Founder Origins: Mark Armstrong Co-founder of RateMyAgent.

Mark Armstrong is the Co-Founder of ASX listed RMA Global Limited which is the parent company of Australia’s number one real estate agent ratings and statistics website RateMyAgent. The business is a Melbourne success story that is now also building fast into the US and NZ markets. 

We caught up with Mark late last year, pre-COVID 19, to learn about his entrepreneurial “origin story” and to explore what it takes to be a successful entrepreneur.

Mark, when you look back on your life now, what were some of the things that led you to the startup world and to starting your own business?

MARK: For me, I think it was about taking control of my own destiny. From a very young age, and my whole family is the same in this respect, we wanted to be able to follow our own paths, not follow what someone else was telling us to do. My aim was always to achieve freedom, not just financially but also the type of freedom that means when you get up in the morning, you can do whatever you want to do. For example, I was fortunate to be able to spend three years traveling the world and I was able to just wake up, have no idea where I would be going, see a bus, and just jump on that bus and let it take me to somewhere else, some new experience. That’s true freedom.

Looking back, what do you feel are the traits and personality characteristics that have driven you to where you are today?

MARK: I think you need a certain amount of confidence. Also, I never really feared failure, I guess, and I have always worked for myself. Hopefully, nowadays, people see that failing is just a learning curve. Not having that fear of failure and being able to pick yourself up and move forward is really important.

Is there a story you recall or perhaps a family anecdote that comes to mind from when you were younger that might have suggested you would be an entrepreneur?

MARK: That’s a really good question. I think that being the youngest in the family, (I am one of four) might have something to do with it. I don’t know if that is common amongst entrepreneurs – being the youngest. As a family we are all very close, but possibly when you are the youngest you feel like you have a bit more to prove. So I might have been affected by that.

As the youngest, you are the smallest, often the last in line, often the one who misses out. The older ones tend to go off to the Royal Melbourne Show but because you’re too young you don’t get to go. I don’t actually remember that happening, but you know what I mean, you’re not tall enough for the rides - I didn’t get to go as the youngest. Like the family I grew up in, I’ve got four kids too, and I can see similar character traits coming through in my kids now with the younger ones. Maybe it is a function of where you land in your family birth order that the youngest ones, in a good-natured way, tend to have more to prove.

If you think back was there an early entrepreneurial pursuit you took on? Did you sell lemonade at a stand? Anything classic or clichéd like that?

MARK: No I never did anything like that. I was probably more of a daydreamer, I’d sit and daydream about what I could do in the future, but for me, for whatever reason, I always had this interest in real estate. I used to drive the streets with my father when I was 17 and 18 years old, driving through the streets of Richmond looking at real estate. He bought an investment property and 18 months later, when I was 19, I bought my first investment property too, with my brother. 

Was your Dad in real estate?

MARK: No, he was in Foreign Aid in the non-profit sector. We just had that really strong interest in real estate. We would get up every Saturday morning and pick up The Age newspaper because we didn’t have Domain and Realestate.com then, and we would circle the properties and write our open for inspection list out. Then we would drive the streets of Richmond, scooting across town to get to each open. It was good fun. Even to this day, we will be driving somewhere on a Saturday to kids’ sport and my wife Libby will say “where are you going?”, and I’ll say don’t worry I’m just going to shoot past this property and check it out and, oh it just happens to be open for inspection, so we might just pop in and have a look. We often zig and zag through Melbourne, kids and wife not knowing where we are going, but if there is an open for inspection nearby, we will stop, jump in and have a look.

Tell us about RateMyAgent. When did you and your co-founders come up for the idea for your startup? Has it changed or evolved in terms of service/product offering from when you first started?

MARK: There are three co-founders, Ed, Xavier and me. We (Xavier and I) had been working in the real estate business advising people about property, and we got to the point when we really wanted to build a scalable business. And when you are advising people and when you are in a transactional business like that, it’s very hard to scale that because you hit the ceiling very quickly based on resources and staffing.

What year was this?

