Hutly: Solving Real Estate Challenges with Smart Contracts with Jeremy Hastings

0:00 Chris Titley: You're listening to a Day One FM show.

0:07 Jeremy Hastings: Pick My Brain is the podcast where founders pitch me their startup and I try to give them some useful advice so they can connect better with potential co-founders, investors, media, and of course, customers. My name's Alan Jones and I was a founder myself for about 15 years, and after that, an angel investor for another 15 years. So yeah, old. Some of my ventures have been successful and some failed disastrously, But I like to think I've learned a thing or two along the way, and maybe some of that can help you. So if you'd like to learn how to tweak your pitch, subscribe to the Pick My Brain show now, wherever you like to listen to podcasts.

0:42 Chris Titley: If you're building a SaaS business, achieving compliance with SOC 2, ISO 27001, or other in-demand frameworks can unlock major growth for your company and establish customer trust. However, this process is often time-intensive and very costly. Vanta automates up to 90% compliance, getting you audit-ready quickly and saving up to 85% of associated costs. And Vanta scales with your business with a market-leading trust management platform to help you continually monitor compliance, unify risk management, and streamline security reviews. Join 7,000 global companies like Atlassian and Dovetail that use Vanta to build trust and prove security in real time. My listeners get 10% off Vanta when they go to vanta.com/fun. That's vanta.com/fun. Hi, I'm Chris Tittley, and this is FinTech Fun, the podcast where I speak with Australian fintech founders and executive management and have some fun along the way, gaining insights about the person behind the brand. FinTech Fun is part of Day One, the network dedicated to founders, operators and investors. I'm joined by Jeremy Hastings, founder of Hutley. Jeremy, thanks so much for coming in into the studio.

1:56 Speaker C: Nah, thanks very much for having me, Chris.

1:58 Chris Titley: Jeremy Hutley, let's go back to the inception of the idea, the early days, how the business began.

2:04 Speaker C: Yeah, I might go back even a tiny bit earlier than that. So at the time I finished up at Rio Tinto, or just prior to finishing at Rio Tinto, I started a gelato espresso bar and in the second year we sold 17 tonnes of gelato.

2:17 Chris Titley: Wow.

2:17 Speaker C: So there's a reason—

2:18 Chris Titley: Right.

2:18 Speaker C: Gladstone's a little bit a little bit overweight, probably I contributed to that. But—

2:23 Chris Titley: What was the key flavour?

2:25 Speaker C: Oh, so our 3 big ones, boysenberry, salted caramel, and your sort of your chocolate and vanilla went well as well. So, and then grew that into a restaurant wine bar, had about 25 staff, 140 seats, and a general manager looking after that business and found myself a little bit bored, which is never great for a founder. So I was having a glass of wine with my cousin, he was complaining about his property manager and it brought back all these memories growing up. Grew up in Sydney, single mum, 4 kids. You know, we moved a little bit and mum did her absolute best and hats off to her, but we experienced firsthand, I guess, the stress and pressure of, you know, of someone owning or renting a home and saying, if I put in a maintenance request, will my rent go up? You know, when this lease ends, will be there another property to move into? And then I also reflected on a time where my wife and I had an investment property in Parkes in central New South Wales where we met. She grew up on a farm. And we chose the property manager because I played rugby with him and fantastic rugby player but terrible property manager. And so we moved to another property manager who was then caught with his hand in the trust jar and stole a couple hundred thousand dollars.

3:35 Chris Titley: Gross, okay.

3:35 Speaker C: Went to prison. We reached out to our tenant to find out that they had been paying rent. The property manager had been telling us that they were doing it tough and hadn't been able to pay, but they had been paying. And they also didn't have a working stove and a hole in their ceiling. So it's one of these moments where I reflected and went, "Cheers, you know, this agent or property manager in the middle has caused a fair bit of financial pain for me personally." But more importantly, I looked at the stress that people go through when it comes to renting a home and—

4:05 Chris Titley: Yep.

4:05 Speaker C: And so Heartley was really born on the concept that everybody deserves a safe, stable, and certain home, no matter what their circumstances are. So we're solving the problem of shelter, is probably the best way to put it.

4:15 Chris Titley: And Jeremy, when you saw that problem and you thought, oh, here's, you know, let's try and get a solution for it, what was the sort of the transition between like, you know, you going to work somewhere else or a full-time corporate job to then going, actually, I'll start something?

