Being Your Own Abettor | Daniel Cunningham from Leonardo247

DISCLAIMER: Below is an AI generated transcript. There could be a few typos but it should be at least 90% accurate. Watch video or listen to the podcast for the full experience!

Daniel Cunningham 0:00
If you hire somebody, and those early days, there’s so much time and effort that goes into getting getting that person up to speed that if you if you have to let them go, because they’re not working out, it’s it’s, it’s, you’re worse off than he had you not hired anybody.

Alexander Ferguson 0:22
Welcome everyone to UpTech Report. This is our Founders Journey series, I’m excited to be joined by Daniel Cunningham, from based in Redondo Beach, California. He’s the CEO of Leonardo 24/7. And this is part two of our discussion, you should go back and check part one to hear more about their product is an integrated workplace management system, almost a whole new category that you’ve built in an area, which has its challenges in itself. So I’m excited to dig into your story. This, let’s start by maybe looking even before Leonardo, you built Leonardo, before eight, nine years ago, how did you get to where you are today.

Unknown Speaker 1:03
So I personally, and I think this can be proud is probably can be said of many entrepreneurs, I’ve always been a problem solver, I’ve always been seeking ways to do something a little bit better. I’m the very first job. So I don’t tell the story very often, but but my very first job out of college, I’m an engineer. So I’m a civil engineer by education. And my very first job out of college, I was working for a construction company in the Bay Area, and heavy industrial construction company. And our very first job was we were installing these these giant heat exchange bundles in a in a in a power plant of in Northern California. And these bundles were flown in from Germany, and they flew a guy over who was who was an expert how to install them. And he said you have to, you have to account because these are so unwieldy, they’re 20 tons each, and you had to shove them into these, these, these, these heat wells, these heat exchanger wells. And he’s like, this is gonna take a couple, couple three days to get each one of these position and put in place a budget for that. And and I was put in charge of figuring out how to do that. And I invented a method, which was really simple. But I invented a method to sort of put some metal plates on the floor and some pins in there, so that we could just kind of SLAM these, these, these bundles into these pins and immediately get them a line and shove them in. And what he was saying would take three days took took about three hours each. So I save the company a bunch of money, and the guy from Drew was like, This is how we’re gonna do this forever. And, and I remember afterwards, the the reward that I got for being innovative and coming up with that was nothing was absolutely nothing. And revelations. Yeah. And I think that that flipped a switch inside of me that’s like, look, I find that I’ve come up with clever things that make somebody’s life easier. It sure would be nice to be the recipient of the accolades from that, whether they be personal or financial. And I think that sort of set me on my journey and this is the company Leonardo is the fourth company that I started, third company, last company started living homes was a Vinod Khosla funded company. It was building prefab modern green homes. They’re still around, they’ve they’re now come to call plant prefab, which was the very first Alexa funded company. So yeah, so that’s sort of that’s that’s my before Leo. But what actually, what actually led to the creation of Lena 24/7 Was I was, I was working for a developer here in Los Angeles. And I told the story in the last segment is okay, if I recap it a little bit. People

Alexander Ferguson 3:48
want. Yeah, and for those that didn’t catch the first one, yeah.

