Lead by example, There were times in our past when it was necessary to make something happen in order to get to the next level. This can include getting a new partner, securing additional financing, or making a key hire. When pressure is prevalent, sometimes it falls to a leader’s shoulders to elevate the team. This sets the stage for the company and inspires the team to follow suit.
As part of my series about the “Five Things You Need To Be A Highly Effective Leader During Turbulent Times”, I had the pleasure of interviewing Michael Lucarelli.
Michael grew up on Long Island, New York. He began his professional career in Pennsylvania as a financial analyst before moving to Southern California. But it was after he chose Pepperdine’s Graziadio business school that he was inspired to create RentSpree. As a renter, he felt the angst of a clunky system that was frustrating to real estate agents, and painful for landlords and renters. The rental market is a multi-billion-dollar industry and he used the old school method of calling on brokerages to make them aware of their user-friendly rental solutions.
After deploying in 2017, RentSpree’s software was quickly implemented by a “who’s who” list of the largest real estate organizations in the US, such as the California Association of REALTORS, RentPath, and RE/MAX Estate Properties.
With less than 500k dollars in financing, RentSpree grew to screen more than 100,000 applicants by the end of 2019. Today, RentSpree is utilized in all 50 states and is the most frequently reviewed rental screening software on Google.
Thank you so much for your time! I know that you are a very busy person. Our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
Sure. I come from a traditionally entrepreneurial family. Going back generations, my family was all leather workers in Italy where they would craft saddles and other goods. When they came to the US, they switched and opened up a few upholstery shops to work on handmade furniture. My grandfather owned his shop in Queens, nearby where I grew up, and I always remember hearing stories about “the shop’s” employees when I was little. I was enamored by the freedom and work ethic that my grandfather had through his business.
Seeing the pride that my family took in creating something of their own from nothing, I was sold on the idea of following that path. However, my path ended up a little different than working with upholstery.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lessons or ‘take aways’ you learned from that?
Probably the funniest mistake I made when starting off is assuming that things would come a little easier than they did. I never thought that everything would be a breeze, however in hindsight I probably had my expectations a little too high. For instance, there were some early partners we secured for RentSpree that I thought would have had a larger and faster impact. We still arrived at success with those partners, but it took a lot more time and nurturing than anticipated. I’d recommend taking your original expectations or forecast and reducing it by about 60% to be safe!
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?
My former classmate and cofounder Paul has been an amazing friend and mentor for me since 2014. He has an entrepreneurial mindset and results-oriented approach to everything he does. He taught me to focus on the highest value activities and complete them to perfection.
Extensive research suggests that “purpose driven businesses” are more successful in many areas. When your company started, what was its vision, what was its purpose?
At the beginning, our purpose was to “make tenant screening simple”. We knew that more than 1/3 of US households rent their homes, but that the process to secure a home was broken and outdated. Where people ultimately live impacts employment opportunities, neighborhood safety, friends they make and many other factors. We wanted to make the process of securing a home as easy as possible for both applicants and agents/owners.
Thank you for all that. Let’s now turn to the main focus of our discussion. Can you share with our readers a story from your own experience about how you lead your team during uncertain or difficult times?
From day one I have always prioritized building a sustainable business with a strong foundation. Thousands of pieces and decisions add up to create where your business is today. If those micro-decisions are made with care and deliberation, the result is a business that can better weather times of uncertainty and challenge. For example, many stakeholders exerted influence on us to take shortcuts in exchange for short-term benefits. Think raising excessive capital and spending too much too early. Many companies who take those shortcuts end up with rapid inorganic growth and an unsustainable burn rate.
Because we built RentSpree with quality from the beginning, we were able to weather a couple Covid-19 down-months with virtually no impact to our business or our team while others ran out of cash and ran into widespread layoffs. In short, effective leadership is not just required during turbulent times, but I would argue effective leadership is necessary at all times.
Did you ever consider giving up? Where did you get the motivation to continue through your challenges? What sustains your drive?
My main motivation is derived from our team. Anytime I need extra drive, I just think about all RentSpree’s hard-working team members. They devote their time day in and day out to the betterment of RentSpree and my promise to them is to continually pursue excellence to ensure that they ultimately get way more out of RentSpree than they put in. That said, I’ve never considered giving up and I see opportunities in all challenges I face.
What would you say is the most critical role of a leader during challenging times?
That would be to lead by example. When you can show others the path and that you care you get everyone pushing in the same direction toward a common goal.