4:29 Speaker C: Yeah, so I'd left Rio by now and had been 2 years, oh no, a couple years more than that, yeah, 2 years out working in the restaurant wine bar. So I'd already been a couple of years out of the corporate side, but then I found myself, I said, oh, this tech thing is, there's something to this. If I expand the gelato bar across 10 locations, that's $10 million of capital, 70 staff, and not a huge return. And then I said, oh, well, tech, you can serve an unlimited market with absolute ease from anywhere. Yep. And access a global market. And that made sense to me from a business perspective. So I built a deck at the time. This is 2018. So this is kind of before the tech boom that we went through. It was sort of the very start of it. Built a deck and it was terrible. I saw it the other day and I was like, oh, that is horrible. And so—

5:20 Chris Titley: You know what I thought to myself the other day? It would be actually a great idea to get the decks of some of these companies and just put them up and just sort of like, not sort of laugh in retrospect, but just go where the business has gone from. I'm sure like Afterpay's first deck and a few, you know, I've seen Airbnbs and— Oh, it's terrible. Yeah, I saw Airbnbs the other day and I was like, Maybe you should do it for Australian businesses too. So I'd love a copy if you don't mind.

5:40 Speaker C: I'll happily hand it over. It's shocking. So, but we managed to raise capital off it. So I very luckily had a sort of a seed investor who was the owner of the building where the restaurant wine bar is. And he'd seen me work in that business for a number of years since 2014 through to 2018. And I shared the deck with him on the back of a license issue we're having with the restaurant. I said, "I'm going to raise money on Monday in Sydney and Tuesday." And so I flew to Sydney on the Monday. I get a call from him about 5:00 PM in the afternoon. You know, Jeremy, Jeremy, how did it go, how did it go? And I said, "Oh, you know, it's going, you know, as planned, meeting more investors tomorrow." And he goes, "Oh, got $750,000." And so he'd called a couple of mates over the weekend who turned out one owned a high-rise in Hawaii, Montreal, and the Gold Coast. Another one owned a sugar plantation in the US and, or sugar refinery in the US. Did the call around to a couple of mates and raised the capital. So I raised $750,000 on day one. Day two, then met with—

6:38 Chris Titley: A little slower on day two.

6:39 Speaker C: Yeah, I know, yeah, well, it was a little bit slow. So I met with our Beachhead Venture Capital, who's still on our cap table and have followed every round since, but they put in $430,000. So I raised about 1 point, I think it was 1.8 mil in the space of 48 hours. And so I went from, geez, we've got, this, you know, idea and now we've got some capital. And what we quickly realised that some of our early assumptions were very wrong. And so my original view is, why is there a property manager and agent? Can we replace them entirely? And that was not correct, you know. And what we learned in our research and in that first early days or early year of Hutley was that people don't want to be accountable for the biggest financial decision or nest egg in their life. They kind of need that intermediary. They need somebody there You can take them on the emotional journey.

7:25 Chris Titley: Yeah, true, yep.

7:26 Speaker C: Now what we did realise though was that doesn't mean the way it works right now is functional. And it certainly isn't. You've got an intermediary who spends more time dealing with transaction noise and crisis and less time on the human at either end of the transaction. And we said, okay, if we can bring efficiency to that process and so on.

7:45 Chris Titley: Instead of replacing it. Efficiency versus replacing, yeah.

7:47 Speaker C: Exactly right, yeah. And just get a better outcome in the relationship between all the parties. Turned our attention to smart contracts and turned our attention to the real estate contract more broadly. And you sort of fast forward today and we're doing a million contracts a year and 47% of the East Coast now using the platform.

8:02 Chris Titley: Wow. Two questions on that. One is, how did the name Huttly come about? We'll do that first.

8:07 Speaker C: Yeah. So originally it was rSmart, which sounds a little bit like arse smart. And so when I met with that investor—

8:14 Chris Titley: How do you spell that?

8:14 Speaker C: It was R and then S-M-A-R-T. So ArseSmart. And then when I met with the investor, Beecher Venture Capital, I remember walking into their boardroom and they'd drawn an arse on the wall before I got there.

8:27 Chris Titley: Right.

