Propelling Proptech: Innovation in Real Estate RFPs

Yolanda Muchnik:
Today we’re chatting with David Barakchian, cofounder of Light RFP, a procurement platform for commercial real estate where property managers and developers can quickly find the best vendors for their projects. Get ready for a behind the scenes glance into a prop tech startup. David, welcome to the show.

David Barakchian:
Hi Yolanda, thanks for having me.

Yolanda Muchnik:
Thanks so much for joining us. To kick this off, can you tell us what experience or turning point led you to take the leap and found Light RFP? What gap did you see in the market at the time?

David Barakchian:
Sure, sure. So the inception story goes back to around 2018, actually. So I started an office in Costa Rica for a company called Kepler Group. So I was an associate director there at the time, and I had to start an office from scratch. I had to do 15 RFPs at once. I had to figure out the real estate, the lawyers, the payroll, the food, all in a new country where Spanish was my second language and there wasn’t really a good review system at all.

Even Google reviews or Yelp wasn’t necessarily a thing there. So from that pain point, having to do all these RFPs at once by myself with no context, I wish that there was a platform where I could just post my project, have vetted vendors, bid to win my work, have all the compliance details up front, the insurance requirements and all of their past work reviews, so that I can make a better decision and not have to do all of that. Picking up the phone, all of the, the legwork in the middle that I could kind of just cut to the proposal, do my bid leveling and go from there.

And so that was kind of the headspace that I went into business school at Columbia with, that I wanted to start a company to solve this problem, the arduous RFP problem. So while I was there, I met my cofounder, Carlo Dobrović. And when we both graduated in 22, we started Light RFP.

Yolanda Muchnik:
Excellent. And I also want to level set with our listeners a little bit, because when we connected there was this interesting difference in our industry terminology. And I want to ensure that our listeners here are all on the same page. So when you say you’re in commercial real estate, you include multifamily in this broader umbrella is that correct?

David Barakchian:
Yeah, absolutely. You know, we, although the platform can serve, you know, single family homes, single family portfolios, we mainly focus on multifamily and commercial offices. And so, yeah, we definitely consider multifamily to be a commercial asset type.

Yolanda Muchnik:
Excellent. Now, Light RFP coming out of the Columbia incubator, can you tell us a little bit about that incubator and how the community there is supporting your company?

David Barakchian:
Yeah, so once we graduated, there’s a place down in Soho called the Columbia startup lab, and you, you apply. It’s across all of, all of, the schools in the university, so the business school, the college, the engineering school, etc. And I think, I don’t know the exact number, but it’s essentially a one year co-working space, and it’s a really supportive community to really build your venture, get your venture off the ground.

And yeah, it’s been amazing kind of basing up there. They’re super supportive. And in terms of making intros in the beginning and in terms of. So, yeah, I would call that our incubator, even though it's more of a co-working space. And now we’re in metaprops accelerator, which is really incredible as well. And, and that comes with money as well, versus the Columbia startup lab, which is more of a nest for you to build your venture.

Yolanda Muchnik:
Got it. So as you’re developing your company, how does Light RFP enhance teamwork and communication amongst the stakeholders in the RFP process? And do you have any success stories that come to mind that you can share with our audience so far?

David Barakchian:
Yeah, yeah, absolutely. You know, it might be better to give an example from when we were building the product. So we met a Vice President at JLL and we showed him our v one, and he basically said this would be really good for one off projects like water tower cleaning or smaller jobs. But if you really want to scale, you need to build the platform to be very collaborative so that we can do RFPs across multiple buildings, so that a chief engineer in one building can answer an RFI, so that I can assign tasks to a property manager in another building, another state, etc.

And so we really built the current version of the product today to handle everything from a small, you know, let’s say sidewalk replacement might be a five to 10k job for a broken sidewalk, all the way up to replacing 50 ton HVAC units on the roof. So there, there’s really a wide range of RFPs that get posted to light RFP in any given month. But we handle both labor and materials. So one example was a, in terms of materials was a 1380 HVAC filter
RFP, where the property manager., yeah, yeah, they expected to pay about 25k.

And then surprisingly, once the bids came in, they ended up paying around 9k. So it’s really shocking. Once, once you really get to run a perfect RFP process, the cost savings you can find. So that’s on the materials front and then on the labor front. You know, we’ve done anything from a small $30,000 butterfly valve replacements on each HVAC system to larger security installations where, you know, the budget was around 800k.

We got it done for around 400k. The same thing in relation to bigger HVAC contracts. So I don’t, I don’t want to go, you know, I don’t want to give away anyone specific projects or anyone specific bids because confidentiality is important. But you know, really the magic moment is when you get those bids back. You know, instead of three bids, you get eight bids, you get just a better feel for a more perfect RFP process. And then you see the cost savings and that NOI goes right to your bottom line.