MARK: It was 2012 – we initially came up with the concept called Property Tycoon which was an auction tipping competition and that’s when Ed joined us and we started to collect data from the internet. The idea was that we would run a game where you could tip on property auctions and if you tipped, say $1m, and it actually sold for between $950k and $1.05m then you’d win the tip like a footy tipping competition and the value of the property would go to your virtual portfolio. Then, at the end of a season, it was going to be a 10 week round, you would win a cash prize. This is something we have shelved at the moment, but it’s still one of my pet projects that I might pick up down the track. (Ed: Since the interview, Property Tycoon – “A gaming app to tip on real life auctions across Australia” is live and running).

So that’s what we were trying to do and then Ed got on board and we were collecting data, and I remember it very clearly, the three of us remember it very clearly, we were looking at data from Richmond and Ed showed us a pie graph of all the agents in Richmond and how many properties they had sold and we could see the average sale price and we could tell which agency had the biggest market share. There was all this really rich data that no one was using. That was the moment when we realized it wasn’t Property Tycoon we should be working on, it was RateMyAgent. And it all happened very quickly from there.

What is the problem you are solving? When did you connect the data you had with a problem?

MARK: The problem we are solving is one of transparency. There are a lot of issues in the real estate market with transparency and consumers not really knowing what’s going on in the market. We wanted to help address that transparency issue. So we built a platform that is completely independent and all it does is highlight the best agents in the market. They can’t pay to look good, it’s not a marketing tool in that way and it’s not ranked based on the quality of the property either, so we are completely independent. And our view on who are the best agents, is that it’s not necessarily the person who sells the most property that is the best. If that were the case, the idea of volume being the best, then that would suggest that a Toyota is a better car than a Ferrari which isn’t necessarily the case - just because Toyota sells more cars doesn’t necessarily mean that they are better cars than Ferraris.

So, for us, it was around customer feedback, the best agent is the agent that gets the best customer feedback. Of course, they still need to transact and sell property, which is an important factor, but in the end it’s really the customer who should be in control of determining who the best is. So that ‘s really the problem we wanted to solve and why we want to get as much feedback from the customer as possible and then deliver that information back to the next customer based on what the previous customer had told us.

If it’s not too confidential, please give us an idea of the current (Ed: numbers updated as at July 2020) scale of your business?

MARK: We don’t have any secrets as we are a publicly listed company now – so it’s all out there. As per users, we are pretty strong in the Australian market. Agents who sell 80% of the property in Australia are on RateMyAgent, and one in three properties sold in Australia gets a review on RateMyAgent. So we have a database in Australia that has more than 810,000 reviews. There’s around about 70 people in the business, with the majority of them here in Richmond. We also have a US based office in San Diego and a total of eight US based colleagues across San Diego and North Carolina. We have around 60,000 agents in the US engaging with the platform and that’s growing. The US market is the big one for us. We are still building out and developing the product in Australia with a strong view to cracking the US market.

Let’s move to your co-founder relationships. How would you characterise a good co-founder?

MARK: You’ve got to make sure that all the people in the business, not just the founders, are enjoying the journey. This isn’t easy to do because you can get bogged down in the day to day. I think it’s really important to enjoy the journey and to celebrate all the little victories along the way. I was thinking of a football analogy the other day, and every time a team kicks a goal there’s a big celebration. They may not always win the game, but they celebrate all the little wins and I think that’s what’s important in a business.

It’s also important not to take the hits too seriously. If we make a mistake no one dies, we are just collecting reviews of real estate agents. So we don’t take it too seriously. It’s a common saying here that “remember, we are not saving the world”.

Do you think you are similar to your co-founders?

MARK: Well, not taking things too seriously is pretty common amongst the founders, but we are different in the way we approach things and that feeds naturally into the roles we play in the business. For example, the difference between Ed and myself is that his attention to detail is incredible, he is a software developer, he is the CTO of the business. Ed is very analytical and structured, he looks at all of the detail, whereas I am probably the least detailed person. I float across the top of things and don’t drill down too much into the detail. You’ve got to have people who complement each other. Our complementary skill sets have played an important role in us achieving the goals of our business.