8:27 Speaker C: So politely rubbed it off, but you could still see the outline.

8:30 Chris Titley: And you went, "We're meeting with the arse company." Yeah, exactly right.

8:33 Speaker C: And I pointed to it about 15 minutes into the pitch and I said, "Look, we're changing the name." And they all burst out laughing. And so we then changed the name to Igloo Co. And igloo was, you know, will keep you out of the cold, was sort of the genesis.

8:45 Chris Titley: Yeah, that's very metaphorical.

8:46 Speaker C: Yeah, and so as the business grew, we realised we had 46 trademark infringements.

8:50 Chris Titley: Oh right, okay.

8:51 Speaker C: So we had to move away from that. So I then put it to the team at the time, I said, "Okay, we need to change the name. A .com would be great, and it's gotta represent shelter in some way." And so the team really focused on hut. It embodies a village, it embodies how we wanna work as a business, and it also represents sort of the rudimentary concept of shelter. And so Hutley was born from that.

9:10 Chris Titley: Excellent, that's a great story behind the name. And the second thing, you mentioned smart contracts now, and you're doing a million of them a year. For the listeners out there that don't understand smart contracts and exactly what Huttly does, can you explain that?

9:23 Speaker C: Yeah, absolutely. So we saw, you know, you've got this paper-based PDF document that traditionally was living in the filing cabinet. And that document or that real estate contract across commercial sales and residential leasing has a whole lot of value attached to it. You know, you've got the data that gets generated from it, you've got financial transactions, which is where all of the financial decisions stem from. And it's also the only intersect in real estate where all the parties, the vendor-buyer, landlord-tenant, agent or property manager, are obligated to transact. So we saw this contract is kind of crucial, the nexus of value to real estate. Now, smart contract is saying, okay, well, you know, a smart contract is blockchain, which I don't generally talk too much to blockchain, but I'm more than happy to. But we looked at Ricardian smart contracts. So how do you take elements of a PDF contract or a base contract and use blockchain where it makes sense? But for the rest, use what's Web2 or just cloud-based technology. So smart contract essentially now, what we do, Ricardian smart contracts, is we take elements out like payments, for example, or the bond, and we turn that into a smart contract, which essentially just brings the end users closer in a more efficient way to transact.

10:33 Chris Titley: Right. And then going through COVID and the period of sort of unprecedented uncertainty through that, how did you manage that and how have you come out the other side to where we are now, which is a rental crisis a cost of living crisis and shortage of accommodation?

10:50 Speaker C: Yeah, today's problem is really interesting. And I was at the, down in Hobart a couple of weeks ago, listening to the Assistant Governor Sarah Hunter from the RBA talking to sort of the crisis we find ourselves in. And a little bit stemmed from COVID So COVID resulted in a whole lot of supply issues. So you had restriction in construction materials. You had essentially a global slowdown in the ability to access those materials. And that has extended to where we are now. So pre-COVID, the number of people per property was 2.8 and now it's 2.2. And that drop-off, the RBA expected to bounce back, but it didn't bounce back. And that's mainly because people need an office at home. And so that third, fourth room is being utilised for work.

11:34 Jeremy Hastings: Yep.

11:35 Speaker C: Coupled with that was, you know, apart from that, the slowdown in the construction industry and access to materials, which increased the price of building. Was that the forecast of the Australian population back in 2015 was that we're gonna hit 27 million in 2040. We hit that in 2019.

11:52 Chris Titley: Right.

11:53 Speaker C: And so the fundamental assumptions around Australian population was out. And so you fast forward to where we are now and we're in a crisis. There's no supply, there's no supply coming through, not at the magnitude that we need. You've got different restrictions in the ecosystem, such as local governments are looking after planning and that process can be slow and cumbersome. Coupled with, you know, all the other pressures that the market's experiencing. So I think COVID was interesting for Hutley. Like, we were a little bit worried going to it. You know, what happens to real estate? And it's one of those things that is very unpredictable.

12:28 Chris Titley: I think everyone was. And what happens to the banks as well at the time as well.

12:30 Jeremy Hastings: Yes.

