Distorting Reality

by Scott

As I stood in pure bliss under the showerhead this Monday morning a sense of pride washed over me. Just a year ago, the house I was showering in had stood vacant. Worse, it was exposed to the elements for years and completely stripped of its vital systems1. But through countless hours of hard work and incredible support from friends, family & community members, we breathed life back into it.2 Monday was my first shower in the house where the hot water actually flowed through the walls, and what a shower it was.

We carved out our own little corner of the universe, and we changed it for the better. My hot shower was the perfect reminder of my ability to distort reality, and the timing couldn’t have been better because after a few months of working fulltime on Castle, the realities of startup life were starting to wear on me. Each day spent trying to build a startup is filled with an unparalleled amount of uncertainty, and the failures that inevitably result from all the experimentation will take their toll on morale in time. So much of your mental energy is consumed by the startup that it’s almost impossible to get it out of your head, and your personal brand is so intimately intertwined with the startup’s that you begin to self-identify with it.3 All of this may seem scary, but to me, it’s absolutely worth it.

The capacity to exert one’s will on reality and actually change it, that’s what gets me out of bed every day. It’s what drew me to web development, and it’s what lead me to start a company. Next, we’ve got our sights set on building Castle into the first scalable property management company. We know we’ll have to be relentlessly resourceful4 to have any hope of getting there, but we believe we’re just the right team for the job.

1. Most abandoned homes in Detroit have been stripped of any and all precious metals—especially copper pipes and wires—by scrappers. ↩
2. By “we”, I mean Max, Tim and myself along with Detroit blight-buster Sean Jackson. ↩
3. Although I don’t know from personal experience, I imagine this experience being similar to parenthood. ↩
4. Paul Graham’s definition of a good startup founder. ↩

Rent Collection: Anatomy of a Failure

by Max

In my last post, I explained that our original plan for Castle—software tools for independent landlords, beginning with rent collection—had failed. Actually, I didn’t say “failed”; I said that we’d realized we needed to go beyond software alone to fully achieve our vision of automating landlording. And that’s true—but it’s also true that pursuing our rent collection tool hadn’t worked out as well as we’d hoped. This post is an attempt to explain why.

First, let’s look at where we ended up. When we made the decision to shift our focus, we’d been building and selling our rent collection tool for a little under three months. We had eleven landlords signed up for the beta, with another ~100 at various stages in the sales pipeline. (Of course, we knew this approach wouldn’t scale, but the approaches successful startups take to get their first customers rarely scale.)

Our Streak pipeline as of October 2014

Our sales process (inasmuch as it was a “process”) was simple: we’d have an initial conversation with the landlord that was all about them, to learn about their needs and build the relationship. Then, we’d walk through a demo of Castle with them, primarily to get their feedback. We never did any kind of hard sell—instead, some percentage of people would express interest in using Castle when we showed them the demo, and we’d sign them up.

A slide from our demo deck

Rent collection as MVP was failing lightly, which is the most dangerous kind of failure. We were making some progress, and we could’ve probably kept going like that for a while, signing up new customers at a steady (but rarely increasing) clip, maybe even raising a little money. Having just enough “success” that we never felt like we were falling flat on our faces. But it was never going to take off.

Ultimately, with rent collection, we failed to make something people want. It was a tricky kind of failure, because landlords “want” rent collection, they just don’t want it. When we talked to them about it, they often said they were interested in it, but it was more of a “sure, I guess I could see myself using that,” not a, “Yes! I want that!”

Paul Graham says you need to make something a small number of people want a large amount. Peter Thiel says the same thing in a different way: that you should gain a monopoly in a small market and then expand with the market. Rent collection is the opposite: a large amount of people want it a little bit.

We knew this going in, or at least we should’ve: there are tons of other rent collection services. If landlords really wanted online rent collection that badly, they could find it with a quick Google search.

We believed that none of these other rent collection services have really stuck because they mostly did a bad job with the execution, and because rent collection on its own isn’t enough—it’s necessary, but not sufficient. We still believe that to be the case. But the writing on the wall is clear. And that’s why we’re moving in a new direction.

A New Direction

We started Castle with a simple mission: to automate landlording.

Most landlords buy properties for the same reason they’d buy stocks or bonds: as an investment. But unlike stocks and bonds, which you can buy with a single click and then forget about entirely until it’s time to sell, real estate comes with a job. And though it’s often a great investment, it’s a lousy job. Landlords and tenants suffer because the rental experience is messy and over-complicated.

