🏠 Out with the Old, In with Rhino

Before I begin the piece today, I’d like to give a special shoutout to:

• Paraag Sarva, Co-Founder & CEO of Rhino, for Zooming in to have a conversation about the journey to Rhino and the company today.

• Jordan Stein, Head of Public Affairs & Communications, for organizing the conversation and making this a reality.

Does a Silver Bullet Exist?

A common human fallacy is the belief in a silver bullet — a magical solution to solve all. In reality, it takes many micro-solutions.

Profoundly, this is advice not just for companies tackling an enormous market, but for our personal lives as well. For example, if you want to become a body builder, you can’t just workout. It’s a combination of sleep, diet, effort, time, discipline, and many more micro habits that create the whole.

So, why do I bring this up today?

Housing affordability is at the worst it has been.

According to the Federal Reserve Economic Data, the median sales price of houses sold in America as of Q4 2022 is $467,700. Naturally, the rise in prices is pushing more people towards renting. As demand has trickled down, median U.S. rent has rose to over $2,000 for the first time ever. We are at a point in American history where affording a home is at the most inaccessible point it has been.

All that to say, there is no silver bullet, but we, as Americans and entrepreneurs, can create many micro solutions to chip away at this gargantuan problem.

That’s a Grand You’ll Never See Again

Remember that thousand dollars you paid to your landlord when you first moved in?

Yea, no idea whether I’ll get that back either.

Slightly frustrating, isn’t it?

Here let me make you more annoyed — Imagine you go rent a car and the agency tells you to pay $1,000 upfront to insure the car in the case of an accident. You’d scoff at them — That’s what car insurance is for.

Too bad the same isn’t true for the rental industry.

Turns out, it’s a problem for millions of Americans — approximately 110 million renters to be precise. In America, there are approximately 40-odd million rental homes nationwide. Experts in the industry suggest that figure implies there’s a whopping $45-50 billion dollars of capital tied up in security deposits.

For perspective, you can buy outright Universal Music Group, 160,000 Lamborghinis, OR 4,000 private islands with $45-50 billion dollars.

That’s a lot of unproductive capital clogged in the plumbing of the American rental infrastructure.

TL;DR: It’s a pretty big problem.

Diamond in the Rough

Let’s go back in time. Over the course of the past two decades, there was a quiet observer of the real estate industry being groomed within the bowels of the finance, public policy, and technology sectors — Paraag Sarva.

Paraag is the Co-Founder and CEO of Rhino. Before deciding to embark on a journey to redefine real estate, he began his career amidst the bull market of ‘05 at Goldman Sachs in their Investment Banking Division. Upon completion of his 2-year stint, he spent some time as a policy advisor to Mayor Michael R. Bloomberg and subsequently, joined HowAboutWe, a dating startup in the technology space later acquired by IAC.

His multitude of experience in those three sectors eventually led him to pursue, what he thought at the time, his next adventure — Multi-family property management. This adventure gave him a birds eye of view of the New York real estate sector and the understanding of the nuance in the sector from bottom-up.

As a born and bred New Yorker, it was an exciting opportunity in a city with an ever changing street scape, but he quickly noticed property managers are not equipped to manage security deposits. The average property manager is equipped to fix boilers and re-finance when necessary, but managing multiple escrow accounts and fulfilling state-mandated requirements is foreign. As Paraag combed through his network, he quickly realized this was a shared problem amongst many within the New York real estate sector.

It was that unique insight in combination with his technology background that led Paraag to create Rhino.

Dating Services Aren’t Just for Relationships

Funnily enough, Paraag had gotten married around the time he started working at the dating startup, HowAboutWe. Admittedly, that never made him super excited about the product category from the perspective of its use case, but turns out he found another partner, Bryan Woods — Co-Founder & CTO of Rhino.

Bryan was the Lead Software Engineer at HowAboutWe and when Paraag left he said something to the extent of “Call me if you ever start a company.” Luck would have it that as Benjamin Lantos, Co-Founder, CRO, and fellow banker that crossed paths with Paraag at Goldman, were brainstorming who to bring on to build out the tech infrastructure, Paraag thought of Bryan’s parting words.

