Jake Aaron Villarreal: Welcome to our podcast, From the Ground Up, where we interview startup founders exploring their journeys, their challenges, successes, and lessons learned. We hope you be inspired in discovering what it takes to build a thriving startup. I'm your host, Jake Aaron Villarreal, and here with us today we have Tommaso Montagni, the co-founder of Rubik, a startup that's raised $5.5 million in funding. Tommaso, welcome to the show.
Tommaso Montagni: Thank you very much, Jake. Thanks for having me.
Jake Aaron Villarreal: Great. So a little background of Tommaso: he's an Italian-born mathematician and is revolutionizing single family home investing through Rubik, an online marketplace connecting investors with home sellers. As a former professional skier, going fast and taking risks is in his blood. This is his second startup venture with his current co-founders and they're growing a fantastic company. Tommaso, before we dive into your company, tell us a little bit about professional skiing. For, for those of us who have skied and we love it, how do you go from just having fun to becoming a professional?
Tommaso Montagni: Well, I would say the first thing is you stop having fun. Um or not, not in the bad way. But uh you start understanding that you know, every run, uh every, every ski slope, slope counts. Um you're usually in the cold with little to nothing on. Um you don't get many breaks and you have to travel at obnoxious hours to get up on the slopes at like 6, 7 a.m. Uh summer and winter, so it's definitely a lot um, a lot different than recreational skiing. And when I left skiing, that was I think the, the thing that I found out, uh you know there's a lot of things I found out about recreational skiing when I left the um the professional realm that I didn't know about and I was really excited to kind of dive in.
Jake Aaron Villarreal: Now as a skier myself, uh I grew up skiing in, in Lake Tahoe. Uh I I never could figure out how to get the days in to ski consistently to really build up your you know, to, to move to the next level. Did you grow up in a ski area or how did you get involved in skiing?
Tommaso Montagni: So I grew up in Milan. No, not a ski area, but not too far away from a ski area, about uh 3 hours away from where I I skied. And so every weekend I'd uh take the bus or my parents would drive me up and I'd go skiing. And then uh sometimes perhaps also on uh Thursdays or Friday afternoons I'd go up to a resort that's a little closer to Milan, maybe like an hour and 15 minutes away and just train in the afternoon uh basically up until the night and then come back, uh come back home and continue kind of work on school.
Jake Aaron Villarreal: And as a professional skier are there different levels? Is it World Cup level, is it Alpine, what's the, what's the process?
Tommaso Montagni: So once you turn uh, once you turn about 16 or 17 you start going into the, let's say semi-professional uh or races. Um and those are kind of tiered up so there's essentially just the general uh entry level races, then there's kind of Euro, uh the Italian uh national level races. European, at least for me, European races, and then World Cup. I never made it to the World Cup, but I was kind of in the European uh scene uh in terms of racing. And so everybody is ranked accordingly, uh and everybody's ranked against each other in all of those uh races and you get to race with people that are in the World Cup and people that perhaps trying to get into the European competitions. But that's kind of the realm that I played in.
Jake Aaron Villarreal: You know, racing is in some ways kind of like a startup. You have to go out and you know, pick the path you're going to go down. You have to think about your competition and how you can compete to win. Um you have to think about raising capital. And then it's really a race against time to make sure that you get to the finish line before the capital runs out. What were some of the lessons you learned as a professional athlete that you've taken into the business world?
Tommaso Montagni: So um, I think the, the main lesson that I learned was that uh I'm responsible for my own efforts that I put in. So if I put in more effort I'm going to get more output out. Uh and so really honing in on that, like uh uh aligning responsibilities to myself and to others, um and really making kind of um... trusting that other people are doing their roles uh very well to kind of facilitate your success as well is, is kind of a, a huge part of why I got where I am in entrepreneurship as well as where I got in skiing. So uh kind of defining uh roles and responsibili- and really putting that trust into the people who, who perform those roles.
Jake Aaron Villarreal: Great. Um let's talk about your company a little bit. Before we do that, how do you go from skiing to technology?
