is a second generation multifamily guy and so he knows the industry not just as a tech guy, but he understands the other side of things as well. And so we're gonna have a fun conversation today. I've known Tyler a long time. He's a good guy and that'll be a fun conversation. One more quick plug. I've been doing more on the newsletter side. So if you like getting stuff in your inbox, if you don't, I perfectly get it. But if you do like it, putting out anywhere from one to three newsletters a month and you can get that@jparsons.com newsletter and if you scroll down a little bit there's an area you type in your email and subscribe. Not going to spam you, but like I said, I usually send out anywhere from one to three newsletters, including a monthly update on the apartment space and quarterly on SFR and then the deeper dives in the REIT markets. REITs every quarter. In addition to that, some of you've been seeing that. All right, so let's jump in. First and foremost, big thanks to our sponsors. First to jpi, a leading apartment developer with a stated purpose to transform building, enhance communities and improve lives. And also thank you to my friends at Madera Residential, a leading apartment owner and operator in Texas. Check them out@maderaresidential.com okay, so as always, kick it off with here's a chart and today we don't have a chart. We got a quote. And so I'm not usually I'll spend a good bit of time on this section. Today we're going to keep it fairly brief. Brief, but I wanted to talk a little bit about AI and to set up our conversation later with Tyler. And again, there's a lot of noise in the space and I'm not an AI expert. I'm not going to pretend like I am, but you know, it's kind of annoyed me a little bit. And annoy is probably a strong word, but I just, I have a healthy degree of skepticism when people talk about fellow non experts like me, talk about AI because I feel like everybody wants to assign it way too much credit and blame without really knowing what they're talking about, having a full grasp on it. I don't want to contribute to the noise. But I mean, just think about this. How many headlines have you seen of late that blame AI for taking away all the jobs for gen zers coming out of college, for instance? And I see that and I think, yeah, I just don't think that passes the sniff test. Okay. And so I read this. In the last rounds of earnings calls, Angela Kleeman, the CEO of Essex, she was asked about the impact of AI and I thought her answer was really good. And I want to read. I think I've alluded this previously. I want to speak to this a little more depth because I think it's really interesting and it speaks not only to how it's impacting rental housing both from the operations and demand side, but also I think a lot of employers in other kinds of ministries could probably say the same thing. Okay, so let me read this. She said in an environment where the macro environment is soft, businesses are and they should be focused on efficiency. And so I don't think from what we're seeing that they are AI driven job losses. Okay, so right there. So what she's saying is that everyone's nervous, they're pulling back a little bit and they're not hiring as much. They're trying to be more efficient, but they're not necessarily AI driven. Okay, so let me go back to the quote she says, but in terms of what we think is going to happen with the conversation about AI displacing jobs and becoming, or as viewed to be a disruptor, we do think it's going to happen at some point. AI capabilities is rapidly growing and we're seeing research suggesting that most companies are experimenting with AI. So that experimentation level is very high, but the adoption, the level is low because the return on investment is still unclear. That's a very important point there she's making. All right, so back to the quote. So this is again, she's talking about how Essex is using it. And I think you can make this case for not every industry, but a lot of other industries across the economy. So here she goes, she says, so for example, Essex, where we see AI benefiting data analytics and certain repetitive tasks, but it is still in the early developmental stages and we need additional technology to interface with the AI applications for utilization. Essex has not had significant workforce reduction using AI. And so what we do expect is that the pace of disruption or job displacement will become more gradual. And because on the flip side, we, what we're seeing is, as I mentioned earlier, an unprecedented number of startups, small companies that because of AI can form businesses. And by the way, what a great point, right? So to have all this AI, we have to have more jobs that creates more businesses to support all these things. Not just AI technologists themselves, but the cottage industry that supports that too. And then go back to a quote, and that's not being picked up by the bls, meaning the Bureau of Labor Statistics, but certainly it's being picked up by the demand that we are seeing in Northern California. All right, so great comments from Angela there. I thought that was really interesting. So, so again, I think just go back to the comment I made earlier. We all see his headlines, AI is taking away the jobs. Right. But again, to me, I think Angela's point backs this up, is that just at this point in the game, it doesn't make sense. I think we're all trying to explain the softer job numbers. And so in that rush to try to explain it at this, we're in this, at the same time we're seeing this, we're also, everyone's asking Chat GPT to rewrite some emails and to, and to create some dad jokes. Right. So because AI is increasingly in front of us, I think we're probably too quick to assign it the blame for these softer job numbers. But I like what Angela says here, which is, I think a balanced view, and I think she's right. Yes, everyone is probably experimenting with AI to some degree, whether you're an apartment or SFR operator or other, some other type of industry. But how many of us are truly seeing in our companies AI fully taking away a meaningful number of jobs that existed just six or 12 months ago, and probably not very many if we're being honest. So of course that could change in the future, like Angela said. And I obviously wouldn't be a surprise to see AI take away over time certain types of jobs, but is it really happening at scale today? I, I, I, I don't think so. Even Amazon people point to Amazon, obviously they're one of the leaders in, in, in AI and they've just announced a recent round of downsizing. But what they've said is that it's not really AI driven, it's just more efficiency driven. And we've been seeing this, that pattern across a lot of tech companies these last few years is after the years of just building, building, building, building and hiring, hiring, hiring and offering all kinds of, you know, crazy employee benefits to be on campus, they pull back a little bit. And that's, you know, kind of what Amazon has said as well. It's more the itch for efficiency and eliminating redundancies. But in a lot of cases, those tech jobs are just getting shuffled around. But it's not like we've seen some big spike in unemployment and particularly for tech. So again, I do think we'll see AI cause more disruption in the years to come. I don't think it takes a, you know, you don't have to have a crystal ball to know that. And I know that that reality worries a lot of people and some for good reason in some cases. But you know, think of it this way, if this is somewhat encouraging, which is AI is not the first major disruption we've seen here in the U.S. you know, we had that little thing called the Industrial Revolution a century plus ago that took away a lot of jobs to say the least. But, you know, it took away some jobs, it created a bunch of other jobs, and we adjusted. You know, many decades later we had the offshoring Spree, first for manufacturing, you know, the industrial revolution now has an effect everywhere else. And then also later for back office business jobs and back office tech jobs, white collar jobs and, and you know what happened? We adjusted. We had the computer era which that too was a big disruption, greatly reducing the number of for instance admin jobs who were routing phone calls and typing up memos on typewriters or data entry workers, et cetera. And you know what happened? We adjusted. So we've gradually become more and more of a services based economy through these disruptions. And again, I'm no expert in AI, but it just seems like AI is going