Case Study: Fintor's Relies On Daily User Feedback For Quicker Product Iteration

Fintor's Farshad Yousefi says, "You need to iterate on your product quickly while engaging with your first set of users on a daily basis to understand their pain from every aspect."

May 16, 2022

Author’s Note: I will be hosting a webinar with Farshad today on the Case Study at 5 PM PST today! Please comment on this article if you want to attend and I will add you to the calendar invite!

Introduction:

Farshad Yousefi is Co-Founder and CEO of Fintor. An Iranian-American immigrant, Farshad earned his bachelor's in finance from University of San Diego. He worked at a venture capital fund in Silicon Valley investing in early stage consumer startups. Soon he realized that money was not the only motivation in his life, he wanted to truly get out and build products that improved people’s lives. He co-founded Visionful, an AI-based startup that automated parking and transportation using computer vision. After exiting his last startup, he recognized that the barrier to entry for real estate was far too high. Not only for himself but for his entire generation. Fintor was started with that mission – to democratize real estate investing for all. Since moving to the United States, Farshad's one goal is to create positive change for the next generation.

Executive Summary:

Problem: Overcoming Real Estate’s Liquidity Issues

Millennials are constantly getting priced out of buying the most basic properties, leaving them unable to leverage a common avenue to build wealth as prior generations did. In addition, buying and selling real estate, a non-liquid asset, is a complicated and time-consuming process.
Market: Millennials Aspire To Be Homeowners In The $37 Trillion U.S. Real Estate Industry

Yousefi says, “From the results of our interviews, we learned that there is strong interest (8 out of 10) in the younger generation in investing in real estate, but they have no practical way of accessing this asset class.”
Solution: Do Not Get Overwhelmed By User Feedback

User feedback should be prioritized in terms of intensity and frequency. If you optimize for building features to solve pain points that occur on a daily basis and are highly frustrating for users, they will come back repeatedly and tell their network as well about your product or service.
Team: Conflict And Disagreement Is A Natural Part Of Startup Life

Yousefi says, “We see our debates as a tool to find better solutions, not a power trip. Our disagreements often lead to us building a stronger relationship because we see how passionate the other person is about the product.”
Fundraising: Mission And Vision Attract The Right Investors
Yousefi states, “As a founder, you need to choose investors who are determined and believe in your mission. At the pre-seed and seed stage, you really only have your mission and vision.”
Takeaway: Daily User Engagement Drives Quick Product Iteration

Yousefi sums it up: “You need to iterate on your product quickly while engaging with your first set of users on a daily basis to understand their pain from every aspect.”

Case Study: Fintor

Fintor cofounder and CEO Farshad Yousefi.

Problem: Overcoming Real Estate’s Liquidity Issues

Tell me about a problem or set of problems that you’ve had to solve on your journey to product-market fit.

There are so many user experience and functionality details that need to be considered when starting a fintech startup. In every aspect of the platform, you are building, the design, copy, and compliance requirements need to be aligned. As we started building Fintor, we figured out how to make real estate accessible by fractionalizing properties. Later in the process, we noticed that we needed to consider the holding period. So we designed a system that allows our users to be able to sell their shares during monthly trading windows. Iterating on your product and features is part of reaching the product-market fit.

Why were these problems so critical to solve? What was it like personally struggling to overcome these challenges to achieving PMF?

Besides the need to have a large amount of capital, historically, real estate has been associated with long holding periods. That is one of the main reasons that the young generation has been unable to invest in the real estate market. By securitizing real estate properties and following the regulations guidelines, we are able to create liquidity in this asset class. Given that fintech is a highly regulated industry, we had to find the right structure and partners in order to build our platform.

The most successful founders I've encountered and worked with have deeply struggled with what they are trying to solve. It's no different for us; real estate investing was only available to wealthy individuals.

When we started my last startup company, we would drive through these neighborhoods in Silicon Valley to get to the Stanford and Facebook campuses. This simple thought started our research and our understanding of how to spot real estate investments in up-and-coming cities. We wanted to start with a small investment and diversify our portfolio.

But soon, we realized that it's impossible for us to invest in real estate because there are so many restrictions and barriers to entry. There were no platforms in the market that allowed us to invest in real estate properties without all sorts of restrictions and without requiring huge investment minimums.

We knew this had to be a bigger problem. Other people must have felt discouraged too.

We decided to speak to our friends and colleagues. Soon we realized that real estate investing is the dream of every Millennial, Gen Z, and other underserved demographics. After extensive market research, we came to the conclusion that everyone had the same attitude towards real estate investing.

Real estate investing was inaccessible and reserved for the rich.