Tommaso Montagni: Um, so I think I always knew I was never going to go uh and spend the rest of my life in skiing. Uh but I did want to continue and pursue it as long as I could. So with that idea, when I finished high school I joined Colby College uh for um uh for university. Uh and they had a really, really good ski team and that's kind of the main reason why I went there. And that's kind of where my transition uh happened. So I was on the team and I raced for Colby and a little bit for the Italian national team while I was uh at Colby. But um, but mainly that transition happened in the first couple of years where I started another business or I started a first business with my co-founders and skiing started to become a second priority for me. And um, and I started to prepare myself for, for the life ahead and that was going to be entrepreneurship. I've always kind of known that from the beginning uh that I wanted to kind of do something and solve some big problems and so that's when that transition happened. And the main reason is because uh I met my co-founders in college in the middle of nowhere in Maine.
Jake Aaron Villarreal: Well you know, it's interesting, finding your partners in life and in business are one, one of the most critical decisions that you make. It can make or break you as a company and really as friends and partners. How did you find your partners? Was it by coincidence, were you roommates, how did that happen?
Tommaso Montagni: Um, somewhat uh, somewhat coincidence and somewhat not. So we are all international. So we arrived at international orientation about uh 10 days before everybody else arrived. And it's a very, very small school so with like only about 50, at the time there was only about 50 international students. Um you know, we had some more things in common because we came from abroad. Uh we got there and we pretty much met each other, clicked a little bit and then said, "Well you know, we all want to be here and do more than just uh learn in school. Let's you know, let's start a business." And we all had that kind of idea. So we sat in front of a whiteboard and within 10 days or so uh we started kind of building a friendship and started kind of a college startup and that's kind of where things um took off. But I think the main uh the main thing that kept us together almost 10 years now is that fundamentally uh yes we did start a business together at the beginning, but it was more of a friendship. Um and there's a level of friendship first and then business second in the sense that we really respect each other, uh respect each other's opinions, and I've uh kind of always kept that as a main uh grounding factor. And then everything else comes up on, on top of that.
Jake Aaron Villarreal: And you started a venture before this company we're about to talk to now. Uh what was the company you started prior?
Tommaso Montagni: So it was called Pack Mules. It was a delivery service for students, for college students. And the biggest problem was Colby was in the middle of nowhere. We wanted to get uh stuff from local stores downtown and couldn't access it. And plus it's even worse in Colby because, or in Maine, because half the year uh is freezing so you're not going to go and walk uh anywhere. And so we wanted to connect um students to the local businesses. And uh we essentially uh just started a delivery service almost a little bit like Amazon but directly from local businesses to the students' rooms within 24 hours. Uh launched it online and then immediately got a lot of traction from international students initially. And then from all of the other students that kind of wanted to uh to use our uh our software. But the need there was that uh many people didn't have a car, many people didn't have access to downtown or any local stores, um and so were not able to kind of engage with that local economy. And we brought that local economy to them.
Jake Aaron Villarreal: That's great. So an online business and your next venture, which is one we're going to be talking about now, Rubik, is also an online venture. Uh it's in the real estate space. Now for most of us we understand how real estate work, works and we understand the players that are out there that we see as a consumer, Zillow, Redfin or some of the big marketplaces that you hear or read about. What's the niche that Rubik's in and what are you focused on?
Tommaso Montagni: So we're focused on those homes that wouldn't otherwise transact uh on the open marketplace, on the MLS let's say. And the reason why they wouldn't usually transact there or that, that's kind of not the ideal place for them is because they're either tenant occupied, they need uh repairs to be done to the homes before um getting sold to let's say a homeowner, uh or the homeowners need to sell quickly and don't want to have showings and stuff like that. So we kind of uh take that sector of the market, the one that wouldn't traditionally be um let's say taken over by real estate agents. And we allow for, when we facilitate those transactions...
Jake Aaron Villarreal: Great. The biggest challenge it seems like would be is how do you find those sellers that have the house that they know they have to repair things, they're not motivated, they don't want to bring people inside to look at it. How do you find them? That's a...