Definitely NOI improvement.

Yolanda Muchnik:
Absolutely. I can absolutely visualize the value there. In our pre-call, you actually mentioned there’s a new law in New York going to effect in 2025 that’s having a huge impact on real estate and property management companies. Can you explain this law and what your role as a platform plays in ensuring compliance?

David Barakchian:
Yeah, yeah, absolutely. So it’s local on 97, and essentially, if you have over 25,000 sqft, you have more stringent emissions guidelines for your building. And so if you don’t bring your building’s carbon footprint down to the level that the government states, you get increasingly higher fines year by year. And so what we think is going to happen is all of these property owners are, hey, they didn’t model for this additional cost, so it’s not like these capital improvements are in the budget and then b, they’re all kind of waiting to see if there’s going to be rebates, if they’re going to change the law, they’re going to walk it back.

So we’re anticipating some degree of essentially surge pricing for, you know, taking out oil burners and going to heat pumps and improving the efficiency of HVACsystems and things like that. So I think next year, a service like Light RFP, if everyone is trying to upgrade their buildings at the same time, it’ll help you to run a more efficient bid process. And hopefully find you the perfect vendor at the best price you can get at that time.

Yolanda Muchnik:
Definitely. And so, obviously, market conditions are making New York a greenfield area for you to continue growing your business. What other markets or regions are you guys actively exploring, and how does your approach need to adapt as you expand?

David Barakchian:
Yeah, so our database of vendors is national, and we didn’t expect it to go this way, but we would close a client in New York and they would send us to these tier two, tier three markets. So they would send us to Atlanta, Indianapolis, Pittsburgh, Philadelphia, the La. And so it really forced us to adapt and expand our vendor footprint.

And so essentially anywhere in the US, if you have a job, you can post your project, set up your site visit schedule, and well qualified vendors will come to give you a quote.

Yolanda Muchnik:
Got it. You know, it sounds like you guys have had a pretty smooth run recently, and I just know how hard startups, startup life can be. I’m curious, maybe can you share one or more of the significant hurdles that you guys have encountered thus far in the startup world and how have you overcome it? How are you actively overcoming it?

David Barakchian:
Yeah, so in terms of startup hurdles, I think the toughest part is definitely the first year. You know, once we really, once we met the property manager at JL, we mentioned his name’s Chris G day, things really started to go in the right direction for us because we could chat with everyone on his team. We had, you know, three class A buildings that we could work within, do four RFPs for, and really line up all the problems and smooth out every aspect of it.

Um before that, I think the biggest pressure is which direction to go. You know, until you have a significant client with a lot of potential, you can build anything. Right. But the biggest question is, is what you build going to work for the market? And so the, the biggest problem early on, you know, is you can build what you want, but you only have one angle on the world, right? So you want to get as many qualified opinions into your aperture as possible so you can find the common thread and give the market what it needs. And so, you know, I would say the biggest struggle is that initial phase when there’s lots of ideas, but you need to triage and pick the highest propensity ideas to go with.

Yolanda Muchnik:
Makes sense. And so what stage would you say your startup is currently in and what has been the most challenging aspect of reaching the stage? Going back to your question just now.

David Barakchian:
Yeah, absolutely. So we, we built the company slightly differently than I think most companies get built. So we raised our friends and family round. And our goal for raising that friends and family round there was about 250k, was just to cover our salaries, build the product, get to revenue, and then raise what would resemble more of a pre seed round from institutional venture capitalists. And so for us, we’re essentially going into what I would call the pre-seed round where we were in the metaprops accelerator.

We, we’re having an amazing time with the partners of Metaprop. We’re learning so much, getting great introductions, and, you know, also comes with our kind of first vc investment. So Metaprop, you know, we’ll always be so grateful to them. They’re the first institutional vc’s to believe in us. But yeah, so I would say we’re at that pre-seed stage, even though we’re kind of a more developed company. We’ve been around for almost two years now.

Yolanda Muchnik:
Excellent. And just coming off of a comment you just made, personal connection can be so important at the stage especially. And so I’m curious, have you attended any commercial or multifamily industry conferences recently, or do you have any on your radar for this year?

David Barakchian:
Yeah. So last year we attended Blueprint, which is a little bit more of like a tech focused conference in Vegas. I attended a multifamily conference in New York City a couple months back. But honestly, I need to, I need to step up my conference game.
I’ve been just so busy, you know, working on our current clients that I haven’t been able to hit the road. So I was in Pittsburgh two weeks ago at a 64 unit multifamily property.