Our first plan was to solve this problem with software tools for landlords: starting with rent collection, and then expanding to cover every touchpoint of landlord-tenant interaction. But over the past several weeks, it’s become clear to us that to achieve our vision of fully automated landlording, we’ll need to go beyond software alone.

That’s why we’re introducing the new Castle: full-service property management you’ll actually like. For a flat fee of $49/unit/month, we’ll handle everything that needs to be handled, from collecting rent and keeping the books to managing repairs and even finding tenants.

Current property management companies have two critical flaws: they’re expensive (usually around 10% of rental income), and they fail to provide owners with a clear picture of what they’re doing and where their money is going. Landlords we’ve talked to have described their dealings with property management companies as feeling like “scams” and “ripoffs”—and those are just the phrases we can print on a family-friendly blog1.

We’re going to change that.

Castle has simple, fair pricing: just $49/unit/month. Our work is the same whether your property rents for $500 or $5,000, so charging a percentage of rental income, like almost all other property management companies do, just doesn’t make sense.

We’ll also be the most transparent property management company you’ve ever seen. The Castle app will give landlords a full behind-the-scenes look at what’s going on in their properties, so they can understand where their money is going when they use Castle’s services.

Down the road, we’re bursting with ideas about how we can grow and scale by using technology in ways that traditional property management companies have barely scratched the surface of. But that’s for another day. For now, we’re focused on getting our first units under management.

Oh, and if you liked using Castle to collect rent? Don’t worry—you still can. Even better, it’s completely free, for as many properties, tenants, and payment cycles as you want.

We’re super excited about the road ahead, and can’t wait to get going. Stay tuned!

1. Disclaimer: this blog not guaranteed to be family-friendly.↩

How Castle Keeps Your Information Secure

by Tim

Castle relies on its users’ trust to function. We will do anything and everything we can to maintain and preserve that trust.

In that vein, here is our complete methodology concerning sensitive information. I’ll start with the information we store on our servers, then move on to the information we pass to our third party payments processor, Balanced. Finally, I’ll discuss how Castle uses Balanced to transfer payments.

Castle

For tenants, Castle stores the following information:

• Name
• Address
• Cell phone number
• Lease end date
• Rent amount

For landlords, Castle stores some different information:

• Name
• Cell phone number
• Email address
• Password1

Notice what Castle doesn’t store: bank account information. When you enter the information we need to link your Castle account to your bank account, Castle doesn’t keep any of it. Instead, Castle passes it straight to Balanced using 256-bit SSL encryption.

Balanced

For tenants, Castle passes the following information to Balanced:

• Name
• Bank routing number
• Bank account number

For landlords, Castle passes a little more information to Balanced:

• Name
• Street address and ZIP code
• Month and year of birth
• Last four digits of SSN
• Bank routing number
• Bank account number

For landlords running their properties through a business with an EIN, Castle passes a few more details to Balanced:

• Business name
• Business street address
• Business phone number
• EIN (Employer Identification Number)

The most sensitive information—the routing and account numbers—never touches Castle’s servers2. It all moves directly to Balanced, who protects that information with bank-level security. (Specifically, Balanced is PCI compliant.) Castle displays the image below during signup when the requested information is headed to Balanced:

Balanced powers payments for lots of great companies. Notable clients include Soylent, GroupMe, Artsy, and redditgifts.

Castle + Balanced

Castle deals with Balanced in two ways: linking bank accounts when users sign up, and transferring money when users make payments.

The process for linking bank accounts is a little technical, and Balanced does an admirable job explaining the steps. Here’s the jist:

1. Castle passes a new user’s most sensitive information to Balanced, without storing any of it on Castle servers.
2. Balanced stores the information on its secure servers, then creates a “funding instrument” that Castle can use to request transfers.
3. Balanced passes Castle a link to the funding instrument. The link is unique to Castle and requires authentication from Castle for any request.

Once tenants verify their accounts with microdeposits, they can initiate payments through Castle. The process for transferring money is as follows:

1. The tenant manually initiates a payment, or Castle initiates a payment if the tenant has activated automatic payments.
2. Using the link to the funding instrument, Castle makes an authenticated request to Balance to transfer funds.
3. Balanced transfers the funds into an escrow account, then transfers the funds to the destination account.

Your most sensitive information stays out of Castle’s servers, and your money stays out of Castle’s bank account.

If you have any other questions, especially if you’re a beta user, please use the Support page to contact us by email, phone, or live chat.