to further accelerate us in that direction. It disrupts and then we adjust. But I believe we're a resilient bunch. We'll adjust to this as well and we probably won't look back. And so again, short term I'm skeptical that it's limiting a lot of jobs. Longer term it could disrupt a lot more jobs. But I think we'll adjust as always. So what does that mean for apartment demand and leasing, SFR demand and leasing? You know, probably not a ton. You know there's going to be pockets where it does obviously if you have pockets like in Silicon Valley or the, the silicon slopes and there are other pockets and you know, tech part tech places like in eventually Seattle, which doesn't have a lot of AI now that's going to come and places like Austin and etc. You know there's going to be jobs created to help support AI and that could be a pockets opportunity and see better demand there something Angela mentioned happening in the Bay Area. And then on the flip side of this, you may have certain pockets of the country where there's a concentration of job types that are more easily replaceable by AI. And so I think that takes a little bit of foresight to kind of see, okay, before we're acquiring a site or acquiring for development or acquiring existing property, are they overly dependent on a certain employer or certain job category that is at risk for displacement through automation and AI? And if so, that probably should factor into the calculus. All right, so again more on AI and specifically what it's doing and where it's going in the rental housing space in our conversation today with Tyler. But next let's go to rental housing trivia. Okay, today's trivia question is presented by Foxen, which provides a suite of value add solutions to improve operations compliance and property performance. Rethink renters insurance compliance, rent reporting and pet management with Foxen. Check them out@foxen.com that's F-X E-N.com. all right, so today's question is what was the first prop tech company founded in the US and founded way back in 1971? So the first, first major prop tech company, what was it? I'm going to give you four choices, make it a little bit easier. And all names that are still around today, believe it or not, was it MRI, RealPage, Rent Manager, or Yardi? Okay, so give that some thought and we'll give you the answer in a bit. But next in the news, In the news this week is sponsored by Authentic. If you got a property that's underperforming and you can't quite figure out why, check out their multifamily leasing and marketing audit. They'll dig into your pipeline, your leasing funnel and your comps and tell you exactly where they think things are breaking down. Plus strategies and how to fix it. Listeners of the pod get 50% off. So head to authenticff.com, click on the banner to learn more and claim the offer. All right, so we got a few headlines this week. The first one, it comes, it's a, it's a press release comes from Business Wire. It says, Lincoln Property company acquires Capstone Development Partners to enhance higher education services platform and expand Capstone's national reach. Okay, so big news. You know, I, many years ago I lived in my first apartment was a Capstone student housing property. So this, this one, I saw that name right away when I saw this headline come out. And so Capstone will continue to operate as Capstone Development Partners powered by Lincoln, according to Lincoln press release. And also Lincoln said the leadership team will stay mostly intact. Capstone dates back to 1990 and has been one of the biggest names in student housing development building 70 plus building in, excuse me, 70 plus colleges and universities across the U.S. all right, next headline this is, this comes from Knightvest, which is a multifamily owner and operator with heavy presence in the Sunbelt. They just did and of course we had their CEO on this podcast a number of months ago. It was a good conversation actually almost a year ago now it's probably early this year. And so this, they, they just released their 2020, 25, 2026 multifamily renter sentiment report. So it's based on a survey of apart and renters and there's some really interesting stats to share from this. Three quick things I want to share with you. Number one, and this one's an encouraging one. 95% of renters expect their financial situation 2026 to be better or the same as 2025. So we always hear the bad news. That's a great stat. 95% said better or the same. Second thing, 47% so they plan to rent for at least the next five years. 47%, it's almost half plan to rent for at least five more years. And that is up from 42% who said the same last year. And then the third thing, and this is an interesting one too, it said if mortgage rates dropped, are you more likely to buy a home? 53% of renters said yes, but that was down from 70% just two years ago. So, you know, I'm not sure how much of that drop off is maybe due to the challenges of getting a down payment or just the preferential shifts favoring renting or if it's just survey, you know, kind of survey nuances here of differences in composition or whatever. But that's definitely an interesting stat. All right, our third headline. This is one that I think every Build to Rent developer in America is probably sending to their investors if they saw this headline. It comes from Business Insider. It says, I decided to live in a buildtrend community after buying a home I'll never buy again. Okay, so now you see why if you, if you're a BTR guy, you didn't see this before. Now you're probably googling this. Take a get the link, send it to your investor base or put in your next newsletter. Okay, so this is a first person or really a as told to account from a 34 year old guy living in suburban Orlando, Florida. He had owned a home. He saw an ad for a BTR townhome and thought he'd check it out and he fell in love with it. And so I'm going to read a little bit this, just a few excerpts. He said I walked away paying $3,300 a month when I thought it was supposed to be $3,000 a month. That's from the house that he owned and that's due to property fees increasing as well as other taxes and fees. My monthly rent for the townhouse unit, the BTR townhouse unit is now $2,225 a month. There is a landscaping service at $55 a month, a concierge service at $10.95, a smart home package at $35. And then I have water, sewage, utility bill, electricity through the rental company along with one more utility bill. My total expenditures come out to $2,588 a month. As a renter, I don't have to worry about the lawn because they come out to cut my grass every Friday. With the concierge service, I could submit an order online for something to fix my. Someone fixed my something in my house. And so my AC Goes out. I have to call an AC Company to come out and check to see what's wrong. When I was a homeowner, my garbage disposal stopped working. It was $125 just for one guy to come out and tell me to take it apart to see what was wrong with it. And luckily, I didn't need a replacement. But if I had, I think the cheapest one would have been over $100. So for me, I'll stick to renting. I don't think I would look into buying a house again. I would rather stay where I am, save money, and do something better with it than buy a property. All right, so obviously, this is just one guy. Not everyone's gonna speak for the, you know, say the same things. Obviously, homeownership is still a great thing for those who aspire to that and want that. But it does fit a niche, right? I talk about this a lot. It's a niche. Like, we don't want to say it's everybody. Like, I don't like people say, oh, everybody's gonna be. Wants to be a homeowner. Everybody wants to rent. Like, you know, we tend to exaggerate these things a little bit. But it is a niche. It's a growing niche, and that niche is real. It's been underserved for a long time is these people who've aged out of an apartment stage of life, but they do like having a property manager to call to get things fixed, like the garbage disposal. They do like the flexibility of renting, and they don't like what they perceive as the hassles of homeownership. And also, I think the myth of the stable housing costs for the homeowner, which this guy sort of alluded to, like, that's always been a myth. Like, oh, it's like, you know, my homeowner costs are locked in. My rent is not. That's not true. You know, your mortgage rate is locked in. But that's one of only. That's one of a bunch of different costs that you have between, you know, taxes and insurance, and, of