You know, I was up in Boston this past week, so I’m traveling. But it’s more for our customers than the conferences at the moment.

Yolanda Muchnik:
Got it. Well, there’s more. There’s always time for that, don’t worry. So, going back to the operational aspect and reflecting on customer feedback, what has been one of the more surprising insights that you guys have received about light RFP and how have those insights influenced your strategy?

David Barakchian:
Hmm interesting. You know, one of the toughest parts of running an RFP process is coordinating the vendors. So it sounds so simple to just say, okay, we’re gonna have a calendar invite for site visits, and folks are just gonna show up, right? But folks don’t necessarily show up on time. There’s weather events. You know, it’s raining at the property in Pittsburgh today, so the roofers have to come at a different time.

They can’t send up their drones. There’s all this friction that happens that honestly scares off property managers from even doing RFPs in the first place. You know, they might have a recurring contract for landscaping or recurring pest, pest spraying contract, or, you know, they might just go with the guy they went with last time, even if they know he’s not the best price or anything like that. Just because it’s so tough to actually run a request for proposal process, we’ve put so much effort into smoothing out everything in that middle stage.

So, it's really an end to end vertical SaaS solution with a marketplace of vendors attached. So we help you to post your RFP as smoothly as possible. DM with vendors throughout the process, automate bid leveling, really just smooth out everything in the middle so you can post your project, get to the bids, and then even create the report that you can give to ownership if you’re a third party property manager.

Yolanda Muchnik:
Excellent. And so what would you say are some of the next big steps for Light RFP? And how do you envision your platform evolving in the next day? Five years or so?

David Barakchian:
Yeah, great question. So right now, we’re very focused on mastering what we call the core loop of the RFP process. So everything from the idea going off, you have a problem, to getting it posted, to getting your bids, to signing, all of that is done. So we have in browser contract signing DM’s with vendors, all the calendar, scheduling, but that’s where it stops today. So you sign on the dotted line, everything is stored, all the compliance details are in the platform, and you review the work once it’s done.

But that next step is project management. So if it’s a one year contract, two year contract, if it’s, you know, a heavy development contract where there’s draws, let’s say you give 25% deposit upfront, and then X has to be done, that dictates 50%, then you pay the 50%, 25% more. Whatever the case, all of that project management, that Gantt chart of the timeline, is something that we talk a lot about at Light RFP, and we think maybe we’ll end up tackling that one day as well.

And then also the payments that go with that as well. So right now, we’re not really tackling the payments. However you pay your vendors is up to you. But I do think there may be an opportunity to smooth out some friction there and then you can never have good enough dashboards for asset managers. Asset managers always wanna see as much data as possible across their portfolio. So right now, we’ve been super focused on solving the problems for the property managers and the vendors, but eventually that kind of C suite executive level, we’ll probably turn our gaze toward them and help them as much as we can too.

Yolanda Muchnik:
Interesting. I look forward to following along and seeing some of these visions come to fruition. This has been super enlightening to take a look at all the different stages and all that goes into really starting a prop tech company. For those invested in the future of property, technology and entrepreneurs who are looking to enter this, what advice would you offer them based on your own experience to date?

David Barakchian:
Yeah, so looking back on it, if we had not met the Vice President at JLL that, you know, really bought into our vision sooner, we could have gotten to this point a lot sooner. Right? So for anyone that wants to start a startup, it will be so much easier once you, if you can go into it with your first customer. So if I was doing it again, I would send out a hundred emails. I would say, hey, let’s have a bunch of coffee chats.

You know, I want to build this. What do you think? Does this work? And then if you find that early adopter, that’s like, yeah, come into my house, let’s have a meeting. Here’s my employees, let’s build this together. That’s justnna be so much more grounded in reality and it’ll make it a little easier for you to bring it to a vc and say, hey, this is what we’re doing. You know, I think that, I mean, that is the customer discovery process.

A lot of startups, I think, get off track because they don’t ask people to pay. I think one thing that we did that was smart upfront was that we said everything we do has to have a dollar attached to it, right? So that we don’t get a bunch of folks working with us for free, and then we start to charge and then the whole business goes away. Um, so yeah, I, it might be good to just chat about our business model as well.

Um, so when we started the company, um, we charged 5% to the vendor side, um, which was pretty high, actually. And so once we got into metaprops accelerator, we had a conversation with them and we decided to move it down to 2%. So there’s two ways that you can work with Light RFP. It’s completely free to post your project. You can post it, get your bids, sign on the dotted line with the vendor, and you don’t have to pay anything.