1. Actually, it’s a hash of the password. When a landlord logs in, Castle hashes the submitted password and checks for a match to the stored hash. Only the landlord knows the password.↩
2. The last four SSN digits and the EIN do touch Castle’s servers, but are never stored there.↩

The Primacy of Process

by Tim

Navigating the seas of the startup world is never a simple task. There’s a whole big world of possibilities out there, and it’s hard to know if you’re following the right route. The dismal success rate for startups shows how tough the going can get.

In the storms of hard decisions, uncertain futures, or plain bad luck, many companies lose their way. The instinct to bail the overflowing water and let the ship drift for the moment is strong, and sometimes reasonable. Most times, however, abandoning planning and process spells doom for a startup. As the COO, creating and enforcing processes is part of my job. I use processes to tame the disparate parts of the business, channeling the torrent of activity my co-founders unleash daily1.

In order to mark and measure our path to future greatness, we recently adopted a planning system called Objectives and Key Results (OKRs). OKRs are a measurable way of setting goals and evaluating progress company-wide, from the freshest hire to the highest executive. Every employee has at least one objective, which in turn has 3-5 key resources that measure the objective’s completion. OKRs should be ambitious and a little uncomfortable. On a 0-1 scale, the right score is about 0.7; a lower score indicates poor completion, and a higher score indicates poor goal-setting. OKRs started at Intel, then spread across the corporate world. Their most famous advocate, John Doerr, brought the system to Google in the company’s early days; they still use the system today2.

Here are our Q4 2014 OKRs:

Company

Objective: Public launch

Key Results:

• 100 landlords using Castle
• 50% smooth onboards3
• 90% of landlords would recommend Castle to their peers

Max

Objective: 100 landlords using Castle

Key Results:

• 750 leads generated
• 75 leads closed
• 25 inbound leads generated

Scott

Objective: Public launch

Key Results:

• 95% production site uptime
• 15 new user stories4 based on feedback from beta users deployed
• 10 automated tests written
• System for auto-deploying code to production built
• System for creating daily backups of the production database built

Tim

Objective: Prepare Castle for public launch

Key Results:

• 2 interns hired
• 100% of QA user stories completed
• 250 leads added
• 25 leads closed

The system has already proven useful, forcing us to set specific targets for sales and development—a tech startup’s two most important activities. As an engineer, I have an unending appreciation for all things measurable, and I look forward to measuring (and blogging about) our progress at the end of the year.

1. Once during an interview, the interviewer pointed to his bike and asked which part represented me best. I chose the frame, since it holds all the moving parts together in a discrete and firm manner.↩
2. I recommend watching Rick Klau of Google Ventures explain the system and its history at Google here.↩
3. A smooth onboard is one in which the user has no questions from the start of signup to the first rent collection cycle.↩
4. User stories are how we describe features. For example: “As a tenant, I can activate automatic rent payment by text.”↩

Meet the Team: Max Nussenbaum, CEO

Each week, we’ve be introducing you to a member of the Castle team. This week, we conclude with CEO Max Nussenbaum.

What’s your favorite part about working at Castle?

The constant challenges. With the possible exception of all of seventh grade, I’ve never felt more scared, confused, or unsure of myself than I have over the past few months. At the same time, I’ve never been learning as much as fast as I have been lately. If you don’t sometimes worry you’re going to pee yourself a little bit, you’re probably not pushing yourself hard enough.

What’s been the most interesting part of being a landlord so far?

The complex emotions that landlording engenders. You and your tenants both develop an attachment to the house, and this creates an unusual situation where two groups of people view the same house as “theirs.” They say the #1 rule of real estate is not to get emotionally attached, but that’s not always easy to stick to.

What’s a fact about yourself that people might be surprised by?

Although I’m a huge tech guy (I can see three different computers in my room as I write this), I refuse to make the transition to ebooks. I buy pretty much every book I read, and have amassed a massive (800+) collection of physical books. Ebooks might be more convenient, but when a girl comes over and checks out your bookshelves, is she really going to be impressed by your Kindle?

Before Castle, what was your proudest accomplishment?

In college, I co-wrote, produced, and directed a full-length original musical. In many ways it’s visibly a first, collegiate effort, but there where a few moments where Nat, my co-writer, and I really hit on something great.

If you could have any celebrity be your landlord, who would it be?

Taylor Swift. After I moved out, she’d write a song about how I was a bad tenant.

You can reach Max anytime at max@entercastle.com.

Castle Newsletter #1: Things We’ve Learned, Straight to Your Inbox

Starting this month, we’re sending an email update to our supporters with one thing we’ve learned recently. September’s is below. Want to get these updates your inbox? Sign up right here.