Tommaso Montagni: That's a great question. And uh um and the way we solve that problem is, so we have um essentially wholesalers that bring us those sellers. So wholesalers um are kind of local mom and pop shops uh in all of these areas across the country. They're literally everywhere. There's millions of them just like real estate agents. Um and they go around, they maybe have signs that say "hey if you want to sell your home for cash," uh or perhaps they send out mailers to these homes or reach out to homeowners that uh you know, to vacant properties, to homeowners that potentially could be able to sell. And then uh they engage with them, uh get properties uh uh basically get, get an idea of whether those people would be motivated to sell or not, whether they want to sell their property or not. And then they refer them to Rubik which connects them to uh an investor or potential buyer for that property. And so all of these uh wholesalers across the nation, we work with about a thousand of them uh if not more at this point, it's growing every day, uh bring us prop- uh of these wholesalers that bring us properties every month uh from kind of a, from their local markets, they bring us homeowners and say "Look, this guy wants to sell. Can you find him a buyer?" And we'll go ahead and find them a buyer.
Jake Aaron Villarreal: Now you've got the wholesalers that bring the, the housing, the buyer, the sellers to you. You've got the buyers that are coming to your platform to buy. What type of buyers are coming to the platform?
Tommaso Montagni: So uh we initially started, and that was kind of our entry level market, was just institutional investors. So anybody transacting about a thousand properties plus a year, uh we would work uh with them to trans-, for them kind of to access all of this inventory that's selling off market. And so with the likes of Tricon and Mynd and all these large partners of ours, uh we help them transact all these properties from these homeowners directly to them. Uh and then uh especially over the last year or so, we expanded that. So not only working with the top 10 or 15 uh largest institutional investors, but we expanded that to every other investor possible. So we opened up that side of the marketplace once we had kind of established the demand on the, on the seller side. We opened up the buyer side of the marketplace. And now anybody essentially uh that uh is not going to use a traditional loan, everybody else uh paying cash or with a hard money lender uh can access this marketplace now. And uh get deals that match their investment criteria, area. So what we'll do is we'll curate a list of properties uh every day, every week you know every month however much um they're actually buying, uh to get to their inbox that perfectly match um their buy box or that fit with their current portfolio. So we'll look at the buyer portfolios and say, "Well these are properties that are likely going to fit really, really well in your portfolio based on your strategy and based on what you've done with your past home uh investments. You should take a look at this one here as well." And usually they end up either bidding [on] it or uh or buying it.
Jake Aaron Villarreal: If you look in the market today, um you know the trends uh of the capital markets, it's tight to raise capital and interest loans are pretty high just in general. What's been the opportunity there for you as a company?
Tommaso Montagni: So uh the opportunity for us has been that we got to really focus on building a business that is profitable and that uh, that really helps uh, that doesn't, that doesn't grow just because we have VC capital. Um and uh it's been a great opportunity for us to also partner up with uh uh with a lot of companies in our space to kind of combine businesses and combine um solutions to the problems that we're solving to provide a better service to our uh our wholesalers and our buyers. So we've partnered up with a lot of companies kind of on the buy side as well as on the sell side uh to deliver a much more streamlined and efficient um home transaction process essentially. Whether that's title companies, whether that's uh larger wholesale partners that can provide us a lot more inventory, or whether that's networks of uh real estate investors. And so this kind of uh turbulent market has opened up a lot of opportunities to work with the customers that uh otherwise we wouldn't have worked with maybe last year.
Jake Aaron Villarreal: It's fascinating that there's so many different niches in real estate and it's always an asset class, it's continuing to grow. Um from your experience or just in terms of the creative model, what's the business model? You've got funding, you've raised capital. How do you make money?
Tommaso Montagni: So we take a spread between the uh purchase price of the home and the resale uh uh of the home. So we'll uh we'll close on a transaction once we know that there's a buyer for that transaction. We'll close on the transaction and then resell that property out. So we'll do a transaction model, um and we actually split the profits 50/50 with the uh uh with the wholesaler bringing us that property. So someone will come, bring the property, we'll do a transaction model and then we'll split 50/50 those profits. Um this basically ensures that uh that there's kind of a streamlined transaction end to end, and um and everyone's kind of getting what they're, what they're looking for, both the seller if they're, that's the price they've agreed on they're getting that, and the buyer as well uh on that end.
Jake Aaron Villarreal: I love the creativity of this. Um because you're not putting any of your own money into investing in real estate. You're basically building the marketplace and bringing the buyer and the seller together and taking a spread in between.
Tommaso Montagni: Exactly.
