Surecave: An Exclusive Interview with Founder & CEO Louie Baugier
In this exclusive Blog Shark Tank interview by Quinn Donaldson, our guest- Louie Baugier, CEO of Surecave, offers exclusive insight into his thoughts and journey as an entrepreneur in the real estate technology space. For those of you looking for one man’s blueprint to constructing a growing business while having a day job, this is the feature for you.
Through his trials and tribulations as a founder, Louie gives us an intimate look into how today’s entrepreneurs are formed and evolve both professionally and personally through their passions. Enjoy!
Quinn: For our next installment, I Quinn Donaldson am sitting here with Louie Baugier.
Louie: Excellent pronunciation.
Quinn: Thank you, thank you. And he is the CEO of his own company called Surecave. They are a next-generation cloud platform for property managers and he got his start right here in New York City.
Louie: That’s exactly right.
Quinn: Louie, thanks for joining me man.
Louie: Of course, and as an avid podcast fan, I am very happy to now be on the medium first hand with the one and only Quinn Donaldson.
Quinn: Please, the honor is all mine.
Quinn: So I told Louie a little bit about this [beforehand]. He’s actually our second installment of our Entrepreneur series. And for this, we want to get a little bit more into the mind and actual life of an entrepreneur vs. just the typical “how you got your start” “what’s your business like” because Louie has done a few pieces on that himself and he’s had some success. But I think it would be great to get a perspective the mind of an entrepreneur. Actually making that jump from your typical job that you see most people in into making the leap taking that risk.
Unfortunately, I am going to start with more of a typical question. Give me a quick 30 second on what Surecave is for those people that don’t what it is and just a few cliff notes on what’s been going on lately.
Louie: To give you the full backdrop, we started Surecave - and this is perfectly emblematic of the life of an entrepreneur to be perfectly frank – we started off as a property management platform. The property management platform essentially did all the basic rental processes, which is processing rent, maintenance requests. Really some of the boring stuff you would expect to be able to do as a renter in 2019. We’ve pivoted into a product that we’ve dubbed Vero. Vero is a much more innovative, exciting solution that enables you to apply for a rental apartment much more easily than what is the status quo. The justification for that pivot is simply looking at the competitive landscape, understanding where the margins are, and seeing before the rest of the market that A) the property management space is incredibly crowded; margins are shrinking to zero. And we had an opportunity to create a product with Vero in a way that was 100% differentiated, exciting, much more of a point solution that filled the real need of a large enterprise owner-operator, property manager, or broker.
So what we do is we essentially link a person’s bank account into that rental application for them to completely eliminate the need for a manager to essentially, completely absolve the need we’ll say, for third-party documents, which are bank statements, pay stubs, employment letters. We’ve linked that person’s bank account and we have an algorithm that understands what their transaction ledger is. We essentially scan their direct deposits to understand A) where their paychecks are coming from, for what amount, how often; the frequency, the periodicity, the average, the maximum, the minimum. So that somebody says “Ok, great. Quinn is employed by X person, he makes Y amount, and this is how often he gets paid, etc. so that I can say I feel comfortable with giving Quinn access to this apartment”. We then send him the ability to execute a lease on his phone and he’s good to start renting.
Quinn: That’s very interesting. It almost sounds like the algorithm itself or the way it’s setup, it sounds like it can understand – since we are so ingrained and so wired to our mobile devices, and that continues to accelerate, it almost understands the person themselves because the more activity they have through their bank account, through their mobile device, the more data they are feeding into it, you’re kind of able to get a better read on the person and actually identify who they are and potentially who they are as a renter. So it’s almost as if it’s an identification software in and of itself. Maybe I’m making too big of a step there -
Louie: No you aren’t. I think generally speaking if you’re a landlord and you’ve got 2 apartments and you got 4 different applicants, who are you going to decide to rent it out to? You want to understand who this person is, which includes facets about this person that’s not just financial, but also from a credit standpoint, from an educational standpoint, from an employer standpoint. There are a whole host of different things that are qualitatively and quantitatively relevant in that decision process that speak to our product. So I think that as an entrepreneur, you don’t build a product for the sake of building a product. You build a product to address a problem first and foremost that you need to study and understand better than anybody, such that you create an innovative solution.
Quinn: Right, well the definition of a startup and being in entrepreneurship is going into uncharted territory without the certainty of success. That word innovative is really important because a lot of people think they have an idea, their own fresh idea, but sometimes it’s really just an alteration of what’s already out there. But it sounds like you really established a niche in the rental space and seems like you have a taking-off point for other applications of your software as your company evolves a bit.
