We are excited to announce today our investment in Knock, a company that is building a modern marketing cloud for the multifamily property market. The company was founded by Tom Petry and Demetri Themelis, Seattle natives and University of Washington graduates who moved to New York to work in finance just as the ’08-’09 financial crisis began. They survived and thrived in those turbulent times, and returned to Seattle five years later to start a company together.
Like many founders who start a company to scratch their own itch, Tom and Demetri, who had rented apartments throughout their working lives, saw an opportunity to vastly improve the apartment rental experience. They mapped the customer journey and identified the major pain points; from finding buildings that fit a renter’s needs, to touring available units at these properties, to the leasing process. Their very first product was an Open Table-like booking engine for apartment tours that made it faster and easier for renters to find the perfect apartment.
Also like many founders, Tom and Demetri have taken a non-linear journey to this point. While they began by focusing on the renter experience, they discovered a similar, if not greater, customer pain as they got to know property managers at the buildings they worked with. Property managers lacked the tools to they needed to effectively attract, close and retain tenants; everything from allocating marketing dollars across channels to attract tenant leads, nurturing prospective tenants from tour to lease, and communicating effectively with existing tenants to improve satisfaction and increase the likelihood that they renew.
By focusing on these pain points, Knock grew from a booking widget for prospective tenants to a comprehensive CRM that property management companies can use to manage communication and customer relationships throughout their journey. By listening to customers and deeply understanding the pain points and friction (a behavior we see in all great founding teams), the Knock team has built the best CRM system for multi-family property managers and are just getting started in their ambition to build a comprehensive, modern marketing cloud for the industry.
And this is a very compelling industry in which intelligent applications like Knock are badly needed. There are 18 million multi-family (apartment) units in the U.S., with a vacancy rate of about 5% annually. With average monthly rents pushing $1,400 per month, that 5% vacancy translates to nearly $15 billion in rental income per year that multi-family property managers and owners are leaving on the table. Property managers who want to close that vacancy gap need modern CRM tools to find, sign, and retain the best tenants, and that’s where Knock comes in. There are large, legacy software vendors to this industry who offer CRM as part of a suite, but in most cases, it’s an after-thought bolted onto software born out of a different era.
Knock’s software was designed to be intelligent from the beginning, and while it is still very early in the team’s journey, the quality of their product and their ability to serve customers is reflected in the customer roster Knock has assembled and the thousands of buildings and hundreds of thousands of units they’ve on-boarded to the Knock platform. In particular, the enthusiasm we heard from Knock’s customers for both the product and team really got our attention and got us excited about the opportunity to work together. Knock fits squarely into our intelligent applications investment theme, and we look forward to helping Tom, Demetri and the whole knock team to achieve their vision of building the marketing cloud for multi-family.