Jake Aaron Villarreal: Really, really cool.
Tommaso Montagni: The um, yeah. The uh essentially we're using the capital for the, from the buyer to transact uh our property with the seller and then resell it to them. Uh so the actual capital will come from the buyer uh and will go through us and then go directly to the seller.
Jake Aaron Villarreal: Great. As a company you're located in the US but you're distributed, you have employees all over the world. What's been your approach to, to, to finding good people and hiring locally and internationally? What's worked for you?
Tommaso Montagni: So um we started off with the market that we knew. So my co-founders are from Bosnia and Kosovo, and one of my co-, friends is in Kosovo. So uh we started there. We opened up an office, we hired some good talent, um and that's where we kind of started to grow and expand into kind of the, kind of a more global um uh company. And from there uh at some point we had kind of outgrown the market. Uh Kosovo is an extremely small market, there's not that many, there's probably only about 2,500 engineers. So we'd outgrown that market. And so we looked at other opportunities, neighboring countries. And Turkey came out as one potential really good um uh source of uh great talent, as well as being such a big market. And so we started putting out job postings on LinkedIn Turkey or just like LinkedIn US, and we got a lot of actual demand from Turkey. And that's uh, and that's when we realized that uh it doesn't really matter where we are. As long as we're set up as a remote company and that we kind of um leverage um all the tools and that we use in order to be a remote company and operate very well and streamline as a remote company, then we can hire there as well. So kind of Kosovo was the stepping stone. And then we've started to hire in uh in Turkey, in Serbia, in Macedonia and the Philippines um and in Italy as well, and Nicaragua basically. So we're, we're kind of now globally spread. But that idea uh started with us um um having a co-founder in Kosovo, understanding that it is possible to do this, and really uh aligning our kind of uh aligning different rules that we need to do when actually communicating. Making sure that everyone is communicating a standard format uh and everyone knows exactly what they're doing with end-to-end processes. And then we applied that to everywhere else that we're hiring.
Jake Aaron Villarreal: What's the strate- [strategy] of managing remote teams and people, to understand that they're truly working for you during the day or night and being able to see their commitment and engagement to the work that you're giving them?
Tommaso Montagni: So it starts off, for us it's kind of two, two-pronged. The first one is starts off from the hiring process. We have an extensive hiring process where we really get to know the candidates. So the more work we put up front, uh the better uh output we get afterwards and the better team members we actually get to work with. Uh so we put a, a heavy focus on the actual hiring uh up front uh and the hiring process and getting to know that person. And making sure that you know, not only they're a match for Rubik, but that we're a match for them. If this is aligned with their goals, what they want to do. And really making sure that uh um you know that this is a partnership that can go on long term. So that's kind of the number one uh thing we look for.
And number two is that we've really systematized our processes and the way we operate as a company remote. So uh it's very difficult to kind of collaborate on many different things when you're a remote company, or at least we found that's very, very difficult. So we've built all of our uh company and our process to be end-to-end. Where one person takes over uh from this point to this point, whether that's in the pipeline or whether that's in you know the, in you know the engineering side or on the sales side. And then they hand that over to somebody else with clearly defined rules on when it can go and what needs to happen at each stage. And there's never back and forth between uh multiple people in the company. So this makes it very, very easy for everybody to know exactly what they're doing, exactly what to expect uh that's coming, and you know, and be able to have a streamlined process end-to-end while being completely remote, uh without even needing to necessarily talk to each other or, or really engage in too much collaborative uh work that could slow things down.
Jake Aaron Villarreal: What, what do you value most in the new hires you bring on board when you're going through the interview process with them?
Tommaso Montagni: I think uh uh culture is one of the things that uh that we value the most. I mean we have uh kind of some missions and values that we, we look for in new candidates. Never giving up, best ideas win, honesty is key, uh one for all all for one, data first opinion second, dream big and don't be so serious. So these are kind of the uh the values that we try to uh see in uh a new team member. And then uh we value kind of uh somebody who's going to stick with us through the you know, good and bad times. It's a startup uh, it's not an established business that has been doing this for 30 years. So we need to find people who uh who are willing to iterate and adapt uh to new environments like we have from 2022 to 2023 uh and try new ideas and uh and really be flexible on that front. Um we've had a lot of success with people who are open-minded um and who can uh who can really see a potential vision uh rather than just be honed in on one solution or one product or one customer. And so that's kind of what we're looking for when I, you know, trying to find new team members to join to the team.