Quinn: Before we dig in to you personally, why don’t you tell us a little bit about some recent successes that you had with Surecave in the last 6 months or recent developments in your company, the market, anything that’s really excited you lately.
Louie: So when you think about a startup, you can segment it in a couple different ways. Fundraising; how are you going to keep the lights on? Business development; what is actually justifying the product market fit such that you can keep the lights on. And ultimately, who’s driving the actual vision. So from a team standpoint, we’ve added a head of product who is an absolute stud. We could not be [happier] to have Kevin Clark on the team, who is a former banker from BofA, Dartmouth grad.
From a fundraising standpoint, we just closed our largest investment to date.
And then from a business development standpoint, we’ve had some huge wins that are way beyond our paygrade in a way that’s incredibly validating of what our vision was to begin with. So I think generally speaking when you put all three of those things together, you get to a place where you can really start catalyze the business plan in a meaningful way and again begin to punch above your weight class.
Quinn: Sure, and being at the center of all that, you have the best perspective on where the company should be going and who you should be partnering with, what kind of people you should be bringing on. And I’m sure you haven’t made all the right decisions along the way, but it sounds like you’ve made enough right decisions to get your company where it’s at and have another round of fundraising from an investor that sounds like they’re invested in the space already. So it’s good to have someone who understands and believes in your vision, which is something to definitely attest to.
Louie: It was incredibly painful. And we had to just make do. That was the story of our lives. The first investor that I had essentially looked me in the face and said “Okay I’m in for $160,000.” And after $32,000 – because this one of my first mistakes as an entrepreneur, not asking for them to fund it up front. We essentially set up milestones. Milestones I had to hit in three months; I hit them in two weeks. Inclusive of funding, I told him I’m going to have to raise an additional $30,000; I raised $100,000 in two weeks. I was like, alright I hit all my milestones, where’s the capital? He goes, “I’m not funding it, I don’t care.” And I looked at him and I said “That’s not part of the deal.” He goes, “Well, that’s my deal.” and walked away.
Louie: And that was it.
Quinn: You had it in writing and everything, he just walked away.
Louie: Had it in writing, had it in writing. 100%. And I was just sort of made to hold the bag there. So at that point, you understood okay, this isn’t kindergarten anymore. You gotta put up or shut up. And what was I gonna do, sue him? Probably not. What was I actually going to do is move along the lines of just kind of pick up and go and move on to the next person.
And that’s the definition of being an entrepreneur, is just kind of rolling through it and not getting hung up on the no’s that you’ll inevitability get over and over and over again, developing hard skin, and understanding that as much as you think your special, your idea’s special, your baby’s beautiful, nobody really cares. It’s all about, “What can you do for me?”. And I think that aspect of persistence and that notion of character and having that ability to preserve through that hardship is really what defines a good entrepreneur versus wannabes.
Quinn: Sure – and that’s a great example, that story right there. I personally never heard of anything like that happening to a CEO where the guy just straight up – he really just straight up just said, no screw you I’m out of here?
Louie: That’s exactly right. Keep in mind, I’m a New York City (NYC) real estate professional. When you work in NYC real estate, the game is completely different. So my investors are typically NYC real estate investors, or NYC VCs. We’re not talking about people in, wherever. This is cut throat. This is, you gotta be the best of the best. You have to know the ins and out cold. And if you don’t, people sniff it out very quickly because they’re dealing with the best of the best.
Louie: So you need to exceed, and your product also need to exceed – you need to be very concise in terms of what the value props are right from the onset. And obviously what you can do for their investment.
So when you think about it when you ask me for money, what does that mean? I‘m gonna give you $50,000. I’m gonna give you $100,000. What’re you gonna do with it? Who are you?
Louie: What’s your vision? So unless I understand you fundamentally as a human being that you can actually execute on what you say you’re gonna do, I don’t care. I don’t care how successful you are, it doesn’t matter, it does not matter. For me, what matters is do you have the fire in your belly. Are you able to say I’m hungry, I’m gonna work my tail off to get this done? And if the answer’s yet, I’m gonna take a bet. But there’s gotta be a connection there where somebody feels comfortable making that bet. And to have that, you have to have some intestinal fortitude.
Quinn: You kind of rolled into one of the questions I wanted to ask you – how do you balance that want to make your own baby, your vision, your company the way you want to make it, but you also have people on the outside you have to please, right? To keep the lights on, to keep things running.
How does that weigh into your decision making as far as trying to make the company how you want it to work versus having the outside influences that really don’t have the same motivations, or not all the same motivations, that you do?
