By Meghan Hall
The pandemic has rapidly increased demand for tenant-based tech platforms, as communication between renters and landlords became almost entirely digitized over the course of 2020. New companies are evolving quickly to better connect the two parties, including Zego, has acquired several other proptech companies as it charts its expansion. The Registry connected with Zego’s Chief Executive Officer, Dirk Wakeham, on the goals of the firm and its perspective on the market.
Please tell The Registry a little bit about Zego. As a platform, how is it a resource for both multifamily operators and tenants?
Zego (Powered by PayLease) is a property technology company that modernizes resident experience management to boost retention, productivity and net operating income. Zego’s mobile-first engagement platform for the residential real estate industry unifies the most critical resident touch-points into one app. Everything seamlessly integrates into the property manager’s back-end system, from payments and utilities to communications and smart devices. Since its inception in 2003, Zego has grown from a payments provider to a comprehensive resident experience management platform.
Can you give an example of how the platform proved pivotal and useful not just on a day-to-day basis but in emergencies?
What’s top of mind is, of course, COVID-19 and how our world changed a year ago. Solutions like Zego were essential for residential real estate to safely continue operations. When everyone entered quarantine, it quickly became evident that residents and staff’s safest avenue to continue interacting was through digital means. This played out across multiple critical resident touchpoints such as rent payment, maintenance requests, and package management.
For example, COVID-19 eliminated the possibility for maintenance personnel to physically enter residential units— but that certainly doesn’t mean maintenance issues stop. Our platform provided staff with the flexibility to prioritize requests and provide contactless options like 1:1 virtual consultations and online ‘do it yourself’ tutorials.
Resident communication in emergencies, such as during the COVID-19 pandemic and natural disasters, is also essential. We saw this recently in the winter storm emergency in Texas. Thankfully, the Zego platform allowed for critical real-time updates and ongoing communication throughout the crisis— including correspondence providing the availability of 24-hour mobile charging/heating stations, lists of places to stay warm, and information about the Texas Rent Relief Program.
Zego recently acquired Mobile Doorman. How did the opportunity to acquire Mobile Doorman come about?
Initially, we were working with Mobile Doorman on a partnership between their app and our payment product, Zego Pay, as an in-app native pay experience was a top feature request from Mobile Doorman customers. As discussions progressed, we recognized the opportunity to combine Zego and Mobile Doorman to create the premier mobile-first resident experience platform on the market. We realized it would benefit all of our customers to shift the conversation to combining our organizations versus simply partnering.
Why was the acquisition a beneficial transaction for both companies?
By combining Mobile Doorman’s market-leading resident engagement solution with Zego’s streamlined Pay, Utility, and Smart offerings, we’ve created the clear resident engagement management category leader. By working together, we continue to drive innovation to support our joint customers.
Zego’s acquisition of Mobile Doorman is its third in two years. What are some of the specific business strategies that Zego has employed that have allowed it to grow so quickly?
Zego’s continued growth is centered around meeting and exceeding our customers’ needs and the market. We have a relentless focus on how we can best support our customers to not only attain their goals but be the behind-the-scenes “hero” in their communities. In 2020, Zego grew to well over 6,000 customers across the residential real estate market. This growth has directly fueled our ability to acquire Mobile Doorman and continue to solidify our leadership in resident experience management.
Is Zego pursuing other acquisitions or mergers at this time? Why or why not?
Our strategy at Zego is to continue to serve as the premier resident experience management platform in the market. To do this, we intend to continue rapidly innovating on our platform and build new features, explore new partnerships, and evaluate further acquisition opportunities— all in and around the resident experience management space.
On a more general note, what is the M&A landscape like within the industry to-date?
M&A activity within the proptech ecosystem continues to accelerate at a rapid pace— thanks in part to the incredible amount of innovation in our market that naturally drives continued M&A activity.
For example, RealPage’s acquisition of Buildium signals the continued increase in overall software adoption in all market segments, including the low to mid-market. We also saw SmartRent’s funding and RealPage’s acquisition of Stratis, which indicates the continued importance of properties investing in smart technology. Finally, VTS’s recent purchase of Rise Buildings shows that interest and focus on the resident experience continue to increase and play out in the commercial real estate market.
Looking ahead, how do you see demands within the rental housing industry changing? Why?
Demand for technology solutions within the rental housing industry is undoubtedly accelerating. While rental housing has been historically slower than other industries to adopt new technology, COVID forcibly accelerated the adoption rate.
Right now, we’re entering into the ‘year of the resident,’ and the resident is going to be focused on regaining those experiences that were previously impossible. As we slowly emerge from the shadow of quarantine, residents will be eagerly looking to host people and experience the communities around them once again. Demographically, Gen Z renters, while more frugal, will similarly crave those renewed connections and experiences. This means proptech is tasked with finding creative and affordable ways for residents to experience their communities, and just as importantly, share those experiences with other residents, on review sites, and through community surveys.
How will Zego meet these needs as they change? As more proptech platforms come to market, what steps is Zego taking to remain competitive? Why?
At Zego, we constantly engage our customers to discuss their goals and how we can support achieving them. These conversations tie directly into our product and innovation roadmap, ensuring we remain purposeful, thoughtful, and increasingly competitive.
For example, our customers demonstrate an ongoing focus on removing back-end friction by going paperless. In Q1 of this year, we rolled out multiple features to specifically meet our customers’ needs— including new capabilities like mobile check scanning and rapid account linking, expanded work order management capabilities, resident surveys, and enhanced Marketplace functionality.
Is there anything else you would like to add? Anything we should be asking?
When we look at the broader picture, the world has changed. Not just with COVID, though it has been a catalyst in the residential real estate industry, but with shifting demographics and the decline in rent growth. Simultaneously, the stakes are high with consideration to staff and resident safety, online community reputation, and resident retention. Because of this dynamic, we find ourselves in an environment where resident satisfaction and retention are critically important.
One of our latest podcast episodes touched on the cost associated with resident turnover and how it can take upwards of 13 months to recoup this expense. But property management staff members— instead of investing time ensuring resident satisfaction— are bogged down by a never-ending to-do list including paperwork, back-end maintenance, and other administrative tasks.
This juncture is where companies like Zego can provide relief through resident experience management solutions that increase resident satisfaction and boost retention, productivity, and NOI for property managers and owner/operators.