Jake Aaron Villarreal: When you started this company, you had an idea and a thesis, you went out, you've raised capital. Obviously the venture, the, the investors liked what they heard. Have you had to make any major pivot from when you started to where you're at today?
Tommaso Montagni: So we uh, we made a major pivot a couple of years ago. Uh first of all, we've made a lot of major pivots. Uh don't get me wrong, this is startup. I feel like we're changing, we're changing [the] company every few months or so. Uh but um, jokes aside, we've made a couple major pivots. The first one was a couple years ago when we changed business model. We used to be a Software as a Service company where we would provide a software to find uh off-market invest- investments. And we realized, uh so we were charging about $100 a month to all these users, and we realized that they were making thousands of dollars with our software. So we said, "Well, hold on a second. Um uh I mean, we're all for customers being happy, but if we're not making any money, then customers won't be happy for long." Uh and so we started using that software ourselves internally and providing them with the end result of the property, rather than providing with the software to find the properties. So that was the kind of the major first pivot, we went from SaaS to a transactional model.
And then another uh pivot that was eventually going to come but it had, uh but it was kind of sped up by the market, was uh uh in late 2022. Uh we were working with all these homeowners and giving these properties to institutional investors. Uh we realized that institutional investors were soon going to completely stop buying. We didn't realize how quickly perhaps, uh but they uh you know, we realized that they were going to stop buying. So we accelerated the um kind of the outreach to the middle market investor. So people buying you know, could be 10 properties a month but could also be like one property every few months uh as investment purposes. And so we made that pivot on the buyer side uh where we kind of uh transitioned to selling properties to all investors, not only those large institutional investors which in fact then very quickly completely stopped purchasing. Or I think are down 90% uh this year as they were last year. Whereas the middle market buyers have relatively uh remained the same in terms of their actual purchases.
Jake Aaron Villarreal: As a company, now you've made some pivots, it sounds like you've found your target. Where do you go from here? What's next on the horizon for Rubik?
Tommaso Montagni: So we want to facilitate real estate transactions uh from homeowners to real estate investors and we want to make this as easy as a couple of clicks online. Right now the process is very cumbersome. You have investors having to uh go see the properties, send their inspectors, their appraisals, the financing is difficult, the insurance is difficult. Um and so our, our goal is to enable a one-stop shop for both investors and sellers to sell their property, maximize their returns on both sides, and transact the property complet-, completely online, including every inspection to be done there, every virtual tour to be done there, and everything to be done on our platform.
So right now it's a closed marketplace wherein buyers do not see sellers necessarily. Uh they will only tr-, they will only communicate with them at the closing table. Um and we want to um essentially [have] sellers and buyers to be able to communicate uh virtually on the platform uh themselves. And may the best bidders win, as well as maybe the best uh sellers sell their properties as, as well. So we want to move to that uh to that online model and have that as a one-stop shop for both investors and sellers to sell their investment properties online.
Jake Aaron Villarreal: So as we head into 2024 as a company, um there there's growth for a lot of opportuni- there's growth for a lot of companies. Um sounds like you've built a great organization. Where [are] you at from a employee perspective in terms of the head count and where do you see growth in the future for your teams?
Tommaso Montagni: So we're really focused right now on optimizing our head count rather than uh growing our headcount. So we're a team of about 17, 18 uh not including us, and us founders. And we are uh really focused on, rather than hiring for our needs, automating for our needs as right now so that we can kind of make the company more efficient in 2023. And then perhaps start growing it in the end of 2023 or, or uh, or the beginning of 2024. Uh so we're not really looking to reduce the size but more uh grow the efficiency. As we require more uh, more people, we can do that through uh processes as well as through implementing some AI products uh such as chatbots to return, to answer our customers uh and automations just in general. Um automating things that perhaps uh we didn't do earlier on uh because we could, uh because we needed to grow. And now we need to optimize and make sure that when we do continue to grow, our count is done in an optimized uh fashion.