“Call me if you ever start a company.”

Founder Profiles —

Luck Surface Area

As I was speaking with Paraag, there were many moments where things lined up at the right place and the right time. I think it’s more than that. There’s this idea called luck surface area — Sahil Bloom explains it best:

I bring this up because Paraag was randomly introduced by friends to Ankur Jain, Founder & CEO of Kairos — A family of companies making everyday life better and more affordable. Maybe it was luck, or maybe it was a culmination of noise Paraag had made throughout his professional career. Nonetheless, their 30 minute coffee quickly turned into a two hour conversation which turned into Kairos participating in the financial backing and early product launch of Rhino.

Special shoutout to the investors in Rhino — Tiger Global, Lakestar, Kairos, Starwood Capital, Founders Fund, FJ Labs, FFVC, among others.

Customer Obsessed

Rhino is a company working towards creating solutions for housing affordability. With an emphasis on lowering the upfront cost of rent, Rhino is bringing innovative solutions to the archaic industry. Notably, the company created a low-cost insurance replacement (~$5) as a substitute to the traditional cash security deposit (~$1,000). Additionally, the company has a property management tool offering for owners that saves time and streamlines workflows.

As it is with any new product category, Rhino also finds itself in the seat of an educator. The team is well aware wide spread adoption will only happen if they are the trailblazer in raising awareness and education. However, it’s not only about awareness, but awareness at the right moment in time.

The way Paraag described it to me is to think about it as trip insurance — It isn’t something you think about on your walk to work or by the poolside, but it becomes relevant at the point of an airline ticket purchase. Following that train of logic, Rhino has, intentionally, embedded their product offering into the move-in application process.

A key determinant to success I’ve seen amongst founders is being customer obsessed. Most are slow to respond in the face of customer feedback, but Rhino has thrived and introduced new product offerings by listening.

The move-in process causes angst and anxiety, and often times, it feels like juggling many moving parts — broker’s fee, first and last month’s rent, security deposit, renters insurance, bank statements, and the list goes on.

Renters Insurance — In response to understanding headaches, Rhino introduced a renters insurance offering. This form of insurance is a financial line of protection in the case of events like theft and fire. Most landlords require it, and in the realization it is another big headache in the moving process, Rhino bolted on renters insurance — Another value-add service to customers.

Credit Worthiness — From the perspective of a landlord, the premise behind bank statements and credit checks is to understand the financial posture of a potential tenant. I mean, ideally, you’d like your tenant to pay rent. The problem is, there are millions of Americans with little to no credit history. Instead of shutting out millions, Rhino is introducing Credit+, a means to build credit via on-time reporting.

These innovations show Rhino is building a powerful suite of products making renter’s lives easier.

Cash Drawer

Rhino is still in the early days.

The team works with property owners that represent approximately 10-12% of the national rental market. Though that is significant customer adoption and proof of concept, Paraag is aware that is about 6 million homes in comparison to the 40-some-odd million rental homes in America.

Until the day all 40+ million rental homes accept security deposit insurance, Rhino is fully committed to providing a technology-first rental experience.

A little over a month ago, the company fully completed the integration of Deposify into the ecosystem and launched Rhino+, the first end-to-end deposit management platform.

Paraag’s mental framing describes the acquisition best —

To read more about the transaction, check out this PR Newswire article.

Above and Beyond

It’s truly impressive what the team has accomplished in five short years —

• Saving renters greater than $1 billion in upfront move-in costs

• Garnering support from 100s of elected officials across the country

• Introducing an array of technology-first products to modernize the rental experience

• Increasing transparency and trust between renters and landlords

If you want to take a part in tackling housing affordability and building a large, for-profit company, join the team of believers solving one of the greatest problems facing renters today.

Catch y'all next time inspiration hits. Till then, chirp at me on the bird app.

Cheers,

SK – A writer with a curious mind and an appreciation for novelty.