Welcome to the first official Castle newsletter. (Yes, we did send one previous email to this list, but it wasn’t an official newsletter. You can tell because we didn’t start it with “welcome to the first official Castle newsletter.”)

We want to keep you, our earliest supporters and fans, up-to-date about what we’re working on. Hence, this newsletter. The format is simple: in each, we’ll share one thing we’ve learned in the past month. A startup is in many ways a system for controlled learning, and one of the ways we measure our progress is in how much we’ve learned.

This month: simplify, simplify, simplify. Or: how we got rid of tenant accounts.

When we first started designing Castle’s rent payment feature, we defaulted to an app that would require landlords and their tenants to create accounts. We did this without even really thinking about it—it was an assumption we didn’t even realize we were making. After all, to use a web service, you have to have an account, right?

Early wireframes for the tenant onboarding process.

But user accounts create friction. They force people to remember which email address they used to sign up, and to create and remember yet another password. And they add steps to a signup process that we want to keep as short as possible.

A few weeks into our design process, a landlord said to me, “You know, my tenants all communicate with me by texting. Why can’t you just do everything over text?”

It was a good question: why couldn’t we just do everything over text? And so, after a few frantic days in the lab, our new tenant onboarding process was born.

Now, when a tenant gets set up to use Castle, we give them a one-time link that allows them to connect their bank account. After that, they never need to interact with the Castle website again if they don’t want to. When rent is due, we simply text a reminder, and tenants can pay (and set up auto-pay) just by responding to the reminder. Their identity is tied to their phone number, so there’s no usernames or passwords to remember and no need to ever log in to anything.

Wireframes for the new tenant onboarding process. One screen, five fields (and two are pre-filled!)

Of course, for those tenants who want it, we’ll still provide an option to log in and view more details (like their payment history). But it won’t be required. As a tenant, you’ll be able to set up your rent payments once, and then never worry about them again.

I hope you’ve enjoyed this peek behind the scenes. As always, we’d love to hear from you, so please reach out anytime with questions, thoughts, comments, or haikus. You can contact the whole team at team@entercastle.com.

Happy September!

Everything I Need to Know About Startups I Learned from Watching Adventure Time

by Max

There’s a TV show on the air right now that can teach you everything you need to know about starting a company.

It’s not Shark Tank. It’s not Silicon Valley. It’s not even Restaurant Startup (featuring official Friend of Castle Banza!)

It’s Adventure Time1.

For those of you unfamiliar with Adventure Time, the cartoon follows the adventures (of course) of Finn, a boy who may or may not be the only human left alive, and Jake, a shapeshifting dog who’s also Finn’s adopted brother, as they journey through a post-apocalyptic magical world. But it’s so much more than that. Writing in the New Yorker a few months ago, TV critic Emily Nussbaum2 described Adventure Time as “one of the most philosophically risky and, often, emotionally affecting shows on TV.”

She didn’t mention all the startup lessons, but trust me—they’re in there too. Allow me to demonstrate:

Lesson #1: Be relentless.

Building a startup is an exercise in repeated failure. Fail, iterate, repeat, and so on, until eventually (hopefully) you succeed. The trick, basically, is just to not stop3.

Many of Adventure Time’s characters embody this lesson, from Finn and Jake’s relentless adventuring to Lumpy Space Princess’ relentless quest to go to Promcoming with Brad4. But none exhibit it better than the Ice King, the ineptly evil, socially awkward ruler of the Ice Kingdom.

The Ice King is relentless in his quest to marry a princess, whether by kidnapping one, brainwashing one, or even entering an epic Wizard Battle to win a kiss with one. Despite having no friends other than some penguins of unclear intelligence, the Ice King manages to stay upbeat about his situation5. It’s an example we can all learn from, even if our startups don’t (yet) involve kidnapping princesses6.

Lesson #2: Don’t get excited about a deal until you know all the details.

Whether it’s an investment round or a big partnership, I’ve seen so many startups get super excited about deals that turned out to not be so great once they read the fine print. (The classic example: raising a huge round [hooray!!] but giving away a huge percentage of your company [not so hooray…].)

Finn and Jake learn this lesson the hard way in the season one episode “Wizard.” They’re offered some magic powers by Bufo, a weird frog, but in their excitement about gaining sweet wizard powers, they don’t ask what Bufo demands from them in return.

Dustomancy—the power to control dust mites!

Holding up their end of the deal results in a lifetime of wizard enslavement—at least, until Finn formulates a winning escape plan. Because this is, after all, a kids’ show—albeit, an incredibly disturbing one.

Lesson #3: Not everything has a lesson.

