Dhruva Rajendra is an undeniably important part of Latch. As an original cofounder and now CPO, he’s very literally shaped the smart home technology company, which has its locks installed in one in ten new apartment buildings in the U.S. and recently went public through a SPAC listing with a valuation of $1.56 billion.
In this Q&A, Dhruva explores changing the status quo in real estate, the importance of the right business model, and how the market is unfolding with a connection of data points.
What is a key piece of early advice you would want to give a new real estate founder on day one?
Real estate is one of the world’s oldest businesses—changing the status quo means sometimes breaking habits that are centuries old. This means that you need to hold a strong point of view about how your company is going to change the market. There is no shortage of opinions in real estate—knowing which ones to listen to and when is incredibly important. That's not to say you shouldn’t listen to your customers or ignore really good advice, but learning how to translate feedback is critical.
The other piece of advice is that figuring out the right business model is incredibly important and can’t be underestimated. This market is one that’s moving from ‘buying’ hardware to ‘renting’ software in the cloud. Along with creating a great product, you have to be prepared for the challenge to overcome this kind of thinking in the market.
What are a few key documents and/or processes you would suggest founders focus on at early stages?
I’m a big fan of the product-market fit framework developed by Sean Ellis and Rahul Vora. Product-market fit was a fuzzy concept before this came around. While it's not perfect, the PMF score is a great way to orient as you start to acquire your first customers. If you happen to be growing quickly, the PMF score can help you accelerate by focusing on your ‘strongest’ customers. If you are not, it can help determine if you should pivot or where you might be able to grow faster.
Beyond that, knowledge about how to build startups is constantly evolving. As I’m writing this, there are probably 82 new frameworks about to make their way onto Medium. It’s unlikely that one of them will be the magic ticket, but it is helpful to consume as much of this information as possible.
- Lenny Rachitsky
- Stratechery (to feel smart)
- Invest Like the Best (to sound smart)
- My First Million (for the hustle)
- Acquired (great biz breakdowns)
- 7 Powers (how to win a market)
- High Growth Handbook (how to scale a company)
- Creative Selection (how to build a great product)
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What is one thing you learned as you did your first few seed-round pitches? What do you think investors most want to see from real estate founders at this stage?
When we started, I distinctly remember there were a few companies that saw the same market opportunity that we did around smart devices, specifically access. Each of us had different versions of the best way to get there. Back then, proptech was a pretty nascent market, so funding was much more limited than it is now. The only reason I think we were able to close a seed round was because we had high conviction and were able to paint a picture for where the market was headed that was different than just ‘checking a box’.
Today, the market is obviously much more crowded—the only way to stick out, in my view, is to demonstrate a very clear plan to execute on a near-term vision, with a clear path to addressing wider swaths of the ecosystem.
What kinds of early hires are most important in this industry? What kinds of characteristics and backgrounds should they have?
It all comes down to the overall team and what you're trying to solve for. In the early days, having many outsiders who will question norms, mixed with a few subject matter/industry experts is often the right mix. Over time, that mix might evolve to match the problem you are solving and how you are executing against it.
What is most exciting to you about the NYC startup community right now?
The energy and optimism in NYC are really unique. There are a lot of folks who wrote NYC off, and now it feels like the city has something to prove!
What real estate trends or predictions are you thinking about most right now?
Just about everything seems ‘hot’ in startups; real estate tech is no exception. It seems like every day there’s another company raising funding to chase a different niche within real estate. It’s incredibly exciting.
The way I look at how the market is unfolding within real estate is that we’re gathering millions of data points that were previously uncaptured and connecting them to a software layer. Latch is a great example—we took a physical product (key) and connected it via a chip to a network. Each time a new device or process is digitized, the possibilities expand for what we’re able to do—it’s like a massive coordination layer that’s able to increase the pace of innovation within our market.
Beyond the basic efficiencies and experiences that this coordination layer will unlock, there are massive opportunities to make large-scale impacts within our society. Specifically, I’ve seen more startups pop up looking to make impacts in energy, income inequality, and health within proptech. These bets were not previously feasible before because we lacked the core platforms to quickly build and scale these initiatives. It’s almost like the building is a computer, and we’re in 1994, right when the Netscape browser launched.