course, maintenance, repairs, et cetera, et cetera. HOA dues on that line. So again, not for everybody, but I do think we'll continue to see that as a demand driver for the btr Market. All right, let's go to our next headline. This one is going to come from Bloomberg. Speaking of rising costs, by the way, headline here is soaring insurance costs hit owners of New York City rent stabilized units. Landlords are cutting spending on other expenses to cover higher operating cost, NYU report says. All right, now, first of all, just quick thought here. You know, I think what's interesting is talk to people across the country, you know, insurance costs. I'm not an insurance expert, okay? But it's been interesting to me that back, you know, a few years ago when insurance costs started spiking in the Sun Belt, I was like, oh, well, it's the storms down there. It's causing everything to go up more there than else in the country. And then, and then they started to really come down. In fact, a lot of the groups that are in the Sunbelt, in the coastal markets, they said now their insurance costs are down in some cases by double digits. Now, they were not back to where they were previously, but they, but the, but the, but their insurance bills are coming down, but it seems like in other parts of the country those costs spiked later and have not quite dropped off as much. And maybe that's one of the cases here. So again, just different timing, different places, I suppose, and maybe other factors there. If somebody knows why that is, send me a note. But anyway, let's get back to this article. It says skywriting insurance costs. Skyrocketing insurance costs are threatening New York City's affordable housing stock. The landlords, who own more than 450,000 of the city's rent stabilized apartments, saw Insurance expenses grow 150% from 2019 to 2025, far outpacing every other major cost, according to a new report from New York City's Furman Center. And by the way, there's closer to double 450,000 rent stabilized apartments. I'm not sure exactly what it's saying there. Maybe I just misunderstood. It then also goes on to say the rapid rise in insurance premiums is just one of the many pressures on housing in New York, part of a broader affordability crisis that helped Mayor Ramdani win the city's highest mayor elect, highest office earlier this month. So this is the challenge for rent control advocates, right? Which is you cap or freeze revenues, but not expenses and then you in turn put properties into a death spiral. And we've seen that play out already in New York City. And at the current trajectory with issues like this, it's only going to get worse. All right, our last headline comes from Vox and this is an interesting one. It says, is Gen Z, quote, utterly screwed, end quote. The big myth about Zoomer's economic condition. Okay, so there's this perception that Gen Z, you know, the young adults of today and the soon to be adults, the, you know, teenagers as well, that they're just in dire straits, they're worse off than prior generations, they'll never be able to afford a house, they won't be able to get a good career, et cetera. But the perception and the data are not aligned on this topic. And that's what this article shows us. Let me read a little bit from it. It says relative to their predecessors, Zoomers, their word for Gen Z consistently express a more negative impression of their economy, labor market jobs and financial opportunities. And Americans of all ages seem to agree that young people are getting a raw deal. In a 2022 Pew Research survey, 72% said that children today would end up being worse off financially than their parents. These attitudes are understandable and partly reflect genuine economic problems. But they're also a bit detached from Gen Z's actual economic experience. By most metrics, Gen Z is actually doing better materially than past generations were at the same age. And so the article goes on to show that the median 25 year old makes 50% more in income in inflation adjusted dollars compared to boomers at the same age and shows that Americans born in the 1990s have median net worth 39% higher than previous generations at the same age. And that's again adjusting for inflation. And so, you know, I think this is interesting because it is a perception gap and it's a good reminder that perception does matter and it does have an impact. And we see the same thing, like consumer sentiment, like it does impact, you know, a lot of decision making, but it's not always reality. And of course I want to be careful because I want to go too far on the other side. It's not to say that every Gen zer is just crushing it in life. There's all kinds of money to spend. And I have no doubt that some Gen Zers are struggling to get by. They're struggling to find purposes. They want to do better financially. But I think we sometimes forget, like that's been true for every generation at this age. When you're a young adult, you're trying. It's the age of figuring things out, right? And I think sometimes we over romanticize the past and think, well, you know, they must have had it better than I do, when that's not exactly true, right? And I think that's what this is really about. So it's not that they're, you know, just got all kinds of money to throw around, but again, when you're in your 20s, late teens to 20s, maybe early 30s, like that's in the stage of just figuring things out. And so thankfully they've actually figured out better in some ways than prior generations. And I hope that continues to be the case. All right, let's get back to today's rental housing trivia question presented by Foxen. The question was what was the first major prop tech company in the US founded back in 1971? And it was founded in the Cleveland, Ohio era area. So the hotbed for, for technology that is Cleveland, Ohio. So was it MRI, Real Page Rent Manager, or Yardi? The answer is Management Reports Incorporated, aka MRI, founded in 1971 in Cleveland, Ohio. Later. So first it was Management Reports Incorporated, later named Management Reports International. Sounds a lot, you know, a lot more serious. Right. Then acquired by Intuit and Intuit and then named Intuit Real estate solutions, or iRes, and then Vista bought it and renamed it to MRI software. So there you go. All right, so that's going to take us to today's interview. And. And it is sponsored by funnel, the AI and CRM software trusted by four of the six major REITs and many more leading operators like BH and Cortland. To learn how Funnel can help your property centralize operations and automate everyday tasks, visit funnelleleasing.com all right, so our guest today is actually from Funnel. And so I felt a little funny like reading this lead in from Funnel because I want to be clear, I actually had no contractual obligation to invite them because that's not how we roll here at the Rent Roll. But the NMHC Op Tech Conference was last week and that's a big proptech event for the industry, obviously. Plus there's just so much buzz about AI as I mentioned earlier. So I thought it was good timing to talk about AI and PropTech and I thought Tyler would be a great fit for the topic because his company is one of the leaders in this space and one of the leaders in using AI in rental housing. I've known Tyler for a number of years now, and not only is he knowledgeable in the space, but he's a good dude. He's a good guy to connect with. I always enjoy talking with. And he's one of the handful of people, I think, in the prop tech space who, you know, you can talk to. And they're, it's Interesting. He doesn't feel like it's kind of this techno speak type stuff because I think he, he understands the industry, not just the software side, but also the management, ownership, ownership side of it as well. And, and I think it's partly because it's in his blood. He'll tell the story, but he's a second generation multifamily guy now. He is the CEO of Funnel. So we're going to have some fun today. Won't get too technical. We'll have some fun with it. Please welcome in Tyler Christensen. All right, welcome to the interview portion of today's podcast. And I am honored to welcome in my friend and the CEO of Funnel, Tyler Christensen. So, Tyler, thanks so much for being here.
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Jay, it's an honor. Thank you so much for having me.
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Of course. So first of all, I think everybody knows the name Funnel, but let's, let's first talk about you. What's your background? How'd you get into multifamily?