If you don’t mind, please tell us about your early experience with funding and approaching investors.

MARK: Yes, I’m happy to talk about this. We are pretty unique in the way we did this. In the early days we went around to talk to potential investors, and I think a lot of founders will relate to this, the feedback you get is, “It’s a great story but it’s just not right for us”. The number of times you hear that from investors! However we were lucky enough to have our first investor, an angel investor be David Williams, he’s an investment banker here in Melbourne.

David’s been wonderful for our business. This is another example of why it’s important to have complementary skills to run a business. David didn’t really get involved in the day to day running of the business, he trusted us to do that and, to be honest, we didn’t get too heavily involved in the financial structuring and the raising of money after David got on board and became a shareholder. He looked after that. He invested $1m in 2015.

How many meetings did you have before that happened?

MARK: Not many.

Did you know David before?

MARK: We met David through Xavier’s brother-in-law who put us in touch with David and David liked what he saw and he had an instinct that it would work. So we popped around to David’s house one morning and said, “we’d like you to invest $1m bucks” and he stood up, shook our hands and said, “no problem.”

Hang on, that sounds way too easy! Wind us back a few meetings before when you first thought you had a genuine investor. How did you prepare for it?

MARK: Thinking back, I don’t think we did prepare for it. We just rocked up and went with the flow. I don’t think we even had a deck. We had a website and we had users and I guess that was our “deck”. I think we initially spoke to David to see if he could raise money through his channels and we thought about that, and in the end, we came to the conclusion that we really just wanted David to invest and, to his credit, he said yes. Deal done.

At the time people might have thought we did really well with this investment from David. However, it’s important to realise that the value of the business is actually always evolving. Everyone thought when David invested we had a win, but actually very quickly it was David who had a win, and that probably meant that it was the right valuation. It very quickly transitioned from a good deal for us to a good deal for him. And as he has supported us, the business has grown and we have always felt very confident with that and comfortable with him and it’s been a very good relationship and worked out for both parties.

What advice would you give to someone looking for money and walking in your footsteps?

We see a lot of investment decks come through and the problem with most of them is that they are too early in terms of their development. Often, they will just be an idea. If we take a step back, to before we got an investment, we had bootstrapped the business, we were running two businesses at the same time - Xavier and I were running a property advisory business and we were out there, actively helping people buy property and we had a mortgage broking business so we had a mortgage trail coming through. Damien Roylance was a business partner in the mortgage broking business, and he was there writing loans and getting revenue through the door.

So you’d done the hard yards, the early yards?

MARK: Yeah well it’s that whole thing about taking ten years to be an overnight success. I mean the knowledge that we gained through advising in the property market and being involved in it was incredibly valuable. Xavier, Damo and I were involved in more than a thousand transactions so we knew the ins and outs of the property market, we knew what we were doing. We knew how to negotiate the sale of a property; we knew the psychology of real estate agents. A lot of founders or people who start a business, will see something and say, “We want to get involved in that” but we’d spent ten years in it and we knew every facet of the real estate market.

So while you were doing that you were also working on RateMyAgent?

MARK: Yes that was funding the growth of RateMyAgent. It meant we could build it out. At that time there was only Ed and a few developers so we could fund those people and we also took on some debt as well. I think we racked up $600k in debt. We got the business to a stage where it wasn’t just a concept. It was working and I think that’s one of the main reasons David saw this as a going concern. We didn’t have a lot of revenue, but we had a little bit of revenue, and you could see there was light at the end of the tunnel. In contrast, we see many slidedecks where it’s just a lot of hot air. We had not just a business model idea but a proven product that the market was actually using - reviews and ratings were growing and customers were active on there. It wasn’t an idea; it was a product and we’d built it to that stage. 

I think that founders have to back themselves. It needs to be more than just an idea that will only work if they can raise funds. They need to back themselves and put their own money on the line first – then investors see it’s not just an idea but an actual operating business.