Jake Aaron Villarreal: I think that's a great response. You know, we uh went out and looked for technologies first actually. First we looked for process that could take companies and take their employees and optimize how their employees worked better. And there was a real good answer for that. So we went out and interviewed 200 Chief People Officers to understand how do you take your current teams to make them better, from C to B players, from B to A players. And there really wasn't one silver bullet answer to that. So we went on a search and came out with a couple companies that are in the AI space that can really take a look at how people behave when they work and monitor what they're, what they're doing on a, on a minute-by-minute basis. And then you could understand the habits of your A players and teach that to your B players and your C players. And it's been really fascinating to see how technology in, in AI specifically can help organizations that are not hiring but are optimizing their current people as well as their processes. So these are just some of the things that we're seeing from AI. From your perspective, how do you see AI uh in the future with your current company and just in general the impact it's giving?
Tommaso Montagni: So there are a lot of tasks that are, that are, that will never change in real estate, or not in the short term. And that is you know, communicating over SMS, over email, uh some you know outdated uh processes that will just have to remain. Like communicating with a title company in their own way they want to communicate uh rather than bringing everything online. And these are just things that are inherent to the real, real estate space. And I think AI can bridge that gap uh between those traditional processes to um you know startups like ourselves who are really trying to innovate and uh smoothing out those um uh those processes at least for us. Uh even though we need to uh um make sure that we go through all of whatever processes are already in place. So bridging that gap.
One example could be uh you know um direct communication or 24-hour access for our investors to ask questions about what's happening with the deal, uh ask questions about title, uh what's going on with the sellers as well, asking them when inspections will happen um uh how many people may show up for that inspection or when it's closing etc, etc. And we can really bridge that gap uh that would other, otherwise traditionally be done through you know just uh phone calls or uh a personal assistant basically essentially answering all of these questions. We can bridge that gap through using AI. And um uh I think I, I think that's the largest uh way that we can, we can facilitate uh kind of both our customers, our buyers and our sellers. Uh and then internally we can use that as well. So really uh laying out our, our processes, uh seeing what we're doing that's perhaps repetitive uh that occupies a lot of time, and seeing if we can use AI to uh um to streamline that.
One of the biggest things for us uh is data manipulation. Uh we've uh made a large push uh over recent months into uh moving away from manual data entry or data manipulation, data formatting, uh to using you know just maybe perhaps ChatGPT uh to manipulate the data and put it in the right format that we need for our algorithms, for our buyers, for our pipeline, for our sellers uh etc. And so that's kind of both internally and externally we've been able to use it, and we continue to try to push in that direction.
Jake Aaron Villarreal: I love that. Well you're on an amazing journey. I, it's really great to hear the innovation you're doing in the real estate market. Um I want to give a big shout out to you Tommaso for coming on our show and and joining us and sharing your experience. Um as you go forward, if somebody wants to learn more about your company, where do they go to find Rubik?
Tommaso Montagni: They go to rubik.com. Uh and that's where you can learn a little, a lot more about Rubik or just contact us directly. I mean we are uh an open uh company, anyone can reach us at any uh you know email, phone, always available. Especially as founders, we're available 24 hours. So just reach out to us, happy to talk.
Jake Aaron Villarreal: There you go. You've heard it straight from the co-founder Tommaso. Thank you Tommaso for joining today, really appreciate your time. And for all the listeners out there listening, it means the world to me that you've chosen to spend your time with us today. My name is Jake Aaron Villarreal signing off for now, but can't wait to connect with you all again on the next episode. Take care and enjoy, and until the next time we see Tommaso, good luck and keep plugging away.
Tommaso Montagni: Thank you so much, Jake. Thanks for having me on.
Jake Aaron Villarreal: Before we wrap up, I want to give a big shout out to all the entrepreneurs that have joined to make this podcast possible. And for all the listeners for listening, it means the world to me that you chose to spend your time with us today. I'm your host Jake Aaron Villarreal signing off for now, but can't wait to connect with you all soon on the next episode. Take care.
This show is sponsored by Match Relevant, a company that helps venture-backed startups find the best people in the market. And they do it in three simple steps. First, they sit down with founders to understand their story. Second, they tell their story into multiple candidate channels. And third, they schedule interviews within 48 hours. Find us at matchrelevant.com to learn more about how we do it.
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