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Yeah, well, you know, Jay, I'm a longtime listener to the podcast, huge fan, as is my dad. You know, when I told him that I was going to be on here, he's, he's very excited. And that's because I come from a real estate family. So my dad was a banker, was in commercial real estate his whole career. And then right around the time I was in college, he switched over to multifamily development, a group out of Salt Lake City called Wasatch. And so I got exposure to the multifamily world and in college I interned for them, looking at pieces of dirt all over Salt Lake City, going to city offices, getting zoning plats. And that was my first intro. But then also was incredibly fortunate to be in what is now called Silicon Slopes. So Utah County, Utah Valley. You know, it's where companies like Entrada are based. Also, you know, companies like Domo, Adobe acquired big companies there. But I was coming out of college when really that Silicon Slopes was emerging and was very fortunate to get my first job out of college was at Property Solutions, which now is in Trotta. And back then we were still helping multifamily convert to innovative technology like websites. That was the big trend.
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We're dating ourselves here now, so I know, right?
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I like to think myself as a young guy, but I now have a 16 year old daughter. And yeah, my first product I sold was websites, that is, but that was my background ultimately spent a lot of time there, ran the sales organization, then Trot as they transitioned from a website and payments Provider to property management software but also did a brief stint at lro. So you and I both, you know, love talking about revenue management and pricing software and then ended up over here which we can unpack as well. But yeah, my background is I am born in multifamily and, and love it.
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Yeah, I like that because you know, most of us, I, I joke all the time, most of us sort of stumble into multi family by accident multifamily or sfr. But you actually have, there's very people who actually have it in their jeans unless there's like a hand me down, you know, New York, you know, small walk up property or something. So that's pretty cool. You got that background. So now tell us about funnels origins. Like what's, what's the kind of early kind of foundational story of funnel and how you got to where you are now.
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Yeah, well thank you for asking so much. I mean we're hopeful that a lot of your listeners have heard of funnel. If not, we'll unpack a little later kind of what we do. But know on the origin side it's a little bit like the Starbucks story, right. That a lot of folks may know Howard Schultz and you think you know Starbucks, but the, the background is wildly different. And the, the funnel story starts in New York City as a company called Nesteo. And even before that there was a company called Urban Apartment and the original concept for the business was Pinterest for apartment hunting in New York City. Yeah, right. If you think about what we do Today, you know, CRM for REITs, it was a long ways off. But it's an important kind of data point because the Karen Mayo who is now at Get100, Michael Tool, who is our CTO and co founder, they had this idea of I'm looking for multiple apartments in New York City. And you know, all of the different ils is they aren't really designed for the consumer themselves. And so the kind of core function was I find apartments and I pin them to me. And that is an important data point that will come back up later in what we call renter centricity. Yeah, but so Nesteo grew in New York City and ultimately kind of landed into folks that know multifamily technology will remember this name vaultware. They kind of became the vault wear of New York City. And for those who aren't familiar taking disparate listings information from New York City owners and pushing that to the very bespoke New York listings world, which you know, if you're looking for an Apartment in New York, you don't go to apartments.com, you go to Street Easy. Right. Which is now owned by Zillow. And you also are going to have to work with the broker in that process. And obviously, you know, that's changed a little bit over the last couple of years. But that is the one market where the brokers really still dominate the, still.
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In the dark ages in New York City.
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Yeah, 100%. And so the reality of that business was that Karen's a phenomenal entrepreneur, Mike was a phenomenal cto, but they were. You know what every entrepreneur will tell you, the first question investors ask is what's your tam? What's your addressable market? And what they didn't probably realize at the time when they first built it was that that was not a transferable product. Right. And so the company Nesteo grew to about 30 employees, grew to about 3 million in revenue, but hit its head on the ceiling. Right. Because in, in Tampa, Florida where I am, in Texas, where you are, you know, brokers are not how you find. Maybe there's locators a little bit, but that's not the normal multifamily model. Myself, as I mentioned, I was running sales at Entrada at the time and my big kind of aha was that during the Entrada Yardi lawsuit which I was deposed in and seeing customers had to pick a side which platform all in platform. And our belief early on was there should be an agnostic renter management software tool. So fast forward from then when I joined Nesteo in 2018, we launched Funnel in 2019. The big AHA that we're going to talk about from there was centralization. Right. Centralization was the unlock and funneled that architecture of pinning properties to the renter became a big, big important deal. But in short, Nesteo is a New York City broker company. That business we've sunset. There's still a handful of customers that will send listings to brokers, but it's almost a non existent business for us. In its place we've built Funnel, which now serves 1.5 million apartments across the units across the country have about 170 employees. And that's what we kind of look like today.
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B
Yeah. And primarily a CRM tool and now growing number of things too, right?
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A
That's right. Yeah. So most of our clients would use Funnels, their CRM and AI product have about a half a million apartment units that actually do their application screening, lease signing payments on us as well. Yeah. But kind of primarily known today as the CRM and AI platform for multifamily.
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B
Yeah. So let's talk about AI a little bit. In the rental housing world, it seems everybody's talking about AI, obviously, but there's an equal amount of excitement, but also cynicism about AI. And so I guess first of all, is that fair? Do you agree? And then also I guess, related question, I kind of feel like, and tell me if you agree on this too, that we in the multifamily industry, not you, but like more broadly, maybe abuse and overuse the word AI and kind of maybe set wrong expectations about what it is or isn't. But what do you think?
- [33:28]
A
Yeah, I actually want to take the second question first, Jake, because I think it's super relevant to the rest of our conversation. Okay, yeah, absolutely. The word AI is overused, I think, over time. You know, much like we don't say cloud software anymore, we just say software because all software is cloud. Eventually, AI is going to not be the term that dominates everything because it is not a product. Right. It is a technology like the Internet, like electricity, that permeates many other products. And so then to take that back to kind of your first question of, you know, there's, there's both hype and cynicism right now. And I think to answer the question properly about kind of, you know, what is the sentiment in multifamily, especially coming off of, you know, I was in Las Vegas this week at NMHC's op tech with the retc organization and it, there's two different kind of spectrums or charts that I want to put together and overlap. So hopefully folks are familiar with the Gartner hype cycle. And essentially, you know, it kind of talks about when a new technology comes out, the promise of that new technology leads to a lot of hyperbole, hype and over promise. Right. Inevitably, that leads to a disillusionment, trough of despair, it's often called, where folks are just like, this technology sucks. It's never going to be useful. I don't know why we bought it. And then you move into this slope of enlightenment where eventually, much like Internet, there's something similar to a plateau where you've kind of found all the usefulness of that technology. If we think that concept. And then the other concept, for those entrepreneurs or technologist enthusiasts, you know, the concept of crossing the chasm, which really kind of buckets users of technology into different categories. And I put those two concepts together, Jay, because the reality is there are some folks who don't want to use AI and are Cynics of it. And then there are others who are, well, through the chasm and through the hype cycle and are in the slope of enlightenment. And maybe one, I would highlight, for instance, a Funnel customer who this week just got named the RETC chair. Christy Simonette, CTO of Camden Property Trust. She has been. She helped Funnel developed our AI product in 2020. Right. Way before it was. It was hyped and prom and you know what people know about generative technology. And so we've been through multiple cycles with Camden on our AI products. You know, first starting with chat now and then voice, and now you get into kind of some of the. That slope of enlightenment where the kind of second and third opportunities are hanging. I will say, though, one of the things, I'd say the majority of folks have implemented AI in some form, and there was an MIT study that kind of validated this. The majority of folks in their first and early implementations of AI have not achieved the results they were hoping for. And put simply, in multifamily, they haven't seen a reduction in staff. It's very rare to do that. And so I think a lot of folks are cynical. What's unique, though, is that they're not wanting to turn it off. And I think that those early findings, much like Camden or like Essex, some of our other partners, will transition into cost savings if, you know, as they move into those next. Those next steps. But both, yes, hype is real, and there are a lot of folks that are a little bit frustrated right now. That was very, very clear at Optech this week.