How do nimble companies become sclerotic and bureaucratized7? Often, it starts like this: a mistake is made, a lesson is learned, that lesson is codified into a new rule or procedure. Rinse, wash, repeat, and a process that’s intended to eliminate mistakes ends up eliminating the very spontaneity that made you succeed in the first place.

While it’s important to learn from your mistakes, it’s equally important to recognize that not every failure has a lesson to teach. Luck is the perpetually under-credited component of success, and sometimes you fail despite doing everything right.

“Freak City,” my personal favorite episode of Adventure Time, makes this lesson hilariously explicit8. At the beginning of the episode, Finn is turned into a giant foot by a flamboyant douchebag known only as Magic Man, who refuses to change Finn back until he’s learned “a valuable life lesson.”

Foot-Finn becomes an outcast due to his freakish nature, but eventually—after an inexplicably auto-tuned musical interlude—he teams up with a bunch of other messed-up freaks to hunt down Magic Man. And after all that, it turns out the “lesson” Magic Man wanted them to learn was just that he, Magic Man, is a big jerk.

Some lesson, huh? But that’s how it goes: not every experience has a valuable life lesson to teach you. Sometimes, the best course of action is just to move on.

I watch Adventure Time almost every week, and with each new episode I’m more and more convinced that it’s one of the crowning artistic achievements of our era. And the business lessons? They’re not half-bad either.

1. Kind of gave it away there with the title, didn’t I? ↩
2. No relation, I swear. ↩
3. Paul Graham said that “you can get surprisingly far [in a startup] by just not giving up.” ↩
4. Most cartoon characters are known for their limited, repetitive behavior sets, so none of this is too surprising. ↩
5. That said, it’s not too hard to tell that he’s masking a deep, incurable sadness underneath. ↩
6. “The royalty abduction industry is ripe for disruption!” ↩
7. I’m normally a super good speller, but man, “bureaucratized” trips me up every time. Get it together bureaucratized! ↩
8. This episode also contains one of my all-time favorite Adventure Time quotes: “I’m not gonna cry, man, I just FEEL like crying!” ↩

Meet the Team: Scott Lowe, CTO

Each week, we’ll be introducing you to a member of the Castle team. This week, we’ve got Scott Lowe, Castle’s CTO and #1 nerd. Want to know more? Just read on.

What’s your favorite part about working at Castle?

The opportunity to build something from scratch is what drew me to Castle. It’s like exploring a new frontier, where each day brings new challenges and new experiences, and that means I get to learn a ton.

What’s been the most interesting part of being a landlord so far?

Discovering the different pieces that make up a house and how they work together has been fascinating to me. A house is a fairly complicated machine when you take the time to appreciate all the systems that comprise it.

What’s a fact about yourself that people might be surprised by?

I have a tattoo of a book on my left rib cage. I’m often stereotyped as a huge nerd, so the tattoo catches most people who don’t know me well off guard.

Before Castle, what was your proudest accomplishment?

I built the web app that Venture for America uses to match Fellows with companies. I minored in CS in school, but that was my first experience with web development and, honestly, the first thing I’d ever built top to bottom. I put a ton of time into it and learned a ridiculous amount.

If you could have any celebrity be your landlord, who would it be?

Miley Cyrus.

You can reach Scott anytime at scott@entercastle.com.

Meet the Team: Tim Dingman, COO

Each week, we’ll be introducing you to a member of the Castle team. We’re starting this week with Tim Dingman, Castle’s operations guy and punk fanatic. Here’s a brief Q&A to provide you with a look into the Wild World of Tim:

What’s your favorite part about working at Castle?

The collaborative decision-making. Our team has established a formidable process for coming to conclusions about how we should run our business. I have experienced nothing even remotely like it.

What’s been the most interesting part of being a landlord so far?

Establishing the lease and accompanying house rules. Every property-landlord-tenant relationship is unique, and the lease and house rules must reflect or encapsulate the relationship. Those two documents lay the groundwork for everything that follows.

Before Castle, what was your proudest accomplishment?

Planning a conference called A Better World by Design. ABWxD is a student-run and student-led design conference held annually at Brown and the Rhode Island School of Design (RISD) in Providence. I was on the planning committee for the 2010 and 2011 conferences, a time of high growth and formalization for the event. In startup terms, we had moved from nailing it to scaling it.

What’s a fact about you that people might be surprised by?

I’m an Eagle Scout.

If you could have any celebrity be your landlord, who would it be?

Elon Musk. He could get our house solar panels through SolarCity and let us ride around in his prototype Teslas.

You can reach Tim anytime at tim@entercastle.com.