This is a $37 trillion dollar industry in the U.S. — and it's still not available to the majority of people.

There is absolutely no way of investing in this asset class unless you have thousands of dollars, plenty of time, and some background knowledge.

The American real estate market has consistently been the biggest driving force for prosperity in human history, with returns of about 10 percent annually on average and creating 90 percent of the world's millionaires' wealth. That's great news for some people but doesn't mean anything for the millions of people — including the 85 percent of U.S. millennials — who are stuck on the sidelines due to economic and psychological barriers to entry.

Real estate is pretty much an exclusive club for the wealthy, whether through personal portfolios, crowdfunding platforms, or real estate investment trusts (REITs).

Market: Millennials Aspire To Be Homeowners In The $37 Trillion U.S. Real Estate Industry

Let’s get deeper into the pain point or points you were trying to solve. Imagine I’m a customer thinking about using your product or service. How do you go about understanding my pain and creating a solution to address it?

In the early stages of your company, the key is solving the pain that your users feel on a daily basis. Oftentimes, you'll be surprised by how common you will hear the same pain points from different people. We've used different tactics to understand the main problem of the market. First, we used to run surveys and meet a few sets of our potential users to really understand the problem from someone outside of the founders' perspective. As we built our product, I've dedicated a large amount of my time speaking with those individuals to really understand how we can serve them better. Your company's success is built on your first several hundred users, and we are dedicating a lot of our time speaking with them and having them as a part of our Fintor family as we build the platform from the ground up.

Assuming you’ve managed to address the pain points I face as a customer, what additional information did you discover in your journey to PMF that there’s a large market in need of a solution to the existing problem?

Creating a product is hard, but starting a company is even harder. When we started Fintor, we only had an MVP product that we built using placeholder properties and data. We put the app up in TestFlight to get feedback from friends and family. That's when we noticed that so many of these individuals were inviting their friends to the app, even though everything we had built was not interacting as a real transaction. Later on, we gamified the process to really understand if there are needs for what we are building.

How did you narrow your scope of what portion of the market you wanted to tackle first? Who did you decide would be your first beachhead customers and why?

Being a millennial, I knew that my generation had been struggling to invest in real estate. All of my peers around me wanted to invest in this asset class, but existing platforms were broken in one way or another. We decided to start with the young generation as our beachhead market, given that we are in their shoes of them. We understand their needs better and have been struggling for years to diversify our portfolio in real estate. We are solving our own problem.

For us, finding our target market was very simple. We are sitting at the top of our target market, and traditionally, real estate investment has never been available to us. We decided to go a step further and survey a thousand individuals under the age of 35.

From the results of our interviews, we learned that there is strong interest (8 out of 10) in the younger generation in investing in real estate, but they have no practical way of accessing this asset class. More than half of the individuals we spoke with had long-term investments in stocks and crypto using Robinhood and Coinbase. The large capital requirement, complicated and time-consuming process, and low liquidity in this asset class are the major obstacles that need to be addressed for our users.

Usually, for startups finding their target market is not easy, but for us, given that we are millennials, it was clear that our generation is in the most need to access the largest asset class - real estate.

Solution: Do Not Get Overwhelmed By User Feedback

How did you build your solution to maximize its relevance with the customer and ensure product-market fit? If you haven't found PMF yet, what have you learned? What are the blockers for getting to PMF?

Some of the challenges with reaching product-market fit are being able to iterate quickly and getting a workable product to market. There could be a lot of reasons for not getting to PMF, but I think the biggest one is that you are not generating enough value for your end users. You need to think in terms of hours or days, not weeks or months. You need feedback now – not in the distant future.

What are some of the things you did that “didn’t scale” to shape your solution today?

We are currently hand-picking individual properties that we list on our platform. We know that this is not scalable, but given that we are an investment platform, we want to make sure that we are highly selective in our choices. The only way to succeed and make sure everything goes smoothly is to take on the unscalable approach first. I believe every startup goes through a process where, at one point in their starting journey, they've had to do one or multiple things that would not scale. It's something necessary to get the company off the ground.

What did you learn to best engage with your customers? How did you build a tight feedback loop with your customers to rapidly improve your solution to their problems?

My cofounder and I have opened our calendars to a lot of potential users. Even though it's time-consuming, they are the building blocks to our company reaching success. This takes hours and hours every week. We don't have time to get on a call with every user; we try to respond to every email we receive.

Walk me through how you landed your first few customers as you were building your product or service.

Our first user on our beta version of the app was one of our friends. We noticed that he invited over 100 friends to our platform that we had running on TestFlight and those individuals were inviting more friends. That's when we first noticed that we are truly building something impactful and something that the public wants to use.