- [36:32]
B
Yeah, that's really interesting. So let's dive into that more. But maybe to zoom out for a second, you were just at op tech. Obviously y' all are doing a lot. You see a lot of other groups doing a lot of things. What do you think's the current state of AI in the multifamily slash rental housing world right now?
- [36:49]
A
Yeah, I would say majority of communities have AI turned on. And so if you just go and pick a. You know, I don't know if you do this, but every time I'm at a stoplight and I see an apartment community, I pull up an apartment website. I'm like, who manages this? What technology are they using? And it's a real thrill when it's Funnel. The majority of those have some sort of AI at the front door answering the pet policy questions. One of the things that you've shared on the podcast and previous episodes is obviously, we've seen a flatlining in some places. A decline in rent growth. And when you combine those two things, you know, a lot of discretionary spend went into AI. And also on one of your recent episodes, you talked about the increase in marketing spend. Yeah, you know, I think the ILS are doing well. I'm really good friends with the apartmentless CEO Matthew woods, and they're, they're doing a great job. But I also think a lot of that spend went into AI. And unlike maybe the market, the marketing spend where you're, you know, you know, what you're buying in AI, buying chatbots, buying these nurturing tools. I think folks weren't thinking they were buying a consumer experience tool. They thought they were buying, you know, workforce reduction tools. And so to that sentiment question, again, nobody's turning off their AI, but I think a lot of the hopes of, you know, we're going to run properties without humans has not materialized. I think certainly a topic we're going to get into and one that folks hopefully know about Funnel is centralization. The customers that did embrace centralization first. So again, looking at a Camden, looking at bh, you've had Joanna Zabirsky on the show, those organizations, because they've aggregated the teams that do the work, have seen actual cost savings. But if you just throw AI at an individual community with the normal 1 to 100 employee unit ratio, you're not going to see a reduction in headcount, though you won't turn it off either because it is a better consumer experience to get your questions answered at 2:00am.
- [38:31]
B
Yeah, that's such a good. Let's actually jump to that because that's a good point. I was at a event a while back where this, this conversation came up, which is, and this is probably a year ago now, but it was basically people saying that we're not necessarily seeing the expense reductions that maybe you'd want to see with, you know, centralization and AI. So is what impact you mentioned better consumer experience, which I think is undeniable. But what other impact is centralization and AI having on property management, staffing, on operations? And do you think we'll get to a point where it really does impact the headcounts more significantly?
- [39:07]
A
We're there. I mean, there are certain organizations. And again, if you look back to even the pre generative and Jay, I love the recaps that you do.
- [39:17]
B
Yeah.
- [39:17]
A
But I don't think you were doing them when Camden started talking about this. No, they, they attributed $4 million in annualized savings to their centralization and AI efforts. And it wasn't one or the other. It was both. And let me be very specific. And they've talked about this publicly the way that they did that. They do not have assistant community managers, period. Full stop. Essex. Another funnel customer does not have leasing offices. Both of those organizations started with centralization. And then when you. And let's just use the assistant community manager example, right. Who does a lot of administrative tasks. When you take that and you aggregate the role. So rather than having 200 individual ACMs, you aggregate it and say, have, you know, even if you started 150. Right. You're not completely eliminating the role. You're bringing them into a centralized shared services role as you begin to leverage AI. So one of the examples I'll give is our new Voice AI product can handle 70% of calls without human involvement. And this is, you know, kind of in terms of hype. I'll do my turn to do some of the hype here.
- [40:17]
B
Yeah.
- [40:18]
A
The metric that we measure is called a containment rate. And if I tell you, Jay, when you call an airline, hey, there's a human waiting for you, but the AI is ready to answer as well. We're measuring how often do you hit the escape button and go to the human.
- [40:30]
B
Right?
- [40:30]
A
Because you could just not, you could hide the human and you could say 100%. But the real test is I know there's a human, but I'd rather talk to AI. We're seeing 70% of our calls now. I know there's a human I could go talk to, but I would rather schedule my tour, ask about the pet policy, check on the status of my work order, 70% of consumers, because the AI has just gotten that good. When you do that again at a community level, you may or may not be able to reduce a headcount. When you do that and you have 100% of your assistant community manager roles centralized, that's when the cost saving opportunities come in. So I think the disconnect of where we're not seeing the results is it's not really a chicken or the egg in terms of what needs to come first. You need to have a centralized operating model. We can talk about how that looks different in the third party world if you intend for AI to actually genuinely reduce headcount. And the analogy I always give to folks that don't love multifamily as well as you and I do is that multifamily still looks like old school car dealerships. Each individual. And so you know, Henry Ford Brown down the road, you know, Ford car dealership is not going to see cost savings by automating some conversations. But Rivian is. Tesla is right, because they've centralized that consumer brand experience. So I think there are folks that are frustrated not seeing the results, but they all. There also are folks that will tell you and talk publicly about they genuinely have done headcount reduction. And the one, one caveat I would add there, there's so much turnover in those roles in our industry and mostly has come through attrition and not backfilling.
- [41:59]
B
Oh, absolutely. Yeah. It seems like it's just, it's really elevating maybe your best people to take on a broader role, have AI take on centralization, take on some of the administrative tasks and really position good people to do more. But I think what we're finding too is that oftentimes you're paying those good people more as well.
