Case Study: A Data Hub for Affordable Housing
Part 3: Business Models
It’s easy, right? If you’re building a tool to connect people with the affordable housing they need, the customer is the prospective tenant. The tenant is sad, then uses your tool (or goes through your “customer factory”), and is happy. Mission accomplished!
Except, of course, there’s much more to it than that. Last week, I was introduced to Dave McClure’s Pirate Metrics (so called because they spell AARRR):
So let’s add these to the model.
That’s what we’re looking for…except we don’t want to charge the prospective tenant for providing them the service. And we’ll still have expenses to cover to maintain the data, keep the filters working, and so on. So the direct model isn’t what we’re looking for.
The next model I explored was the marketplace model, where your company or tool serves as a matchmaker to connect willing sellers with interested buyers. At first look, it doesn’t have a lot of moving parts.
Then you realize it’s almost entirely moving parts — buyers, sellers, inventory, market value — with you holding it all together in the middle. For this model to work, we’d still need to charge the tenant something, and landlords would need to pitch in as well, and the value we could add would necessarily be limited. That still wasn’t capturing what we were trying to accomplish, so I moved on multi-sided model. Ash Maurya boils this model down to just a few words:
Users use your product, while customers pay for your product.
We’re clear that we have at least two users — prospective tenants and their prospective landlords — with no revenue from the tenants and potentially some revenue from the landlords:
Each of the users was getting something of value, but we still hadn’t identified the key customer(s). I worked backward to make sure our initial assumptions were correct:
Access to affordable housing is a major pain point for Austinites.
Austin is becoming more expensive as wages remain relatively stagnant.
Inventory of affordable housing (0–60% of median family income) is in short supply, while demand is rising.
There are not enough Section 8 housing vouchers to provide one to every Austinite who qualifies for one.
Not all landlords accept Section 8 vouchers.
Many developments designed to be, and remain, affordable have long wait lists.
The current system relies on multiple databases with different data entry standards/maintenance schedules; institutional knowledge; personal relationships; individual human memory; an inexhaustible supply of patience; and paper.
That system is, by its design, time-consuming, labor-intensive, error-prone, and inefficient.
This causes stress in all parties, beyond landlords and tenants, to include city staff and elected officials; housing counselors; faith-based organizations; those serving veterans, those with disabilities, and people experiencing homelessness, and many more.
All still true.
My bet is that our real customer can be found in Austin Strategic Direction 2023, and in the vision laid out for our city in Imagine Austin. I’m going to spend some quality time with this source material and see what bubbles up.
Jennifer Houlihan is managing director for Austin CityUP, a smart city consortium in Austin, TX.