When the future seems so uncertain, what is the best way to boost morale? What can a leader do to inspire, motivate and engage their team?
We boost morale by frequently conveying our company vision and mission, especially with members of the team who are not as connected with customers. It can be easy for our engineers to feel disconnected from our end-users. But by saying and showing the vision and mission, we can orient team members and remind them why they are coming to work each day. For example, our company mission is “To build connections between renters and property representatives resulting in the ideal property match.”
What is the best way to communicate difficult news to one’s team and customers?
The best way to communicate difficult news is to be upfront and not hesitate. The more you can be clear and quick, the more options you give to your team and customer to make alternative plans. By delaying or being cryptic, you’re putting everyone at a disadvantage and reducing their options.
How can a leader make plans when the future is so unpredictable?
When facing severe unpredictability, the best plan to make is to plan for flexibility. By that I mean leaders must be ready to adapt more quickly and make decisions within a shorter time frame in order to pivot or correct course. Leaders often maintain the same processes and mindset that they use during normal times. This is not effective nor is it productive during unpredictable times.
Is there a “number one principle” that can help guide a company through the ups and downs of turbulent times?
The number one guiding principle once a company hits turbulence is to refocus on the customer. As long as a company is continuing to provide significant value to customers, that alone can help guard against a variety of other challenges.
Can you share 3 or 4 of the most common mistakes you have seen other businesses make during difficult times? What should one keep in mind to avoid that?
The first mistake is “duct-taping” problems instead of addressing root causes. For example, if your business’ customer acquisition is slowing, the first answer shouldn’t be to increase spend on PPC campaigns. Instead, leaders would be better served to rethink their acquisition channels or re-evaluate the product to ensure it is providing value to users.
I also see many hesitating to take action. As the old saying goes, “he who hesitates is lost” and this couldn’t be more true during trying times. Finally, I often see leaders losing sight of the core mission of the business.
Leaders should be sure to face problems head-on and take decisive action to advance the company mission.
Generating new business, increasing your profits, or at least maintaining your financial stability can be challenging during good times, even more so during turbulent times. Can you share some of the strategies you use to keep forging ahead and not lose growth traction during a difficult economy?
We always maintain a customer-centric mindset whether times are good or bad. By obsessing over understanding and providing value to your users, you ensure that they will stick with you to carry through even when times are tough.
Here is the primary question of our discussion. Based on your experience and success, what are the five most important things a business leader should do to lead effectively during uncertain and turbulent times? Please share a story or an example for each.
Build sustainability during times of stability
In RentSpree’s early days, there was great pressure to raise excessive financing and increase spend to artificially boost earnings. We opted to avoid this shortcut and instead focused on achieving product-market fit in a way that would prevent RentSpree from collapsing under its own weight. By taking these steps, we were well-equipped to handle the few slow months we had because of Covid-19 and even were able to continue hiring during this time.
Be ready to make quick, decisive decisions
We originally launched RentSpree as a rental “marketplace” that had rental listings for applicants to apply for online. We quickly identified the challenges in attracting renter traffic to our website and pivoted quickly to create the transactional tool that RentSpree is today. With an imperfect product and limited capital, our quick decision to pivot is what carried the company through to ultimately achieve success.
Obsess over your customer
When building RentSpree’s foundation, I spent months on end driving to meet users and present RentSpree in person at real estate offices all over Southern California. Gaining this intimate knowledge of our customer helped us to address their pain points in the rental process. Even today, our team is constantly logging user requests and feedback, and we conduct user interviews to ensure we never lose touch with our customers.
Lead by example
There were times in our past when it was necessary to make something happen in order to get to the next level. This can include getting a new partner, securing additional financing, or making a key hire. When pressure is prevalent, sometimes it falls to a leader’s shoulders to elevate the team. This sets the stage for the company and inspires the team to follow suit.
Use the company mission as a guiding light
During the most doubtful of times, the company’s overall mission should serve to orient and inspire the entire team. RentSpree’s mission is “To build connections between renters and property representatives resulting in the ideal property match.” When we keep this in mind, we realize how important our product is in determining how people can secure housing. Every company should provide value to its customers, and the mission should succinctly summarize that value for the entire company to align behind.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
“In order to achieve your goals for tomorrow you need to work hard today”
How can our readers further follow your work?
Thank you so much for sharing these important insights. We wish you continued success and good health!