Louie: From an outsider investor standpoint, they understand that look this is a startup; they’re educated investors; they don’t go into this blind. They understand the risks; they understand the rewards. For them, it’s much more hey I want to take a bet on Lou, and I’m gonna see what he can do. And in the process, there may some bumps, there may be some bruises, he’s gonna make some mistakes. But it’s part of the course.
So in terms of outside influence, you want to leverage your investors who are typically a lot smarter than you are, as much as possible, to get their feedback, to bring them into the fold. You don’t want to keep them aside. I love getting on the phone with these people and asking “What would you do in this situation?”
Quinn: Right. Well they have a vested interest in you, right? They want to see you succeed, and part of it is, you have a decision in the people you bring in too. It’s not like the one investor you meet with is the only guy that’s gonna be interested in you.
Louie: Right, so the incentives are aligned there and I think that means a lot. But I also think that the reason that you invest in a company like Surecave is to see the ride firsthand, right? From the first row; what’s it like? Can I get his monthly summaries? Can I get his quarterly updates? What is he going through? How can I sort of jump in and help? Because a lot of people who invest in businesses want to be proponents. They want to help you succeed in the process they want their investment to succeed, but it’s much more human than that. Where people are like, “I care about what Quinn thinks” or “I care about what Quinn feels” so I want to put myself in a position where I can be beneficial for the business. And that’s the type of people you want to surround yourself with.
Quinn: Sure, and it’s not always the people with the deepest pockets, or the only ones that are out there on the table. It’s about finding the right relationship with that investor as well.
Louie: If you’re an entrepreneur and you’re just starting out, the value of a strategic investor is exponentially more than just stupid money.
Quinn: Let’s talk a little bit about some of the first investors. You told us the story about one of your early investors kind of screwing you over already, but maybe talk a little bit about those initial steps towards going from your job in corporate to ultimately starting Surecave and getting to where you are now. Talk about some of the key pivotal moments to making that transition. Maybe some of the first people to invest in you and your idea.
Louie: When it comes to the first investor, you [have] a thought, a vision and you bank on the idea that they resonate with it by virtue of them feeling the problem in a way that’s substantial. And that happened in a way that was meaningful at the important time. And I think that I was able sort of parlay that with something that was even more substantial by virtue of me saying hey look, this person believes in me, you need to also jump into the fold to ensure that we have the necessary capital to execute on what we think we need to execute on, provided the milestones and what our goals are at that point in time.
Louie: I think once those items were laid out conclusively, coherently for other people to say okay this person is driving it, he’s got a business plan, this is their pitch, this is the person who’s actually driving this mission, I feel comfortable taking that bet. It became a lot easier to say okay great, I’ve got this steady job, collecting a paycheck every 2 weeks, I feel more comfortable now making that jump.
But you got to keep in mind that I came from a place where it was the biggest corporate of corporates in the world. So JP Morgan, you come in, you work your tail off, you show up at 8 and you leave at 2 in the morning, and you go back to work at the same exact time. So how do you find time to build a business in between then and essentially the morning? It becomes something that is much more of a passion more so than anything else, where you fall in love with it. You figure out ways in between the day where you can spend time to bust your tail and put the pieces together, put the decks together, send the emails out that you need to, be scrappy, again portray and communicate a vision that solves the problems you’re trying to address. So that happened progressively, I think you get to a point where you finally hit the status in the problem where you have to take the jump. And if you don’t, you’re selling everybody short –
Louie: - you’re selling your investors short; you’re selling yourself short. And it gets to a place where you’re not comfortable. And so when I made that jump, I felt…it was very stressful because nobody says to themselves “Screw it, I’m going to leave this beautiful job with people that I really enjoy working with to do something that has literally the opposite of a framework or path of success. It’s gonna be a lot harder, a lot more stressful, –
Quinn: It’s not as shiny and glamorous as entrepreneurship gets portrayed in the media. Whether it be through Shark Tank or through great success stories. I think one you can point to is the CEO of Ring, right? The guy sold his company for $1 billion, didn’t really have to run it that long. Obviously they [the media] want to push that a lot, but that’s not really the case for a lot of people. And it’s not all glamorous. Yeah you’re working for yourself, but you’re the one who has to support yourself in every single way, not just yourself personally in keeping the lights on in your own house, but for the company and the people that are working for you too.
Quinn: And as you mentioned, you were working on this while you were still at JP Morgan. And I think that’s something that a lot of people out there, maybe who are working a 9-5, or a 9-7 – I mean you were working an 8-2, right? You can find a way to get it done if you’re passionate about it, right? So I think that’s something that can really resonate with a lot of people.