- [42:17]
A
Yeah, no, we, one of our newer customers shared this publicly at our conference last year. Gids, the asset manager Windsor is their property management company. Company. They this beautiful vision that they call bigger better jobs. Right. And what they shared this week with us was their retention rates on an employee basis have nearly doubled. Right. They have gotten much better retaining people and the costs of those individuals or the salaries and compensation have grown 20 to 30%. But they're keeping those better people. So it's still a win. Yeah, yeah, that's a, that's a huge win. And Camden shared publicly as well that their leasing agents saw their commission really take off. Right. So they had fewer sales associates, but those sales associates were making significantly more than. And I'm a sales guy, Jay. Like if my addressable market was Tampa, Florida to sell proper management companies, I'd be frustrated. Right. But if you give me a bigger pool and more sales opportunity, you know, I'm going to lean into that. So it's definitely a retention tool for your best people.
- [43:12]
B
Yeah, it's a win win. All right, so what are the next frontiers for AI and multifamily, do you think? What's, what's, what's the, what's the what's next? What's, what's down the road?
- [43:20]
A
Yeah. So there's two things that I would highlight. First is that I already talked about voice a little bit. Voice is a game changer for multifamily for every service oriented industry. Because even in the early generative rounds, it was just so bad. And we all still see that at times. I, I flying back from Vegas this week, I had to get on a Southwest flight. I'm in my room packing up My stuff and I zipped the bag as I was talking to the voice agent. And what was that? You know, it stopped the voice. It couldn't understand the background noise. Ruined it. The newest greatest voice, AI technology. And we partner with the chairman of OpenAI who has a company called Sierra. It speaks 37 different languages. It can block out the background noise and that's where you get these really high conversion ratios. If it's genuinely, you know, most people prefer it to talking to a human. So that is going to be applied to all sorts of different channels. Now that we're still relatively early as an industry, let me tell you about the really exciting next thing. And it is a buzzword and it is hype, but if you follow tech like I do, all you're going to hear people talking about is agentic, right? Yeah, that's the, that's the thing that people are talking about. What does that mean? Right, like to, to the Dale Christians of the world that are listening to this podcast. You know, I don't know what that means. It's enabling AI and software. So old school, you know, software, CRMs, property management software, but enabling them through a conversational layer. So a tool like Funnels Chatbot to automate the work being done. Let me give you a very tangible example of what we're delivering this quarter at Funnel on a portfolio the size of Camden's or GIDS or UDRS, you know, call it 60,000 units. Everybody knows, you know, I'm going to have probably about half of my leases renew. Roughly half stay. Right. Depending on the Metro and what's going on the market. I know how many new leases. Something that gets ignored is how many times in a 60,000 unit portfolio will a resident want to modify their lease. What we call mid lease change. Right. And it happens about 20,000 times on a 60,000 unit portfolio. Wow. That somebody says, hey, I got a pet. Right. Or my roommate is going to transfer or something. That requires administrative work to adjust the lease status. And, you know, now the Funnel does the online leasing for our customers. We see that what we're enabling for our customers is a voice and chat agent that can gather the relevant information. So you have the pet example. Hey, I got a, you know, Chihuahua. You know, is the Chihuahua allowed in our community? Yes, it is. Okay. It's, you know, how much does it weigh? The AI is going to gather the relevant information. And historically that'd be a human right in that interaction. And then instead of just stopping, that'd be one thing. If it gathered information, what our customers want is they say, well, have it create the addendum. Have it send the addendum. Yeah, right. And then the ultimate question that our clients are debating is should it countersign the addendum?
- [46:02]
B
Right.
- [46:03]
A
But you imagine a world in which, you know, 20,000 transactions with probably 100,000 individual pieces of communication is just fully handed over to AI. That's kind of the promise of what Agentix software means. And I think what's going to happen over this next three to five years on this, the slope of enlightenment with AI is we're going to go workflow by workflow and identify does a human need to be involved there? And where we end up with the better consumer experience is you will still need humans. We strongly believe at Funnel you'll need them. But instead of doing the busy work to create the pentadenum, you know, why not have them walk over a doggy gift basket to the unit, right? And say, hey, congrats on Fido. And that's going to be the point of differentiation, is if everyone's using AI and everything goes agentic, the differentiation will still be the humans.
- [46:46]
B
Yeah, that's a great point. I think there's been more conversation about this and I think people, you know, it's, it's what it seems to be like. The best case scenario is AI centralization technology. It's taking care of a lot of, you know, back office stuff, but it's then empowering good, you know, your people, people to be in front of your customers, their residents, their prospects. And so that's a great example of something that, that. A great example of that, I think.
- [47:13]
A
Yeah, and we will make some missteps along the way. You know, one of the things that we and others who were early in maintenance AI have found is that if you give consumers the ability to chat constantly with you about their outstanding maintenance work order, it's going to create more work. And so there's a lot of stuff, you know, Marc Benioff, the CEO of Salesforce, said we're in the throw it against the wall chapter. And so there's a lot of AI use cases that may not actually make the consumer experience better. But I think as we get more to, as you said, automating away the mundane tasks and elevating your best people to really differentiate the experience. And you've said it before on your podcast that, you know, it's showing up in retention rates in the REITs.
- [47:51]
B
Oh, yeah.
- [47:52]
A
That all of these investments in better consumer experience, better renewal technology, you know, people are staying more. And I think that we're going to see really a acceleration of that as we. Most folks who work in multifamily on site would describe their job as administrative.
- [48:06]
B
Right.
- [48:06]
A
It's. It's firefighting and it's administrative work and very little is kind of value add customer service. And I think AI has the promise to get us closer to that.
- [48:15]
B
Yeah, yeah, I've. And I think part of that too, the better experience is when you have people who are, you know, you're, you're letting your. Your best people do what they do best, which is, which is you, you know, love on residents, take care of prospects. That's creates a better stickier experiences for residents as well. So let me ask you a question. You mentioned, you know, open AI earlier. I'm just. This is kind of a. Something I've always wondered is how much of the AI being developed in industry like ours is piggybacking off a company like OpenAI, which is one name everybody knows, versus like know kind of. I don't know that right word for this. Like true, like you know, ground up, create my own AI software.
