One raised millions from investors and grew aggressively. The other spurned funding and grew on its own word of mouth, never spending a dollar on marketing.
But for Zumper and PadMapper, two of the leading startups in the noisy apartment rental listing market, those different tactics were still leading to the same place: getting gobbled up by Zillow. “It was get bought or partner up and do something,” says Zumper CEO Anthemos Georgiades. “It made sense to join forces instead of getting eaten up,” says PadMapper CEO Eric DeMenthon.
Zumper, the younger and bigger of the two companies, is the one buying PadMapper. The deal is a mix of cash and stock for a bit less than $10 million, a source tells FORBES. DeMenthon and one colleague will be joining the Zumper team of 29 people in San Francisco, and the combined company will maintain both brands.
Together, Zumper and PadMapper say they’ll be the largest independent destination for apartment listings in North America. The two brands had a combined 4 million visitors to their sites in January 2016 and forecast 8-10 million that for the upcoming summer.
PadMapper had reached popularity first after launching in 2009, scoring millions of uniques while DeMenthon worked another job and turned down investors to make sure he kept control of his site. The company became popular with college students and recent graduates looking for roommates or cheaper spots. Zumper launched in late 2012 but raised more than $20 million in funding focusing on a slightly older demographic, while pursuing mobile visitors: 70% of its traffic comes from mobile searches and its apps.
Both turned down acquisition offers as Zillow, the multi-billion public company in home listings, swallowed up Trulia, as well as startups including Dotloop and most recently and close to home to Zumper and PadMapper, Naked Apartments at the start of 2016. “We might’ve languished and died with another company,” DeMenthon says. Zumper, meanwhile, was “desperately ambitious” to stay independent and become the biggest in its space, says Georgiades.
Even with the combination, the real estate listing market remains crowded, noisy, and as Georgiades notes, “incestuous.” Web searches are still dominated by SEO-hungry sites of various credibility, lookign to make cents off each click they get. Those who stray too close to Zillow’s core business get bought. While Zumper and PadMapper have focused on apartments, their leaders say they share a vision for a more end-to-end platform that guides renters through their entire real estate process. The company will use their brands to draw people in through search, then Zumper’s instant-apply technology to land them the place. They may also compete with startups such as local competitor Cozy to then handle upkeep such as rent. Says Georgiades: “We have significantly more scale.”
The exit puts some money in DeMenthon’s pocket, but for a big payday, he will have to hope his new Zumper stock takes off through the combined brands, which will share the same back-end. Zumper raised money to make the acquisition and plans to raise “a pretty large Series B” in the summer when it can show updated combined growth numbers to investors. DeMenthon says in hindsight, the decision to grow his business alone may not have been the best call. “It was a long grind,” he says. “Startups are a lot more work than the media makes its look like it is. You have to do the work consistently, every day.”
Georgiades says the mindset at Zumper embraces that grind, but while moving fast. “Don’t go to too many conferences and read to many blog posts,” he advises would-be entrepreneurs. “Just take a swing.”