How long did you really do that for? Did you do that a long time before you ultimately just jumped into this full time?
Louie: Yeah, did it for a full year.
Quinn: A full year, wow.
Louie: You get to a place where, again, it’s what you wake up to do. You couldn’t be more excited to work on it, especially when you start showing progress, and you start to see that validation, you understand you’re feeling a real grab. The people that respond and say wow this is really cool, it drives you because all the sudden it’s your baby, your baby’s the most beautiful thing in the world. So you keep saying to yourself wow this is so special, this is so special. And you keep working, working, working until it’s all you think about. Until you actually can’t think about anything else and you gotta take that jump.
Quinn: Sure, sure. And I’m sure you get to a point with investors as well where, you might have alluded to this earlier, where you feel more responsible to make that jump. When the capital’s accumulating, and the idea’s growing, I gotta make a decision one way or the earlier.
Maybe talk a little bit about the support system you had around there when you were contemplating this decision and really managing this lifestyle, right? Because you were in this phase for you said a year. But maybe talk about some of those initial moments before you made that ultimate jump and factors that weighed into saying alright, this is going to be my path and I’m going to leave this other part of me aside.
Louie: So what went into me taking that jump – So essentially what I thought was look, I have everything I need to execute what I need to execute to make this thing successful. If I don’t do that, I am not going to make this story a good one. So it was very simple, right? It was do I want to succeed or do I want to fail? And at that point it became a very black and white, sort of binary decision. So in terms of the amount of time I spent working on it, it took a long time. But these things don’t happen overnight. So if I started this business in 2016 and we’re now in 2019, a lot has transpired to change the face of the business from what it was originally to what it is today. And I think that we’re a lot better because of it, but there was no way to actually speed that up in a way that was meaningful, such that I could have said “I wish I had done this, I wish I had done that”. There were tons of things that I wish I could’ve changed.
With that said, I think that there’s a lot that I’ve learned in the process of those mistakes that I think were incredibly more valuable than anything I could’ve learned or gleamed or read in a book, such that I am where I am today.
Quinn: Sure. Well I think that one other challenge that people can kind of think about is not just the time commitment as well, but trying to go out and find a way to fund this thing, right? It’s like okay, I have this idea, it’s going to cost X, Y, and Z – maybe they don’t even have that figured out yet, maybe they just have it kind of ballparked. And it’s like “I don’t even have the money to put it up myself. How am I going to go convince someone else to throw money into this or someone to come in and help me just build out this vision I have in my head?”
How did you kind of go about trying to essentially just take this idea and then getting the resources and right people around it? There’s a lot in that question, I’m aware, but what were some of the key challenges in there in just kind of getting it off the ground and just trying to battle through those initial phases of getting into a position where you can make this a real thing?
Louie: So I think from a capital standpoint, it’s having a rich uncle, right? It’s a question of finding who is an investor? And what does an investor entail? So an investor entails someone who has been an entrepreneur themselves, who’s got this entrepreneurial streak, who wants to support a younger person who wants to execute on their vision. And there lots of people that you meet day in and day out who have that. It’s just a question of talking to people and then being able to communicate that thought and vision in a way that makes sense.
And from a team standpoint, the way I did it was I just thought about who my smartest friends were and I just said “Hey can we grab a beer and talk about it?” And the way that worked was very straightforward: This is the problem, this is how I want to solve it, what do you think?” And when you can do that well, and you’re able to align people who are really smart behind you and you get them to buy in a way that’s motivating for them professionally, then you’re golden. Then everything sort of makes sense.
And then they bring their own network because they’re smart and they’re successful to the table as well, and everything’s great. It’s not as abstract as I think a lot of people make it. It’s just what does it take to get to a place where I can have a minimum viable product? So just something that is very basic and straightforward. How do I get there?
Well you want to make sure you have really smart people supporting the vision. How do you do that? Well you have smart people around you that you can talk to, at least initially on an informal basis that you can communicate with.
Quinn: People you can kind of think out loud to.
Louie: Yeahhh – just do exactly what you would expect when you’re sort of initially just kind of opining on a thought, right? And when you that well, people get excited, and then you’re able to sort of move on to the next step, which is okay well now that you’re excited about it, here’s how I think we can execute. And you put the pieces together. And once that happens, once that team is built, you go back to the investor and you say okay great, this is who’s driving this mission and this is why we think it’s really important for you to take this jump.