Unknown Speaker 3:51
Okay. So I was I was working for a developer here in Los Angeles, and I had started a property management company for them. And we had a high rise building in downtown Los Angeles, that lost hot water to the entire building 322 units. And it was a very expensive event, because we had first of all, we gave rent credits to everybody. But then we had to had a boiler manufacturer and expedited helicopter to the roof. And, and the owner called me in his office and said, Look, how did this happen? And you’ll turns out that the boiler hadn’t been maintained the ceramics on the inside had a crack and then and then the fire had actually literally melted extra to the boiler and and at that point, what I realized was look are we rely on our vendors to to to do their jobs, we don’t really know what they should be doing. And so we want to make sure everybody in the organization was aware of this thing like, hey, you need to make sure going forward that the vendors check the ceramics on the inside the boiler, but they’re trying there’s a whole there are a whole slew of things of best practices that we really didn’t have much confidence. We’re really We were happening because, you know, we had a, we, we had some best practices that were that were expressed, we really were relying on the community managers and service managers to kind of be no at all. And remember it all, and nobody can be an expert in all of the different things that are wrapped into property management. So it started me on a on a process of saying, Well, first I need to, I need to figure out what all of these things should be, I need to gather together the daily, weekly monthly things that are critical to being a good asset manager, a good steward of the asset. These are all like proactive things, you know, we we kind of already, we had accounting platforms that could manage the leasing and the residence cycle, but there was nothing really to manage the asset cycle. And so initially, I thought I would write a book out of that. And I did write a book. But But what I realized before we went out and started marketing the book, and I think wisely, because I don’t I’m not sure that would have been a New York Times bestseller, operator property. Yeah, what was the realize was that we had, what I’d done was I put together a process that could be very easily translated in software. So that was the birth of lean 24/7 is a way to, to, to capture that institutional knowledge so that you wouldn’t have boilers breaking down again, because everybody would know how to maintain a boiler because Leonardo would be giving that guidance, based on a property’s unique amenity and equipment profile, geographic profile, where they’re located, Leonardo instantly generates a year’s worth of daily guidance that covers preventative maintenance and risk management and marketing and leasing, and a bunch of things that, that community managers you kind of assume that they’re doing. But most many of them don’t know, to do it. And, and this, this provides consistency, accountability, and transparency, because now there’s, you can see, it’s very clear what the expectations are for those folks on site, which they which is good for them. And as they’re doing these things are completing it you have, you have regional managers and executives in the company or owners that can see that that’s what’s happening. And that takes it off their plate. So now they’re no longer worrying, worrying about the minutiae. We’re, we’re handling that for them, we’re giving it we’re telling the inspections to do or the the process they need to follow or the workflow that they need. And so we’ve got that will let you know, when you have a problem. And now those conversations, at the executive level, can focus on things that make them money, like, like rent, and marketing and leasing, and that sort of thing.

Alexander Ferguson 7:41
So there’s two thing that comes to me when I hear this than a second, third time actually hearing this story. First, you’re really good at telling a story. And that tells me the importance as the CEO, the founder, to know your story, the founding of it, and why you exist and be able to tell that really well every time anywhere. That makes a big difference. I imagined in both being able to grow the company get the right team members, maybe funding and customers and clients. I don’t know if that resonates with you, like you just know your core story to a tee?

Unknown Speaker 8:12
Well, I think I think one of the differences between a founder led company, and one that has a you know, a CEO for hire is I think sounder lead companies. They come baked in with a passion for the solution. And I think that’s what you’re getting for me, you know, is, I know this problem in my bones, I mean, I have lived it. And that for sure, in the early days, when we needed to sell people on the idea that this little baby company who had no clients and no track record, that we need to sell the idea that we knew what we were doing coming across as I’ve been there. I have suffered through these same problems. I know exactly what you need. And let me tell you how we solve that. Without a doubt that resonates. It’s not scalable. I mean, I can’t I can’t sell to everybody. So the interesting thing is, how do you get that same? How do you translate that same passion and that story, then to others who come on the team and want to sell for you? And it’s not eerie. But it is interesting, just hear my words or my story coming out of the mouths of the sales team sometimes. Because it is the most effective way to talk about the product. I mean, talking about what I went through how we got to this point is the best way to let the person on the other side of the table know that that we’re a partner. We can be a partner because we understand where they’re coming from. But, but yeah, trying to translate that same passion is job number one.

Alexander Ferguson 9:48
Challenge. The second piece that pops in my head is just again, hearing the concept of your product is a perfect use case of technology itself or when we started This series digging into okay, what is AI? We have this vision of you know, talking robots, but I mean, using a computer, artificial brain to to remember things and tell people what to do it this is just a perfect use case I feel for technology to solve a problem, a real world problem that makes everyone’s life easier and happier and less problems arise. Digging in, though, when you decided to start this, if you bootstrap this, knowing this, you’re your third venture, so you bootstrap at the beginning, did you ever get funding for this?