12:30 Speaker C: Yeah. And funnily enough, real estate improved, didn't go down as everyone expected. And then on the back of COVID it just kept going up. And so we saw, Not much change at all. We fortunately moved to subscription-based pricing pre-COVID. We were previously form-based pricing. Had we been form-based pricing, we would've seen a drop in volume and therefore revenue, but we'd moved to subscription prior to COVID, so we was a bit recession-proof by that stage. But post-COVID now, looking at the market, we're in an interesting place, and I don't see, there is no silver bullet. All we can do is look at products like Bondable to how do we actually make the process better for tenants and solve for some of those pain points in the existing ecosystem while the supply issue works its way through.

13:14 Chris Titley: Two questions on Huttly. Why do you think people have accepted your product and it's going really well? And secondly, in terms of collaboration with other partners, how important has that been?

13:24 Speaker C: Yeah, we've learned the hard way on collaboration. Some early lessons in a trial that we ran in Queensland, we were very early as a company and our maturity wasn't there to be able to serve the early proof of concept that we had. And so we took a lot of learnings from that and applied it to our new partnership in Victoria. The REIV have been an amazing partner. We're a finalist for the FinTech Awards this Thursday night, the Finneys, for the partnership that we have built with the REIV. If you look at some broad metrics, we've increased their subscriber base by 47% without a sales team.

13:56 Chris Titley: Oh, wow.

13:56 Speaker C: We've increased their revenue by 26% over the same period. But more importantly, what we've done is we've built member-first technology. So we've brought solutions to the hands of members that make their business more efficient and better. So Huttly is really— where we've seen growth and traction in the market is we're all about compliance, you know, really boring, but we're about compliant real estate contracts and how do you then facilitate the relationship of everybody over the top of that in a way that leads to a good outcome for everybody. Yeah. So we've just built really product-led growth. I hate that term, but we've seen that on our side. And we're now, only just now, 5 years into the journey, we've just hired a general manager of growth and a BDM team. And we've never done that before, never had to. But we've just seen great success. So we thought, okay, now it's time to invest in that growth.

14:45 Chris Titley: You feel like you've grown up as a business and now it's like put the foot down, full throttle, scale, scale, scale.

14:49 Speaker C: Yeah, it did. Yeah, absolutely. So the last 6 months I have, it's been interesting. We've gotta bring talent in. So we're at the stage where we're bringing in people that, 3 years ago, there's no way they would've looked at, we would've been too risky and too early. But we've now brought in our CTO, was the ex-general manager of architecture and technology for PEXUS around the exchange business, John, he's fantastic. He's brought a, you know, just a level of skill and experience and knowledge to the business that we would not have been able to get organically.

15:17 Chris Titley: And as a sole founder, I think that gives you sort of good comfort around the business as well.

15:21 Speaker C: Oh, absolutely. Until he points out all the problems and then you're like, okay, we've gotta fix, we've got a few things to fix.

15:25 Chris Titley: Go to the founder, he's only one of them.

15:26 Speaker C: And then we've brought on a general manager of growth as I mentioned, Sally, who's phenomenal. Di's come in as our CMO. And then we've got Joel as well on the team. So it's been a, we've got the right team now for the next horizon, which has been a process of probably 4 or 5 months to get there. But we're certainly now equipped to grow.

15:44 Chris Titley: Let's talk about the next horizon. What are the plans for Hutley moving forward in the next 12 months or so?

15:50 Speaker C: Yeah, absolutely. So we acquired a company called ADL Forms and we're migrating them to the, what we call the One Hutley platform. So bringing all of our solutions into one, platform, and that gives us the ability to cross-sell, upsell, and do a whole lot with the platform more broadly. I will also bring our data business. We own a company called propertydata.com.au, which is one of the largest data companies in Victoria for real estate. So we put the market clearance rates to Channel 7 on a Saturday night and The Age on a Sunday. So we're bringing that data business into the one platform as well. So a big part of this horizon is really the streamlining of our business. The second one is, as we do that, we'll be bringing more contract volume through our established revenue channels, such as utility connections, et cetera. Which will see an uptick in revenue. And then the third project that we're working on, which is still, you know, we're not far off doing a proof of concept, but a Hutley Pay, which is how do we solve for some of the really inefficient and high-risk areas when it comes to transacting real estate? And one of those is payments, how money moves.

16:48 Chris Titley: Yeah, right, okay. The intersection between prop tech and fintech.