We were pretty confident. Remember we weren’t new to this. I don’t know if we would be considered “older” founders, but in this space maybe I was older. I had some previous business experience. I’d run a building development business with my brother, and I had been running businesses since I was 25 after returning from my three years overseas. Most investors back the founders and their experience and that was probably Ed, Xavier and me, and it put us in a fortunate position. We were backable.

Do you still have the two other businesses?

MARK: We sold off the mortgage broking business to Damo and we let the property advisory business die off – I did my last deal a few years ago.

It must have been really busy – running three businesses?

MARK: It was busy, but it was fun. When you get to scale you think back on those early days and the little fun things you could work on. Hanging around and having a few beers on a Thursday evening trying to crack a problem with only two or three of you sitting around and having those little wins. I think every founder would relate to that; they are the really fun times. 

I remember when we first launched the platform in Queensland at a conference in the Gold Coast. Xavier and I flew up there with a little stand and we logged into the platform and there was no data there.  The whole database had crashed! You think this would be stressful, but it wasn’t, it was fun. We called Ed and we fixed the problem in the end. I think when you are in the thick of it, you don’t think of it as work. There is the saying, “find a job you love and you’ll never work another day in your life.” Well, we didn’t see it as work. We got off on solving the problem and really enjoyed it. It was busy yes, I think I had at least two kids at that stage, and we then had another two kids during that time too just to add to the workload!

When the business had its first injection of external investment, what was the first thing you did? 

MARK: We were really conscious not to change anything, we didn’t even celebrate. Others might get a cash injection and have a party, but we just looked at the runway that it gave us. We didn’t really change anything. We might have employed a couple of extra people, but we didn’t tell many people, we didn’t make a song and dance about it. We were really conscious that it wouldn’t change us. It just allowed us to keep doing what we had been doing, growing the business.

Did you move into a bigger office?

MARK: No, we had a dirty old office, an old warehouse shell in Richmond which was freezing cold in winter and boiling hot in summer. We bought a Coonarra (Ed: a wood-fired heater) for a $1000 to warm it up. That was the luxury we had - a Coonarra and a ton of fire-wood that we carried up the stairs each morning. That was pretty much all we did.

Did having an external investor change the way you managed the business?

No it didn’t really change the way we managed the business; we just saw it as being on the same path but just being able to go a little bit faster. We didn’t change our ethos or inner workings of the business, we didn’t change our philosophies, we didn’t change our spending habits. We still ran the business on the sniff of an oily rag. We still ran it very tight and only bought things we really needed.

Was there an investor relations piece? Did that start to happen?

We only had one external investor and David would catch up with us over a beer here and there, and we’d tell him what was going on, and share some updated numbers. I think that’s the benefit of having just one person as the investor and that person has a really strong skill set that we didn’t have. We relied heavily on David in that area. But once we had the money in the door, the short term problems we had really went away and it allowed us to put our heads down and keep doing what we loved doing. 

Did the finance function grow?

MARK: I was the finance person! So I did that, I’m a qualified accountant - wages, taxes, I did all that. As a team we were marketing, business development, accounting, product development, take-the-rubbish-out, do some cleaning, we were the wood-stackers and firelighters in the morning. We didn’t change anything; we made a very conscious decision to not change anything and to keep doing what we were doing.

How have you found the Melbourne startup ecosystem?

MARK: That’s a good question, because we haven’t really been involved in it, and I don’t know if you hear that a lot. I suspect most founders are similar in that we are all in our bubbles doing our own thing. I am sure that there is an ecosystem around us, and I know that nowadays a lot of our devs go to meetups and startup meets and that sort of thing.   We support them now, in the early days we didn’t, we just financially couldn’t afford it. Now we support a few startups here and there, and support them at conferences.