- [48:55]
A
Yeah, one of the. It's a really great question, Jay. And something that I've shared before is I actually think so I said before when I came into the industry, we were selling websites and payments. You know, the reality. So I came in the industry in 2012. The reality is that websites and payments had been around for 10 years, right. Like PayPal was founded in 1998. And so historically multifamily has had a very slow adoption cycle as an industry. I. One of my hot takes is that I don't think that's the case anymore, literally. And I gave this example just a second ago. You know, you call a grace our community that has funnels AI on it. It's better than calling Southwest right now. I can say that definitively. And so. And the reason for that though, Jay, is that much of what is available to technologists today is available via APIs. And folks may not kind of understand what that means, but an API is essentially the bridge between two technology systems. You know, 20 years ago when a new technology came out, I would have to go implement that on my servers or my like on hardware to actually get the benefits of that technology today, you know, funnels engineers don't have to, you know, code 37 different languages of AI voice technology through the right partnerships and the right access. You can deploy that yourself. But I will say that is going to be a very intentional decision for funnel that other organizations are going to take a different approach to. As an example, in the 2012, 2015 era, voice technology, in terms of telephony, moving phones from on desk to in software was happening. A lot of the original CRMs the funnel competes with, they, you know, built their own phone systems and as the technology got better, they stayed behind because they're still negotiating deals with, you know, the telecom providers. Yeah, Funnel, there's, there's a tool that listeners probably don't know, but if you're a software developer today, you would never build a phone system. You would use Twilio. You know, we use Twilio. Your old employer uses Twilio. It just keeps you up to the latest, greatest. Same thing with payment software. You would use a tool called stripe. So the short answer is, Jay, is I think that as an industry, it does not make sense for us to build proprietary AI tools. I think what we need to do and actually, let me tell a fun story, so I mentioned the chairman of OpenAI runs this startup called Sierra that Funnel partners with. I was super fortunate. I got a call with him about a year ago and he did the call because we had a similar investor and he got on. You could tell he didn't know why he was talking to me, right? This guy in pink, he says, what can I do for you? And I asked him, his name's Brett Taylor. The guy was, he created Google Maps and he created the like button. This, this guy is like, it's like talking to the Michael Jordan software. And so he's like, what can I do for you? And my first question to him was the same question you asked me. Do you want to build in my vertical in the rental housing space, or do you want to partner with companies like me that are systems of record, that are CRMs, that are transaction tools? And I genuinely believe he had not thought about that question for our vertical because he sat there and processed it. And lucky for me, he said, no, we want to partner. And so since then, we've spent the last year, because think about it, Jay, you understand, you know, they don't want to understand the nuance of working with multifamily revenue management software, which does need to be proprietary. They don't want to work with, you know, the nuance of the property management software systems, Blue Moon, which is our leasing system, fee transparency, which Funnels spent the last year building. There is a ton of industry specific nuance to how we communicate. But again, as I referenced, it doesn't make sense for us to build, you know, 30, 40, 50 different language AI models. And so I think to answer your question, we are all going to be gravitating more towards an API technology economy where the differentiation will be the last mile. Right. It's that service of. Let's connect it so that a UDR who just announced earlier this year they're rolling out funnel, that they don't need to go do all that work and then we can plug it directly into kind of their multifamily systems.
- [52:44]
B
Yeah, no, that's a, that's a great answer. I think it's interesting because all of us kind of see those, you know, it helps. It makes sense, I guess is the best way to say it. Let me ask you another question that, you know something? I've, I think we've been kind. You've touched on this a little bit earlier, but let's get, I want to get to ask it more directly which is, you know, I think early on when probably you got into proptech, you're building websites and multifamily is always historically behind on technology. It seemed to be like in the old days, it's like if you had a cool widget, a good idea, you go to op tech and you pitch like a neat concept, you're going to get some adoption on it. And nowadays it feels to me that there's a lot more focus on, okay, will this actually impact noi? Does it make our business better? Does it make the customer experience better? Does it integrate with a thousand other things? I have. And so my question is, you know, when we think about these new things happening with AI centralization and the people in the industry, what's the proper way to measure the value, the impact of this AI on actual performance? And can you measure it in terms of the impact on expense reduction, revenue growth and oi?
- [53:54]
A
Yeah, really, really great question. And I think that in that question, if I were to summarize kind of the three themes of op tech for me, one, automation of course, which is really AI, but you know, broadly automating away work. The second is centralization, which we've touched on a little bit. And the third would be consolidation to, to your point about a lot of widgets, a lot of startups and, and you know, to the core question of measuring that noi, you know, my personal opinion is that most of what we're doing in technology and kind of, I, I referenced sort of the throw it against the wall era is relatively hard to define and funnel, we're experimenting with tools. So, you know, every software developer in the world now has A AI coding assistant. Right. And originally it was sold as, hey, you're not going to need engineers anymore. The reality is it's made our that that has not happened. And my engineer is listening. We love you, we're going to keep you forever. But it's made them more efficient. Right? And similarly, like I mentioned, most folks have deployed an AI chatbot. Most folks have not reduced headcount and, but they're not turning them off because it is a better consumer experience. I think one of the ways, Jay, that other verticals are solving this question, and my answer is I don't know exactly how it gets solved in multifamily, but is there, you know, if you buy Salesforce for instance, historically you've bought it by the seat or the license. How many people are buying that? And these two newer technology AI tools are all moving to a usage based model, right? That's how we, how we pay for our Sierra usage. How many times does the AI actually handle the call? So they're incentivized and we're aligned to get it to 70, 80, 90% of the time that the AI can handle it. Multifamily has a bit of a disconnect there because we have a pricing model historically that's more based on a per unit cost. So relative scale, I think over time, Jay, that both you will see consolidation because it's not super valuable to have a widget that does one thing. AI itself needs data, it needs workflows, it needs kind of full context and memory. So I think you'll see the, you know, the larger PM software providers, they'll be able to quickly provide a lot of the new and funnel as one of those large platforms. But I think we will need to move to perhaps a different measuring stick. So whether that's, you know, outcome based pricing as we call it. What I will say though, Jay, and you'll appreciate this because you did your budgeting session recently, we've proposed to our clients earlier this year because we acquired a tool previously called Leasehawk. We rebranded it to Phoenix, which does things like, you know, replaces your secret shops. And we've said, hey, would you like to pay for this on a usage based pricing model? And you may guess, and my dad would definitely agree with this, they did not like that idea. Asset managers did not like the variability of pay for what you use. Our industry likes, you know, predictability, likes fixed budgets. And so unfortunately, I think in that world that does mean that it's going to take us a few years to really align on what's worth it, what's valuable. But by and large, again, I can't tell you a single example that comes to my head of a customer turning off AI. What is happening though, to bring those all together is they're consolidating it. So we've always believed CRM and AI need to live together. We're seeing a lot of folks kind of turning off what I would call standalone AI.
- [57:02]
B
Right. The standalone widget era seems to be long gone for the most part.
- [57:08]
A
And it comes back in little peaks. Right. Again, like you and I were talking before the show, Zoom was a technology in 2021 that everyone thought was going to take over the world. Fast forward three years, it's the worst performing technology stock because you get it from. Yeah, they trade terribly because I get it from Google, I get it from Microsoft, I get it from whoever my platform is. Similarly, it's a very scary place to be in multifamily if you're a point solution. But that's always been the case. You have to start there. And we started as just kind of a lead management tool. We now manage the entire front office for companies like Cortland. So it's a starting point. But yeah, startups will not survive if they do not move into being a platform.