Unknown Speaker 10:35
Wow, I mean, really interesting. Question, because it is, it is a real dilemma. It’s a real dilemma. How you start a company like this. And there’s, there’s a number of routes you can go. But if you if you’re if you’re so first, I’ll answer your question, which is, we bootstrap the company, we just recently, so this, we founded the company, I found the company in 2011, with a co founder. And we operated for five years completely with with no outside capital. And then we had an angel investor who came in 2016. And sort of seated, we already had the product was built and was was being used the beta for and he seeded the product that we have today. And we operated that way, for a while we had we had a client come to us, and invest at some point. So we took a little bit of money from them. But we’ve we took our first institutional money from a private growth private equity firm, just a few months ago. And now looking backwards, with the benefit of hindsight, that was the right journey for us, we saw others who were kind of in our space, take a big, take a big chunk of cash up front and really burn through it, without really nailing the product. And, and they fizzled out, we, we took our time to sort of learn, you know, launch the product, get some clients who were willing to have faith in us and give it a shot, learn from them, reiterate, come back with changes, and it really took the product and then I think a different direction, then then in some cases where we thought it would go, and we would have spent a lot of money selling that first product or trying to sell that first product. And so also, from a from a founder standpoint, it helps a lot with dilution, if you can build up a significant revenue stream before you go out and try to raise money. And so I think personally, that’s been a benefit to me. But it is, it is, for sure the harder route to take you I have the classic moment where we needed to redevelop the software. And, you know, I had to, you know, cash in the 401k. And, you know, to help pay for Yeah, so. So that’s kind of what you’re in for. So I can’t, I can’t say that it’s the right path to take for everybody. I but I think if you can bootstrap for a while, I think ultimately you end up in a better place. But I think you’ve got a lot more risk than you do that. Because you know, when you when you don’t have money to, to really throw at development, we don’t have money to hire, you know, experienced prolific salespeople. It, you’re at risk of making a mistake, or of a competitor coming in and beating you to market. And so I can’t always say it’s the right decision. But I think if when you’re when you’re in a in a situation like we are where you’re trying to sort of forge a new path with a new product, and you know, kind of its own product category is going to take a lot longer. And I think in that case, you’re better off to try to make your way as long as you can until you got it nailed down until the messages right to the solution set is right. And then look to raise money.

Alexander Ferguson 14:11
Having the right team to be able to accomplish the growth is crucial. It’s important, but I know how unique challenges they are if you’re bootstrapping and every hire matters a unit you can’t just say oh, let’s hire this person that doesn’t work out. Let’s hire that person. What would you say in your experience is is some of the common mistakes one could make when it comes to hiring?

Unknown Speaker 14:36
Well, you need to you need to hire very slowly and you need to fire very quickly. And that is painful when you’re small because if you hire somebody in those early days, there’s so much time and effort that goes into getting getting that person up to speed that if you if you have to let them go because they’re not working out. It It’s, it’s, it’s, you’re worse off than had you not hired anybody because now you’ve wasted a lot of time with them. You’ve taken your own energy that could have been directed at sales, for example, and you put it in somebody else. So those early hires, you need to find a way to have a break in period. Yeah, absolutely, you’re giving them equity because you’re probably not paying the market. Make sure that that equity is contingent on that there’s that there’s a cliff initially, that that you’ve got some time to work with them before you’re actually giving out your precious equity. And try to really get to know them spend time talking to references other people that worked with them. Those early our first, our first hire actually was a woman named Sue Ellen McFarlane, and, and Sue Ellen was is a rockstar, and she made a massive amount of difference in the company. There were people that we had brought on, on a sort of a contingent basis prior to her that getting me to hold a candle to her, but we thought they were good. And to see once we had swell on onboard, in comparison to the other folks that we have able to attract beforehand, was like night and day. And it was like, wow, we dodged a bullet, not marrying ourselves to, you know, some of those other candidates that we’ve been working with so, so take your time, that as much as you can, and be wary of bringing friends and family into the, into the day to day operations seat because it is hard. Yeah, you were slugging it out in the early days. And, and there are hard conversations that need to be had, that that friendship sometimes don’t survive, is