But if I look at it through the founder lens, we are all just managing a million things and have lots of balls being juggled in the air all focused on our business. It’s not that we have anything against the ecosystem. At the time we just didn’t see anything in it for us. We had three co-founders working together, we were bootstrapping the business and we didn’t want to get into the VC world because that was very restrictive and comes with strings - they want their pound of flesh, and we wanted to grow organically and naturally and that’s what David allowed us to do. He backed us and our thinking without putting pressure on us. We always knew if we needed more money, David could raise it and, ultimately, we did. It wasn’t a conscious thing to be involved or not involved in the Melbourne startup space. It just never really crossed our minds.

What about informal networks in the startup space?

MARK: A good way to put this is, for example, we’ve met the Vinomofo guys a few times but we don’t have a strong relationship because they are all about wine. Their experience and networks are all in the wine area. And, by contrast, we have experience and great networks in the real estate area – agents, agencies and people in that ecosystem and we are proud to be part of that.

We are a tech business in the real estate industry and so it’s not so much about needing to associate with other tech businesses, we interact with people in Real Estate not in tech like the Vinomofo guys interact in the wine sector.

Do you have a personal mentor or advisor?

MARK: Not really, I mean my father was the person I spoke to the most about it. Not so much about what we are doing specifically in the business, but as a broad advisor.

You think in the early days that the best thing to do is to get experts into the business to help you solve problems, but what we realized as founders is that we were the experts in our business and outsiders usually cause problems. They didn’t really understand our business. So very early on we realized we needed to back ourselves and back our thinking.

Once you bring in external consultants, they need to learn the business and you have to teach them, and they don’t generally share the same philosophies and outlook as you. Again it sounds very insular, but we realized that within our four walls we probably had enough knowledge and all the best data and we knew what we wanted to achieve. We still went out and talked to people and listened, but it wasn’t a mentor or advisory group – opportunities, thoughts and ideas are everywhere. Similar to the saying, “keep your eyes and ears open but your mouth shut” is very much how we approached things. We listened, we looked, we learned but we didn’t have a mentor or advisory board as such. The closest to that personally was Dad.

What are some of the hardest decisions you have had to make to get your business to where it is today?

MARK: The hardest decisions I’ve found have always been the people decisions. We don’t take things too seriously, we do want to have fun and have some joy, but we did realise that some people were not right for our business. Getting the right people on the bus and wrong people off the bus is what you need to do, and it’s the hardest thing to do because it’s not personal.

Again, I relate it to football. You might have a centre-half forward who has been with the team for a long time, but if they are getting old and can’t run anymore, it doesn’t matter how good they were or how much you like them from a social perspective. The harsh reality is that they just can’t do the job you need them to do on the field. And business is the same. Businesses outgrow people and that is something Dad taught me.

People play a role at a certain stage of growth of the business, but then the business changes and needs something else. And I include myself in this. I have many times been way out of my comfort zone because the business has grown so rapidly. Fortunately, I have been able to grow with it to date, but it is absolutely possible that ultimately my capabilities will be outpaced by the growth of the business.

It’s the toughest thing making those really hard decisions that are right for the business.

What have you learned in your startup that you didn't know before and that you’ve picked up through doing and experience?

MARK: I’ve learned everything and all from a base of nothing. I have learned heaps! From a technical point of view, I always thought that a web business was all about the look and feel of the website, but Ed really taught me that it’s the boring stuff, the data that’s important. And if you look at the really successful tech businesses in the world like Google for instance, they don’t have fancy UI, but they’re all built around typing in a question and getting an answer back.

A great tech business is all built on the back end. The front end is all about the show. People don’t remember if something worked, they remember if something didn’t work. So, if you type in something and don’t get the right information back, that’s not a design issue that’s a data issue. If a Google search takes ten seconds, we remember that, and we are not happy about it. We learned stuff like that and more generally about business and about ourselves.

When the business was new, when we started, we didn’t even know how we were going to generate revenue or even what the first product was going to be. I think at that stage of a business, you need to understand there will be a lot of mistakes made. It’s important not to take mistakes personally and to just learn from them.

