“Let’s Make These Great Jobs”: A Q&A with Alfred Founder Marcela Sapone

The proptech pioneer Alfred has just raised $125 million. Cofounder Marcela Sapone explains the company's evolution and future.

Alfred cofounder Marcela Sapone (courtesy Alfred)

The company originally called Hello Alfred launched in 2014 as a personal amenity service for apartment  buildings. It has since evolved into a property management platform used in more than 40 US cities. On March 8, the New York-based company announced that it had raised $125 million, in a round led by Rialto Capital, specifically to make acquisitions. Its first target is RKW Residential, which owns 30,000 units in the Southeast. Alfred is also one of the few prominent female-led fintech companies; cofounder Marcela Sapone sat down Wednesday for an interview with Observer executive editor James Ledbetter. This transcript has been edited for length and clarity.

Observer: Is the company now officially Alfred as opposed to Hello Alfred?

Sapone: Yeah, it is. We kind of got the hello because our URL was helloalfred.com. And I kind of went with it when we launched originally, but then our corporate name is Alfred. It’s just so confusing.

Observer: When you launched, you were mostly focused on providing service for tenants. Can you talk a little bit about the evolution of the business?

Sapone: We approached this industry—residential and rental real estate—by coming at it as the resident ourselves, and we were building Alfred believing that help should be a utility, as simple as turning on electricity or water. And I wanted to be able to ask for anything I needed when I needed it, how I would need it, from a trustworthy brand. And we definitely created a category of in-home services. From there, how the business scaled is really having density and that naturally meant working in buildings. And as we spent a lot more time in buildings, it became very obvious that they were not being managed with technology. They did not have a consumer-first mentality and the overarching experience in these buildings is not a good one. And the industry standard for churn in a rental community is close to 50% per year. And the [Net Promoter Score] is on par with a cable company, negative 11.

So when we started partnering with owners and operators offering Alfred as an amenity, we started to go deeper and deeper into: What is the technology that can actually manage these properties? And how can we get people who are operating in these buildings to be focused on the resident and instead of focused on manual jobs that automation and tech can really handle. Like most people still pay their rent with paper. So in 2019, we made an acquisition of a company called Bixby, which is a property management software company that had everything: amenity bookings, maintenance requests. And we built that platform out into a much more sophisticated operating system. So today we’re the only resident-facing operating system that is in buildings and is covering everything end to end.

That’s things like listings, the digital lease signing process–which doesn’t exist in, in most buildings–the ability to add your insurance, to have a moving experience that’s completely digital and choose from movers. that are approved by the building, coming into your apartment, setting up service routines, like pet care, getting recycling set up in your apartment, getting your TV mounted, and then just like everyday utilities that it’s a remote control for. You can book amenities with it. You can book work-from-home space in the buildings where we have co-working, you can pay your rent through it and get rewarded for that. There’s a forum where people are very, very active in posting. It’s also a place where people are posting about services they can provide.

So we’re creating income on our platform, which I’m really proud of. We come in and say, here are all the options. Here are the best prices you can get. You’ve got the whole bundle. Here’s the operating system to run your, your community with technology and take a consumer-first approach.

Observer: You mentioned the Bixby acquisition. You’ve made a number of acquisitions in the real estate business. What are the next pieces? What are you looking for in a future acquisition?

Sapone: [The RKW acquisition] is our largest to date. We acquired a property management company that has 30,000 homes in the sunbelt. We believe that having an operator that’s in-house lets us build the right technology to really automate, add data and to be predictive in a way that the industry hasn’t seen before. So I suspect we’ll probably make additional acquisitions, folks who are maybe focused more on student housing or focused more on active adult, and really building out a national platform. So we can see every type of housing category what’s the right software to build to make these communities really efficient. And then what are the right services to provide to the residents. The world’s changing and what I mean by that is a huge focus on ESG, net-zero emissions, climate change. It’s electric vehicles. What are the different waste and sensors and hardware to do preventative maintenance and to show energy usage?

How can we offset the carbon footprint? That’s where I want to be spending a lot of time in the future. And I think we have a really powerful platform to do that because 40% of all of the emissions in our environment are coming from the building space. One thing that we do naturally is we group services. We make things efficient. We go to the grocery store once for everyone which lowers the carbon footprint, all of our buildings, we’re driving to net zero with recycling and composting. My long-term aspiration is to make renting more sustainable than owning and more rewarding for the resident than owning.

Observer: One of the things that you’ve talked about from the beginning is the importance of making the building-based Alfreds W-2 employees, not gig workers. It seems like the rest of the world is now catching up to you with the various judicial rulings. Talk a little bit about the importance of that.

Sapone: I have a really firm belief that disruptive is kind of a misnomer. I think to transform and to evolve an industry is a better way to be a steward and a founder. One thing I really think a lot about is what is the future of work and where are people going to find good careers and good jobs. A lot of tech companies think about people as necessary evil, and you want to automate them away. If you can make someone more efficient and more inspired, build a relationship with a consumer, they’re the most valuable part of the tech stack. It’s a competitive advantage to have a labor force. And one that is loyal to you and is able to really be an ambassador of the brand.

The folks that are in the building, they know your name, they know your kids’ names, they know your pet names, they are a part of your everyday life. They can solve real problems that you have and be there to make your life easier. So we’re turning everyone in the building into an Alfred. Let’s make these great jobs, let’s pay really well. Let’s make it really competitive, and then be able to share this playbook with the entire property management industry.

Observer: I’m curious how the COVID pandemic affected your buildings and affected your business.

Sapone: We found ourselves on the kind of the front line, because suddenly everyone was at home and your home became the center of everything. The first wave of it was safety and security. Because we had W-2 workers, we could provide PPE and we could provide healthcare. We gave people the options of working or not working, but we were some of the few people who were actually delivering, going to grocery stores and bringing supplies into these buildings. The second thing that we saw happen is we had all of this data about what was happening. And we saw people who left their homes in the cities, and we saw what happened to vacancy. What happened to the rent payment, we saw the pain point from the owner’s perspective of people really losing their employees. Some of these buildings went unmanned. We saw more of our owners be receptive. It was like we’ve been pushing technology for a long time. And suddenly COVID was like, “I need technology because I don’t have enough people.”

So it really, in an interesting way, propelled our business forward. We sold a lot more tech, we sold new services, like we were no longer going inside people’s homes. Home cleaning has become such a minuscule part of what we do.

We’ve seen that trend’s gone down a little bit, as some people are going back to work, but many people are working remotely from their home. So the needs and what types of amenities these buildings need to retain residents are very different. It’s how can you work from home? How can you find spaces that are, aren’t just your small all apartment to be efficient? For example, Zoom rooms that you can book and be able to take a call with perfect A/V.

Observer: When you launched, “proptech” was hardly even a thing, and now it’s this massive multi-billion dollar industry. Where do you think it’s going?

Sapone: I think it’s so exciting to be on the wave of something, be a first mover in a sector, where there has been no technology. And suddenly there’s a plethora of new ideas, new concepts, but it’s such early days. We’re still looking at just the first cohort of companies that are maybe successful. You saw companies like SmartRent and Latch and Porch go public, but they all use SPACs. There’s a lot of companies in the proptech space that had great early traction, but are struggling to get venture funding, as newer proptech companies are getting venture funding. I still think we’re in the early days of it. It’s attracting talent that has a better understanding and some history in real estate, because there’s been a lot of guys who didn’t really understand the real estate space, which has been a big complaint from customers. It’s like, “you’re building technology, but you don’t understand my business.” “Let’s Make These Great Jobs”: A Q&A with Alfred Founder Marcela Sapone