Alexander Ferguson 16:45
less powerful. I imagined as the team grows, and there’s new challenges arise and the culture manage the culture. And you’re definitely you’re well, everyone is kind of distributed right now. But by not by choice, but you are. How big is the team today?

Unknown Speaker 17:02
There’s 26 that are here in the US. Part of part of the part of an outgrowth of being a bootstrap company, is, I outsourced a lot of anything that could be done, less expensive, that wasn’t core to the company really outsourced it. So we have, we have another 20 Some consultants that are offshore, you know, we have, you know, basic password reset kind of level one QA is done at the Philippines, we have QA that’s done out of Serbia, our development is is mostly offshore, but a team I’ve worked with for for seven years now. So you know, the, the really good team and a true partner of ours. So, so yeah, so I think that we probably wouldn’t have survived had we had to hire everybody here locally, we just just wouldn’t didn’t have the money to do it. So it now it seems like, you know, we’ve looked brilliant, because remote workers and a distributed workforce, now is kind of the parlance does your but we’ve been we’ve been that way from the beginning. And even when we hire people here in the States, is my attitude was still let, let’s find the best person I could possibly get wherever they are. And so we were still distributed from the very beginning here, as a company, and it has its, it has its limitations. For sure. I think the benefits are fairly well known, you know, you people work from home, they have flexibility, they really appreciate that. They, I think I think you get more out of people’s day, sometimes even though, you know, during the day, there might be times when they’re dealing with personal issues, I guess you have, if you hire people that have real integrity, there’s they’re giving you that time back and more. So I think all that is good. There is without a doubt, some you lose a little bit of serendipity, right? This is kind of the serendipitous interactions that happens in the office, and that there are certain departments that benefit from that our account management team and our implementation implementation team would probably benefit from seeing each other more, because they’re talking about solving client problems and how each of them is doing that. And, you know, we need to find a way to facilitate those kinds of interactions in a virtual environment.

Alexander Ferguson 19:25
Having the right team is kind of that that foundation that you can build upon when it comes to then marketing and getting eyeballs awareness. That’s that’s a whole nother challenge. And I feel like moving into a whole new market where people don’t a new product offering a new market that people like I didn’t even know this something like this existed as their unique challenges that other entrepreneurs can appreciate. So what would you say is your biggest takeaway or learning from from this whole endeavor? Realizing how do you get people to vote know you exist and that you This is worth looking at and then buying your your service?