A founder can play all of the roles at that early stage, but as the business matures it needs to become more structured. Reporting to investors, HR - I didn’t even know what HR was! But now I realise how important that is and you bring people into the business who have experience in running a more mature business and that’s when it can sometimes start to outgrow the founders. It’s not just business of course, that happens with footy players too. It’s sad if your identity as an individual is based on that business role or that position in a football team, but my identity is not really based on my role here. When my time comes there are lots of other things that I am interested in and I’d love to go and do some other things.

Let’s take your HR example a bit further. Now you have an HR function, how has your hiring process changed?

MARK: It’s more professional. We have a process now! In the early days, we hired on gut feel and we didn’t do too badly, but it was an instinctual approach to hiring in the early days. Ed had a bit more of an analytical approach to employing people in the dev department of course, because he could look at code and do coding tests. Nowadays it’s a process run by the HR team. There is even psych testing involved. As the business becomes more mature you need more structure.

Are you still involved in hiring?

MARK: Yes, but, depending on the level, it tends to be more of a “meet and greet” now that I spend a lot of time in the US. For example, I came back last week and there were five new people in the business whom I hadn’t met, and they had already been recruited and selected without my involvement. That’s just part of the process of letting go and allowing the business to grow organically. You can’t control everything; you have to trust in the capability of your people.

There is lots of research and interest in the area of founder wellbeing given the constant competing priorities and hands-on nature of startups and self-imposed deadlines as well as external pressure. Do you do anything in particular to manage the pressure and stress?

MARK: I think in the earlier days, probably not, it was me just talking to my wife, Libby, and my Dad. Being a sole founder would be a terrible world to be in, I think. Ed, Xavier and I had each other to bounce ideas off, or we knew if we needed to take a mental health day and just head down to the beach or down the coast for the night to just switch off – we always knew the other two would back the other one. We had that sort of support there.

When I needed it, I’d often just wander down to the water to swim and surf and I did some meditation too. I don’t have the commitment to do it every day, but once in a while I’ll still do it. It does help, but ultimately you just have to put everything into perspective. Really what are you stressed about? When you think about it, stress comes from two areas – worrying about the past and worrying about the future. I think that is where meditation becomes important, you can only control what happens today, things from the past have already happened and things in the future may never happen.

Was this always you? That you looked at things in this way?

MARK: I’ve learned that as I’ve become older and people die, you put things into perspective – and you realise things don’t really matter. I learned this over time, but as a family we had that attitude of enjoying life so maybe it was already there to some extent.

What advice would you give to a school leaver if they were weighing up starting a business or going to University (assuming that choice was available to them)?

MARK: That depends on what they want to do. If they want to be a doctor then they have to go to medical school. I didn’t finish high school, and in actual fact no one in my family finished high school. Times have changed a little bit but, for me, on-the-job experience is more important than academics. Although that being said, I did go back to University and got an accounting degree later in life.

In the end it really does depend on what you want to do. If a kid wants to be an engineer, you’ve got to get a qualification. If you want to be an entrepreneur, and I hate that word, but if that’s what you want to be then just get out there and start accumulating knowledge and work experience. I remember when I was advising people in the property market I’d make mistakes about the unspoken signals people were sending me and I’d learn from these mistakes. The sooner you can make mistakes and learn from them the better.

What are your thoughts on an MBA and how useful is it in a startup context?

MARK: Sorry to any MBAs out there, but I have no desire to get one. I don’t think it has much value when it comes to starting a business. However, as a business matures and crystallises and becomes more structured, then with more people, more complexity and more structure, maybe an MBA becomes more relevant and important then.

From your experience, is there any other advice you would like to pass on to someone thinking of founding a startup in Melbourne?

MARK: Just do it, get started and don’t give up.

Thank you for your time today and for sharing your startup origin story with us.

MARK: You're welcome!

This article was written by Luke Henningsen and he is Co-Founder of the growing startup community at Ucities which is being developed to help provide a dedicated space for founders and startup people to network and support each other. He also leads a business called Scale & Swing, which delivers executive search to startups looking for senior talent at a startup-friendly price-point. Feel free to reach out to Luke on LinkedIn or at Scale & Swing or join the growing community at Ucities.