- [57:47]
B
Yeah. So that kind of brings. Next question. One thing I've always liked about uptech is you get to see all kinds of startup ideas. I mean, we're still. Proptech is still a hot, you know, hot area. And, you know, op tech has always had the. What do they call it, that pitch fest where you get to hear from, you know, five minutes from all these different startups in addition to hearing from established companies like Funnel. And so you kind of talked about this a little bit already with some of your comments about some of the themes. But give us, for those of you who weren't at op tech, you know, share some more of the, you know, kind of highlights, the buzz, the mood, you know, what was, what was getting people excited there. Any color you can share from the event for, for those of us who have some FOMO would appreciate that.
- [58:33]
A
Yeah, I do think that there was a healthy dose of reality given, you know, as you described, you know, survive till 25 was not the right mantra and I think most folks were a little bit pessimistic and we're definitely looking, you know, forward to. It's not going to fix it in 26. Right. It's going to get, what was it, heaven in 27. Is that the new mantra?
- [58:51]
B
Absolutely.
- [58:52]
A
Yeah, yeah. So I think that that did permeate, but I think it was good because that same question of, hey, how does this show up in an ROI perspective, I think that broadly, there's not a single technology tool out there that doesn't now have AI features. One thing I'll share that I'm optimistic about, you know, there's a concept in technology development of the innovators dilemma. Clayton Christensen you know, talked about that the large incumbent businesses have an incentive to protect their old business model. Think Blockbuster, right? Blockbuster could have bought Netflix in the 90s, said, no, that'll, that'll ruin our business, right? And so they didn't embrace it. If you look today, though, that's not really happening even at the hyperscalers, right? Microsoft has an incentive to defend the old world. So does Google, but they're investing in the new world. So I do think that the generation of business leaders is embracing that. And I'd say the same in multifamily, right? Like, there's probably five startups at op tech that, you know, have a AI, only CRM, you know, that they're pitching. But the companies like Funnel and candidly, you know, good friends with the new CEO, RealPage, Dirk Wakem, the president at Yardi, Akshay Rao, all of us are kind of innovating pretty quickly. And so I think there was a lot of excitement back on, hey, I'm already on a tool. And this has shown up for Funnel as well. There's a stat that we track with our investors called net revenue retention. How much do your existing customers stick with you and buy? And we had a record year this year of customers saying, hey, if you have an AI product, we would rather buy it from our existing provider because it's in the same context, right? So one of the things, for instance, that Joanna Zabriski is really excited about, and this goes to kind of an opportunity and what I think that multifamily operators are getting smarter about how to deploy AI. I got asked multiple times about the concept of memory, which is a pretty kind of novel concept in AI, which is again, Jay, you may ask a pet policy question at one community, but what if you ask that same question at another BH community? And we knew that you're Jay Parsons, right? And we said, oh, are you asking about Fido? Right, Your labradoodle. That's great. This community actually, you know, our pet policy would, would adapt to him. So one of the features like the Joanna Zabriski make sure to remind me we need asap is a customer 360ai. Right. That as soon as I jump on that page, right, and I look at, you know, Jay, who's up for renewal, what are the three things I need to know about him rather than pages and pages and pages of history and context. And so I do think multifamily is applying proper pressure to their existing providers to say you have a chance right now. If you can innovate and move with the pace of innovation, we're going to move with you because it's not worth doing the entire technology change, especially right now when rent growth is what it is.
- [61:32]
B
And for those listening, Joanna, of course, the head of BH management and past guest of the podcast. So if you're listening, Joanna, hi Tyler. And of course she's definitely one of the influencers in our industry as well. Tyler, what's next for Funnel? What's the next chapter of your business look like?
- [61:54]
A
Yeah, so we are really excited with our partners. Most of our customers start with funnel using the CRM fixing lead management. I would say there's a resurgence right now on lead management and Jay, your data would back this up. It's just still highly competitive. Right. And so while I think as we were coming out of, you know, ZIRP era, everyone was focused on protecting the backdoor. As you, as you showed on a previous show where the marketing budgets are high, we're seeing a lot of operators, especially the third party business, really focused on doing the basics right. I believe one of the trends we're also seeing is that the large third party managers, many of whom use funnel, they're also embracing elements of centralization. You know, and I think they're looking at their clients, the asset managers who listen to your show and saying, hey, we can get you Camden and UDR type results if you allow us to operate more cross functionally. So that's one big trend I don't think is going to stop is I think that enabling the next chapter of centralization is especially as it works within third party management. And the analogy I always give to people is, you know, the concept of centralization already exists in hospitality, right. Asset managers are comfortable with Marriott sharing leads for some reason we're not in multifamily we say, hey, you know, Graystar zrs, you can't, you can't do that. But I believe they're starting to see those back office centralization opportunities. And then the next thing for us that we're hyper focused on and why we've partnered with Sierra to have best in class conversational AI is that the next era of cost savings opportunity and employee to unit ratio improvement will come from automating the agentic layer. So as I discussed earlier, starting today with midlease changes, we believe renewals may be another low hanging fruit opportunity and certainly just the onboarding experience in general. But what you need then is you need a singular system, a singular customer service experience. So about 500,000 of our 500,000 units of funnel customers use us for application screening, leasing, resident portal. What that creates now is the, the right framework to begin automating away the work that historically has been done on site.
- [63:53]
B
Yeah, that's fantastic. Well, certainly best of luck as you navigate the next chapter. And, and Tyler, thanks for being on the program and thank you also for just, you know, sometimes prop tech conversations can be mired in technicalities and things that go over my head. So thank you for making it easy to digest and I'm sure that those listening would probably say the same. And so thank you again for being part of the show, Tyler.
- [64:15]
A
Well, Jay, just the last story to tell you really quick, please. Yeah, I used to, I used to hire new salespeople at Entrada and I would often bring them into multifamily and I always get the question, you know, especially from the younger generation, hey, what's a podcast I can listen to to learn about multifamily? And I had no answer, and I genuinely didn't. I mean, it's part of the reason we started our own podcast was just to unpack the history of multifamily technology. Now we point everyone to you. I mean, so it's a must follow funnel of our employees and you do a great job. So thank you for what you do for the industry, keeping everybody up to speed and, and dispelling a lot of, a lot of misconceptions about the industry, which is really helpful.
- [64:47]
B
Oh, that's the fun part. Well, thank you, Tyler. And by the way, if you're not seeing Tyler's screen on video, he's also the host of Multifamily Unpacked the Podcast. So another good one. Well, thank you, thank you and, and best of luck getting to 2026.
- [65:02]
A
Thanks, Jay. I appreciate it.
- [65:24]
B
That's wrapping Episode number 61. Thank you to Tyler for being our guest today. Thank you to jpi, to Madera, to Funnel, to Authentic, and Foxen for sponsoring today's episode. And thank you to all of you for making us part of your day. We'll see you next time.