Justin McGill
August 21, 2014 10 Comments AUTHOR: Justin McGill CATEGORIES: Behind the Scenes, Entrepreneurship

In the beginning of 2013 my digital marketing agency was looking to help our property management client come up with ways for them (and us) to provide more value to their residents.

It was a long night at the office with my wife brainstorming on my whiteboard. We came up with a concept to deliver apartment community news to residents while providing special offers to nearby stores and restaurants. I gravitated to that concept and began doing research.

There weren’t any actual competitors. I found that a couple of apartment complexes were doing this themselves, but seemingly no property management company had anything organized. Surprisingly, given my digital background, this whole idea was completely offline. We would be printing the news and coupons on paper and having a delivery service go door to door at complexes.

The revenue model was centered around selling ad spaces to local businesses around the community who wanted to provide a special offer to residents. We would not charge the property management company, in fact we offered a revenue share with them.

1 – Understand EVERYTHING That Needs to Be Validated

So, in my mind we needed to validate two markets. We needed to confirm that this is something property management companies would be interested in supplying to their residents. The other market would be that local businesses would be interested in purchasing ad spaces within the newsletter.

I’m not a fan of two-sided business models. Meaning, I have to sell two different sets of people in order for the business to succeed. eBay would be an example in the consumer space, where you need both a seller and a buyer.

This particular model, come to find out, actually had THREE sides that needed validation. Can anyone tell what else needed to be validated?

Well, this third thing went overlooked and it ended up shutting down the business. More on what this third reason was later…

Out of the gate, we had a top 10 property management company in the country sign on and let us work with 30 or so of their local properties. We put the addresses into our custom built system and it used Google’s API to pull in all of the surrounding businesses. We then began selling to those local businesses who were nearby.

After some massaging, building out marketing automation in our system, and a handful of other tweaks we found ourselves generating 2 to 4 sales per day.

2 – Don’t Worry About Scalability Too Early

We were seemingly off to the races.

Projections were beginning to look insanely good. We had a few sales people, and brought on an awesome ad designer. The top 10 property management company ended up wanting to invest in us.

We needed to think about scalability. How could we remove the printing costs? How were we going to get reliable delivery setup in every city when we took this national?

So we started looking forward and already had a plan to take this to a mobile app and we would print off newsletters telling residents to download the app. We wireframed it all out and spent countless hours thinking about scaling the business.

We were obviously way too early to be thinking about scaling this. One of the best stories I’ve heard is how Zappos got started. Their CEO actually went to local mom and pop shoe stores, took pictures of products and then posted them online. When orders came in, he would go buy them and ship them himself! Talk about not being scalable. That business was eventually sold to Amazon for $1.2 billion dollars.

3 – Talk with Potential Customers Before Starting

All things need to be validated.

Yes, we got the two things validated that we were concerned with.

1 – We had a top property management company onboard with aspirations of rolling this out nationwide as quickly as possible.

2 – We had local businesses signing up every day. As I mentioned earlier, this tricky little business model had a third market that needed validated.

The third thing we needed to know was, “Would residents use the special offers at local businesses?

In our case, we didn’t talk to residents to see if this was actually something they even wanted. We had assumed that everyone wanted to use discounts and special offers. We didn’t educate them on why this newsletter was put together or how they could get the most out of it.

This ended up killing the business because businesses were only sticking around for a few months at most. This meant we were churning through businesses, and there are only so many of them within a few mile radius of the apartment communities. Eventually we would run out of businesses to sell to.

We needed customers to be onboard closer to 7 months on average to cover costs and turn a scalable profit. That could change by upping the price, but it wouldn’t replace the fact that the local businesses weren’t getting customers.

Not Everything Was a Total Loss

We ended up building out a very robust backend that managed our entire lead generation, cold calling, graphic design, marketing automation, and printing processes.

It recorded calls our sales people made, automatically billed businesses when we sent the newsletters to print, pulled in all leads around the apartment complexes, sent ad proofs to customers, and a lot more. This, itself, may become a product we decide to license in the future (with tweaks to make it more universal of course).

In addition to the system that was built, I personally learned a lot of things about cold calling, how to hire sales people (both salary and commission only), and numerous other things I’ll be able to carry with me in future endeavors.


The business actually broke even and it was a tremendous learning opportunity. I think the most important thing is understanding what your revenue is dependent on and then working through all of the things that impact that revenue to determine what needs to be validated.


  1. Dave Schneider 10 years ago says:

    This is a great story Justin. To be honest I’m surprised that the customers weren’t using the coupons either? I mean I guess it depends. if it is some sort of specialty store (say like, fishing) I can see why that wouldn’t appeal to the majority of consumers. But if it was like, the grocery store, will definitely. Why do you think customers weren’t using the coupons and how could you have validated that up front?

    • Justin McGill 10 years ago says:

      Great question Dave. The communities were of all different types, high-end, low-end, and in the middle. All had the same result. It could have needed more education, more buy-in from the individual managers of the communities to spread the word, etc. All seemed a bit of a stretch at the stage we were in though. We even heard nearby pizza stores say they hadn’t gotten customers, which we felt was a pretty ideal special!

      • Dave Schneider 10 years ago says:

        I still think it’s a great idea though!

        • Justin McGill 10 years ago says:

          Hah – thanks 🙂 I did too. Started so incredibly promising also. Some really great experience with sales teams, print advertising, and a lot more though that I’ll be able to take with me.

  2. angela 10 years ago says:

    I also think that it’s a great idea! Just hang in there and before long and your company will be exactly where you want it to be! Good Luck

    • Justin McGill 10 years ago says:

      Thanks@disqus_CZGoCG9U4Z:disqus for reading and your feedback!

  3. Johnny 9 years ago says:

    I really like what you mentioned, “the most important thing is understanding what your revenue is dependent on and then working through all of the things that impact that revenue to determine what needs to be validated”. My grandfather owns a few properties. We are trying to fix up and renovate them. It is important to focus on what matters the most. This was really helpful. Thanks for sharing.

    • Justin McGill 9 years ago says:

      Thanks Johnny – definitely feel that is the key takeaway from the post so glad you found it useful!

  4. Elite 8 years ago says:

    I truly like what you specified, “the most imperative thing is understanding what your income is reliant on and after that working through everything that effect that income to figure out what should be accepted”. My granddad possesses a couple of properties. We are attempting to repair and redesign them. It is critical to concentrate on what is important the most. This was truly useful. A debt of gratitude is in order for sharing.

    • Justin McGill 8 years ago says:

      Nice – glad it helped 🙂


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"Justin is the proto-type of a 21st century business leader. Unmatched skills with evolving technology, combined with the social and emotional intelligence required to handle an increasingly advanced consumer." ~ Michael Lambourne of Blend.