Unknown Speaker 20:06
Well, marketing is a real luxury that I think I think bootstrap companies don’t have early on. And we did very little of it, to be honest, and our So our initial traction came from our own Rolodex of people we could get to in the industry. And then we hired our first salesperson, we hired somebody who came in with a role who had been selling into the industry and had a Rolodex, you could immediately reach out and talk to people. Marketing can be can get very expensive very quickly. And if you’re trying in, and by the way, this is, this is a b2c scenario, or sorry b2b scenario, a b2c scenario, I think is different. I think you can’t do that you can’t succeed in a b2c without marketing. But in the b2b scenario, the important thing is to get some wins on the board early on. And that’s a named account kind of approach, where you know, the top 100, you know, potential targets in the industry, and you just go after them, and you try to get in front of them. So, even today, I think we don’t have great broad brand recognition. And that’s part of that actually, is one of the main reasons that we raise money was to be able to now actually put together a well funded thoughtful marketing campaign and go out and try to to spread the word about what we do. But up until now, it’s been very much kind of this named account approach where our salespeople are picking up the phone and saying, hey, I want to I know, I want to tell you about this great solution. But the other part of your question, though, is is significant, which is, once you’re in front of those folks, and you’ve convinced them that you’re solving a problem, one of the hard lessons that we learned is that you cannot, at least with our kind of solution, you can’t, you can’t just turn over the software, the technology then and say, you know, congratulations, we’re done here, you’re all good. Because you need you need adoption early on. And adoption is the biggest challenge is the most wonderful solution in the world is going to receive some amount of pushback, because change is hard. For everybody, change is difficult. And so you you need to, and what we had to do was develop a real partnership, a to, to sort of get get the product over the hump, where you’re really working with them to train people to get buy in from senior executives who are then communicating the message, the why of the recent they’ve they’ve adopted lean on 24/7. And make sure that that is spread far and wide. I mean, earlier on, we would we would sell this, and somebody would just send an email one day saying, hey, you know, 20 sevens on your desktop now use it. And, and that was just not. I mean, hindsight seems ridiculous. But that’s how you know, that’s how the unsophisticated buyers will use the product if they’re if they’re not a sophisticated technology buyer. So we really had to put together a thoughtful onboarding plan that that went from the start with the senior executives and their messaging, and then found a way to communicate that all the way down to the users in the field. And if you don’t do that, if you don’t get by, and you’re going to get churn we have, we have less than 5% churn right now. And that’s because I think, is testament to the work we do upfront, to make sure that everyone understands why Leo is there and the benefit that we provide.

Alexander Ferguson 23:45
He just packed a lot of insight and in one answer, I appreciate that that breakdown, looking forward into 20 into next year 2021, as of the recording of our interview today, what do you see as the biggest challenge that you’re gonna need to overcome to continue to grow? And you’re I think you already alluded to it, but I’d love to just kind of share a little bit into that.

Unknown Speaker 24:06
Yeah, well, it’s easy right now to point to two COVID That’s obviously paralyzed the number of clients and in companies or industries that just, you know, they can’t sign contracts right now. But, but but that one, I think, will, hopefully is is is passing us shortly. But yeah, I think are the number one challenge for us is to is to educate the industry on what it is that we do is this, this is a new product category. You know, we’re similar to an integrated workplace management system, but it’s, it’s really more than that, you know, the risk components that we bring in, you know, the, the, the municipal codes that we that we bring in and automatically push out to people. Like there’s not really there’s not really a nice clean description that we can give that. So we have to do some some education with folks in the industry and talk to them about What we do, the problems that we solve, and, and doing that quickly so that we as really establish ourselves as these, the other must have operating system. You know, clearly, I think clearly we’re the market leader in this, we have the most exhaustive solution set that addresses these issues. So I think so that that part has been mission accomplished. We just need to do a great marketing job to get us in front of as many people as possible over the next 12 months. And then I think you’re going to see kind of this critical mass of awareness, sort of shift, we have a partnership, well sort of shift so that it now becomes like, oh, yeah, of course, we need to do we need to mitigate operational risk, we need an integrated Workforce Management System, or we need, you know, an intelligent property operation systems, couple of monitors that we’ve used. And I think what’s going to help us with that is, we have a version of lean on 24/7. That’s white labeled by the National Apartment Association. And that’s, that’s a real partnership with them. We work closely with them every day, on the click and comply version, which is, which contains best practices that the naa has established, which is what they’re really known for. And so the NA clients using the quick and comply version, they get the benefit of that additional guidance that comes out of quick and comply. And I think between the two of us to those two efforts, I think I think 2021 is going to be a year of people start to understand that we can, there is finally a solution to this problem.

Alexander Ferguson 26:39
Last two questions for you, Daniel. For you, as a leader, are there any books, audio books, podcasts that you are currently reading or have read in the past that you would recommend?