Fintor started with a simple idea: use technology to build new legal infrastructure, allowing us to rethink how real estate investing is done. We essentially took our own problems as founders that we had in real estate and built a platform from the ground up. Along the way, we implemented a lot of features that we received from our users' feedback.

The most important part is that you do not get distracted by all of the users' feedback. The challenge here is to really see what features are most essential to keeping your current users on your platform and what features can be added long term to keep users happy. If founders get stuck on adding features at all times, this could lead to distraction from things that really move the business forward. Luckily, this was much easier for us, given that we had limited users on our TestFlight testing our platform with placeholder properties. This enabled us to get feedback from a smaller beachhead user and implement this feedback to bigger target users.

Team: Conflict And Disagreement Is A Natural Part Of Startup Life

If you have a cofounder, walk me through a time that you two had a conflict. What was it about? How did you handle the situation? What was the resolution, and how did it impact your working relationship with your cofounder?

If you and your cofounder are not having conflicts and disagreements, then you should be worried. My cofounder and I have conflicts very often, but we never make anything personal. We disagree often but at the end of the day, we do what's best for the company. I remember one time we were discussing adding a feature to Fintor, and we were in full disagreement. After a whole week of back and forth, we came to a resolution by one of us being able to convince the other that the feature is best if added. My cofounder went a step ahead and came back with user interviews that they would love that feature. It was at that moment that we both agreed to add the feature. These conflicts often happen in startups, and luckily my cofounder and I have been building multiple startups together. We see our debates as a tool to find better solutions, not a power trip. Our disagreements often lead to us building a stronger relationship because we see how passionate the other person is about the product.

Being in a startup environment, you are always learning about yourself. A lot of people like working at startups because of this opportunity – to keep growing, to try new things, and to take on new challenges.

In the early days, you are an essential part of a team that's trying to turn a product into an entire company. Every day you are either pushing yourself to learn something new or you are learning from your team. We all learn and motivate each other. At Fintor, we are not building another feature or product, or company. We are creating a whole new industry together.

What key qualities did you look for in key early hires to increase your chances of discovering product-market fit, and how did you prioritize what types of hires you needed to make first?

Hiring at the early stages is the toughest job. The first few team members will become founding members and literally set the culture alongside you. At Fintor, we look for individuals who understand the startup ecosystem and that they will need to wear multiple hats on a daily basis. Another core principle is that people can learn skills, but they don't change their values. We hire builders who share our values.

If there was a potential employee of your startup reading this Case Study right now, how would you convince them that joining your team is the next best step in their career?

If you want to create a new category in the largest asset class in the world and make an impact on millions of people, you should join us. Our mission is to democratize access to the real estate market for everyone.

Fundraising: Mission And Vision Attract The Right Investors

How did you set expectations with investors at seed and Series A? What is the main difference in those expectations as your company grows from one stage to another?

Raising a first round can be very difficult. As a founder, you need to choose investors who are determined and believe in your mission. At the pre-seed and seed stage, you really only have your mission and vision. As you grow, your key performance indicators (KPIs) become more important. Investors will want to see projections and your ability to execute. It's important that you as the CEO set the expectations when you walk into every investor meeting. For us, it's not only about the money but how much value investors bring to our company. If we were to go back and do it all over again, we would choose the same investors.

Takeaway: Daily User Engagement Leads To Quick Product Iteration

What are the key lessons have you learned so far from your journey to achieve product-market fit?

You need to iterate on your product quickly while engaging with your first set of users on a daily basis to understand their pain from every aspect. Do things that don't scale at first, but have a plan and a vision that gives you the chance to reach product market fit.

What’s the hardest problem you’re facing now after solving the prior one(s)?

We are focusing on hiring the right founding team members. Whenever you are hiring at this early stage, you want to make sure the person you are onboarding understands the startup environment. There is no process, no documentation, not yet. They have to help build out all of the systems. I advise every founder and potential employee to do their due diligence on one another in order to create a successful relationship. After all, you're going to be spending a lot of time working with these people while chasing your vision.

Click Here for Fintors’s Founder File:

Fintor’s Founder File Description:

Yousefi: “I built Fintor so that every person, no matter your age or net worth, can take advantage of building wealth through this asset class. Right now real estate is acting as its own exclusive club that only the rich can access. There is absolutely nothing available in the market that removes the friction in investing in real estate.”

Fintor's Founder File

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Martin Haiek, Founder of Around: Around turns unused office space into a network of dedicated workspaces on a monthly subscription.
Alpha Kargbo, Founder of Crypcentra: Crypcentra is an end-to-end digital asset investment system built for institutions.

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