Quinn: So a lot of the key things that I’m getting from our conversation is being able to tell a story. I think that is really, ultimately, one of the more important things – I’m not sure if you think it’s the most important, but definitely being able to relay a story that can resonate with people that aren’t inside your own head 24/7, right?
And then some of the other things – just being resilient, being able to battle through adversity, that’s kind of typical, but it sounds like you’re really harping on this story aspect of being able to relay your vision in a way that other people can kind of grab onto it as well.
Louie: Yeah I think the story is critical – the story is important because that is a traditional medium of communicating across generations, right? So when you think about it, as an entrepreneur, people who have wealth are not typically your peers. So you need to be able to tell something that’s compelling – so think about it this way, in the context of real estate technology, if I’m a 22 year old renter, how am I going to talk to somebody who’s 45 to 60 years old, who’s been a home owner for the past 35 years in a way that’s meaningful relative to the problems of the 2018 to 2017 renter space. So the way you do that is you say “the system is broken, and this is how it’s broken, this is how it can be fixed, and this is what it means to the people that care.”, right? So that’s what I mean when I say telling a story.
And then from a team standpoint, you have to have top quality players who say this is how we are going to essentially work behind Lou, work behind Quinn, to make this thing a reality. And if you have good And then from a team standpoint, you have to have top quality players who say this is how we are going to essentially work behind Lou, work behind Quinn, to make this thing a reality. And if you have good quality people, which is literally the end and be all of a team that makes a vision successful, then I think you’re in a much stronger position to make your case as to why you should exist in the first place.
Quinn: Sure…I think that’s as value as anything, especially when you’re first starting out and you’re trying to at least just get this thing off the ground and see if it’s going to be something that’s worth pursuing further.
In the last couple seconds here, don’t want to take up too much more of your time. If you had to take all of your experience over the last three years and try to sum them up into two to three takeaways, for someone who’s out there listening who’s coming up with a million excuses as to why to NOT start something, right? Or they have an idea, but they don’t really know how to go and take the first step. What would you say are two or three things you would say to that person to try to get them to either thinking more critically or kind of take themselves more seriously as being a potential entrepreneur and pursuing their visions?
Louie: So are you familiar with the Allegory of the Cave?
Quinn: The Allegory of the Cave. I don’t believe so, no.
Louie: So Plato essentially postulated that we potentially could all be living in essentially a version of a simulation that Elon Musk, for instance, thinks we live in, which is we’re all strapped down and what we see, what reality is, the shadows of a fire that’s going on behind us.
So all we know, as strapped down individuals, and we’re very abstract at this point just run with me for a second -
Quinn: Sure, okay.
Louie: - is the shadows of a wall that we can see just by virtue of us being strapped down. I think to a certain degree, and I don’t mean to be hyperbolic, when you become an entrepreneur, what you do is you release yourself from the shackles. You get up and you walk outside the cave to see the rest of the real world. I think that a lot of things come into light from a psychological standpoint, from an emotional standpoint, from a professional standpoint, that are incredibly invaluable, that are to say rewarding is an understatement. I think that you learn a lot about yourself in so many different facets that I think is, again, just a gift.
I would always tell people take that jump, even if you don’t succeed, which is going to be the high likelihood for everybody that doesn’t succeed. And by the way – I have no guarantee of success. I am not sitting here thinking to myself that I’ve succeeded whatsoever. There is still a lot that I’ve learned that I think is incredibly more valuable then had I stayed in my corporate job just doing what I’m told to do. So I think generally speaking, the gifts that you glean from being an entrepreneur are far beyond the economic potential, but also the professional and personal development you get from it. And it’s a maturity, it’s an understanding of responsibility, and generally speaking, a sense of altruism, that I think really defines who you are as a person that you bring to any other relationship to your life that is 100% differentiating from a lot of your peers.
So anybody who’s thinking about it, take that jump. Do yourself a favor. Live a little. You will not regret it.
Quinn: Sure. Wow, that was incredibly powerful. I saw you come up to here. That was awesome. I’m actually going to look into that when I get home. I’ve heard versions of that, I’ve heard about Musk at least, kind of talking about that. But that sounds incredibly liberating.
Well, kudos to you. I know this journey isn’t an easy one, and it’s certainly not over. And you and I have talked a little bit before [about how] it doesn’t get a lot easier. But it sounds like the rewards that come from it personally and, when you see milestones in the business, professionally – it sounds like it’s been well worth it so far. Louie, thank you for the time. Really appreciate it and rolling with me here. And thanks for being on this segment.
Louie: Of course, thanks for having me, Quinn.