Unknown Speaker 26:51
Well, we operate the company, according to a book by Gino, Gino Wickman, called traction. And in the book traction, he describes the the entrepreneurs operating system. And I was when I was introduced to it, I was skeptical about it. I’m not you know, and I think and I think many entrepreneurs are not necessarily like regimented goal setters, we tend to be visionary, big idea. We can be very scattered about that. And we live in chaos, and we kind of like it that way. But it’s not a great way to scale a company. You know, once you’ve established the product, you need up you need process to make sure all the oars are being pulled in the same direction. And, and that book traction and the EOS system gave us a methodology that we’re following now for setting goals. revisiting those goals on a regular basis and holding people accountable. So I think any any young entrepreneur who’s starting out, should should look at that book.

Alexander Ferguson 27:50
Do you find your integrator? Are you the visionary?

Unknown Speaker 27:54
I’ve had i Yeah, no, I Yeah. So you read the book clearly. You know, I hold both of those roles. I hold both of those Rhodes roles where we’re seeking the integrator now that we’ve that we’ve that we can actually pay an integrator, what they’re worth. And outside of that, you know, I like Scott Galloway, I get a real kick out of him. He has a couple podcasts, but Professor G podcast he touches so he’s he’s a he’s an NYU I think is a professor of marketing at NYU. And there’s in his podcast personal he’s a funny guy. He’s got a very dry sense of humor, but but his podcast touch on, there’s always something going on regarding business or marketing in those five sometimes politics. So He’s entertaining and I, you know, in the limited amount of time I have to listen to something I like to I like to turn it and and here’s the slightly geeky side of me. I’ve been listening to the tech guy podcast for a long, long time. So I listen to that on the weekends, usually while I’m running. Now motivational music, I listened to tech guy podcast, for less, I’d like that.

Alexander Ferguson 29:04
Alright, so last question for you. What kind of tech innovations from your side do you predict we’ll see in the near term next year and long term 510 years from now

Unknown Speaker 29:13
you COVID Has Has has pushed forward in time a technology that I think has been coming for a while and and maybe has even done so before it’s really ready. But that is this idea that that it is possible to lease units and lease apartments without a human being involved. leasing agents are you know, a real core of this industry and the idea that they could I don’t want to say be replaced but be augmented perhaps or nobody really want to talk about that. But now you know there there there are chat bots that are handling incoming calls and are handling a lot of the basic information that needs to be given out regarding leasing there’s virtual leasing that’s happening now there’s there’s some people talk They’re doing augmented reality leasing where people can walk through the departments on their own and an augmented person can be there could have sort of given advice because of because of obviously for COVID reasons. But it’s proving a point, I think that that I think is going to become more acute as the year is 2021. As we get to 2020, which is AI and and automated chat bots are going to play can play a larger role on the marketing side and the leasing side. And they’re even some, there’s even some evidence that potential prospects may prefer it, then then the awkwardness of being escorted by a leasing agent. I’m not sure that that owner operators is going to buy into that, I think, I think that their perception is going to be that having somebody there, you know, answering objections, real time is always going to be the better route. And that might be true, but I think for sure, we have to recognize that the automated self guided tour is a legit option and should be part of any leasing strategy.

Alexander Ferguson 31:10
Well, thank you so much, Daniel, for sharing your insight over these years. There’s a lot packed in there as well as kind of your prediction of where we’re going in the future. I appreciate it a lot.

Daniel Cunningham 31:20
Yes. You know, everything I know now that said

Alexander Ferguson 31:24
no at all. Now definitely if for those that want to learn more, you can go to Leonardo247.com also listen to part one of our intro to hear understand their their platform product a little bit deeper. Again, this was our founders journey of UpTech Report. Our sponsor for today’s episode is TeraLeap. If your company wants to find out how to better leverage the power of video to increase your sales and marketing results, head over to TeraLeap.io and learn more about their product customer stories. Thanks so much. And we’ll see you guys next time. That concludes the audio version of this episode. To see the original and more visit our UpTech Report YouTube channel. If you know a tech company, we should interview you can nominate them at UpTech report.com. Or if you just prefer to listen, make sure you subscribe to this series on Apple podcasts, Spotify or your favorite podcasting app.