The vendor pays 2% fee to light rfP. So when you sign in to the platform, their credit card gets charged 2%. So that’s the marketplace model. And then some of the property management companies we work with prefer a SaaS fee. So they would rather just pay on a cent per square foot and then bill it to the property owner so that they could do unlimited RFPs. And so that’s also an option as well. But for us, we were, you know, very stringent where it was like, look, if we’re doing something valuable for you, if you’re saving 25% versus your budget, you know, that’s including the 5%, right? So early on that was our attitude. And then now that we’re more in growth mode, we’re happy to take the price down and just continue to grow.

Yolanda Muchnik:
Excellent. Thank you for walking me through that. David, thank you so much for taking the time to chat with me today. It has been fascinating to hear about your journey and creating this proptech company. I’ve never worked at an early stage startup and from where I sit, it sounds like a lot of hard work and I can tell you’re incredibly excited and believe in the value that you’re delivering to property management companies and the real estate industry as a whole.

For our listeners, we will have David and Light RFP’s information on the podcast page. And David, best of luck to you guys as you continue growing your company.

David Barakchian:
Thank you so much.

Yolanda Muchnik:
And folks, hold on one moment for the Good News.

Good News

Charles Buggs:
Hello, thank you for joining Good News. And for the record, Good News can be anything. A successful initiative, a fantastic resident review, even a shoutout to a work colleague or friend. You can even go ahead and shoutout yourself. It’s your time to shine. There’s enough stress, enough anxiety in the multifamily industry, and we want to shed a brighter light on things as they happen.

So how do you submit your Good News? It’s really easy. Go to the Good News show bio on any platform you’re listening on or our podcast page at gozego.com/podcasts and click the contact link on the show. You can leave a text or voice message for any Good News that we can highlight on the show.

I want to say a sidebar here too, just for everyone to know. We will have a good amount of anonymous submissions which we enjoy, but please don’t be so shy. We like to get a few names in there, so if you want to go ahead and drop your name, we will greatly appreciate it. We’ll lightly shout you out for your trouble. Thank you guys so much for listening. Now it’s time to get into some good news.

Our first Anonymous is a write-in, text-in, call in, all the above, I want to get into is a pretty big deal. It says I’ve been in property management for three years and I just took my star program RD515 Rural Housing and now I have my star certification with my new knowledge to help tenants. Hey, that’s a big deal. And we’re so happy that you took the time to get extra education to better yourself for your tenants. Big time.

The next two folks, really easy but big deals. Two folks got promoted. Congrats to both of you.

Our next two Good News updates are personal. The best thing that has happened to me this year is I paid off my card in full. Wow. I have worked so hard to make this happen in less time than agreed. I hope to vacation with my new cushion. Congratulations.

And the next one is I also started wedding planning. Big congratulations.

Moving along here we have another submission from Anonymous. I was excited to get the percentage of delinquencies of one of my portfolios down to 1%. Let me say that again. I was excited to get the delinquency down on one of my portfolios to one percent. Timely payments are so important to our organization and having people use Zego for online payments helps us so much. Also, the new option of split payments is a game changer for roommate situations. We appreciate the shout out, not required, but we definitely appreciate it. And thank you so much for calling out the fact that we’re helping out roommates too, because we feel that’s becoming more normal in the rental space. So as innovation goes, we try to innovate and we’re happy we can help you.

The next one is I passed my broker’s license exam the first time and became the company’s broker associate and now I’m over a property management for my department. Hey, taking over an entire department, taking that extra time to get extra education, you’ll hear me say that a lot because I think it’s so important for you to look at your job as a career and the only way to do that is to educate yourself on that. And if you’re doing that and bettering yourself and making yourself more marketable and usable to your company, that’s good for yourself and for the residents. So thank you for bringing that out to our attention.

The next one is, I received my CAM license platform and I was moved to assistant PM platform. Very, very happy to hear about both those big moves in your career and we hope to hear more from you as we go down the line.

Alright, the next one is celebrating my daughter’s new home improvements and celebrating my mother’s 80th birthday. And shout out to moms, 80 is a big number.

The next one is and this isn't anonymous, this is from Allie. Allie wrote in this say my property recently won not one, not two, three, but four awards from Opiniion. We were voted the top four of the top ten awards for Best Management, Best Move-in, Best Maintenance, and Best tours. Hey, that’s a big deal. So four awards for anybody let four awards for some of the most crucial resident touchpoints you guys are having is a big notch in your belt.

So I want to say thank you to everyone who submitted everything and we just are so happy to get this Good News because as I said before, stress, anxiety, all those things come with the job. So when we can shout out something positive we want to. And as I said before, we love all submissions, anonymous and the like. But if you want to drop a name, we would love to shout your name out in a very modest way. So please, if you haven’t already, go ahead and reach out to us.

Thank you everyone for listening. It’s been a fantastic week and come in next time for some more Good News. Bye bye.