16:51 Speaker C: Yes, yeah. So we're more of a fintech company than a prop tech. And it's only now that we've, We do about $18 billion a year of contract value on Hutley, and so now it's activating payments on the back of that volume.

17:02 Chris Titley: And Jeremy, as a sole founder of a business, we don't come across too many of them, the listeners out there, is there something out there that you've got a little secret hobby that not many people know about when you try to switch off from managing all these different things and scaling the business and managing staff and growing the business in different areas? What's a little secret out there that not many people know?

17:22 Speaker C: Yeah, I would've had a whole lot of shame attached to this 4 or 5 years ago, but I'm now a full convert. But I played rugby union for 20-odd years. And then about 4 years ago, a good mate Cameron said to me, "Oh, you know, you should give AFL a go." And I was like, "Oh no, that's sack religion." So I went to my first AFL training session at Morningside Panthers for the Super Cats, the over-35s. And the culture was just phenomenal. There was 70-odd blokes at training. Everybody's around each other. It was all about footy for fun and the mental health benefits. Benefits that come from that. And I just found this really supportive club. And so I've played since then.

18:00 Chris Titley: Oh, awesome. Have you ever played the Wilston Grange Gorillas?

18:02 Speaker C: I have. I've beaten them and lost to them.

18:06 Chris Titley: I've got a mate in the over-35s team that plays for them. But no, my son plays out there and had his 50th game last week.

18:14 Jeremy Hastings: Oh, fantastic.

18:14 Speaker C: I know him.

18:15 Chris Titley: Yeah, wow. But again, like the culture of that particular club and AFL in general is again, for someone like myself that grew up playing cricket and basketball, Just very unique.

18:27 Speaker C: Yeah, and I now give back a little bit. So I coach the under nines. I've been coaching for 3 years. I call myself a participating parent because I think a coach is a stretch considering my lack of background in AFL, but I've got a high performance coaching team around me. So there's 3 other parents.

18:41 Chris Titley: Yeah, for the under nines.

18:43 Speaker C: Yeah, that have played before and know what they're doing.

18:44 Chris Titley: How have they gone so far?

18:46 Speaker C: So we're not allowed to score, but if you ask the kids, we've won every game. We're 3, I'm 3 years into coaching that team and really enjoy it. Like you see the kids just every week, something clicks with one of them and they turn a corner in a positive way and you get around that and celebrate it. It's a really nice experience.

19:04 Chris Titley: And you're in the, are you in the stage of playing other clubs yet? Are you still on the playing the—

19:08 Speaker C: No, no, we play other clubs. So we play Kuperu. Yeah, there's a few clubs that we play.

19:13 Chris Titley: You do mids, backs and forwards, that's the position you play?

19:15 Speaker C: Yeah, we do. So under nines, we're now, you still stay in your zones, but you can tackle now. And yeah, which has been a big shock to the kids, probably a good shock to them because they last year, you know, they got too confident just carrying the ball and didn't get the concept. They've actually got to let go of it. You've got to find a player and push or kick to space. And this year they've learned very quickly that the way they've gone the last few years is no longer the way. But next year it's full, you know.

19:41 Chris Titley: Yeah, three-quarters field.

19:42 Jeremy Hastings: Running game.

19:42 Chris Titley: And yeah, that's what my son plays now at the moment. It's an interesting one. And then Within that team, you probably have a lot of people supporting different clubs and they come from Melbourne and Sydney, et cetera. Who's your team?

19:52 Speaker C: Yeah, so I was at firehouse, one of the kids the other day, I said, "Oh, you're going for the Lions?" And he was absolutely disgusted. He was a Collingwood supporter. Of course, why not? And so he looked at me like I was the devil. So, but funnily enough, like I'm torn. So I was, I feel like I should go for the Brisbane Lions. I'm from Sydney originally, but have—

20:11 Chris Titley: Well, halfway between.

20:13 Speaker C: Exactly right.

20:14 Chris Titley: Melbourne.

20:14 Speaker C: Yeah. For the Lions, I said, "Yeah, I felt like I should go for Lions." And I went to a 40th and I was told that you need to have a deeper connection to a club. And my brother-in-law, their family are diehard Demon supporters. They sang the song at his wedding when he married my sister. I think the father, his father was on the board of the MCG and his brother was the president of the Demons. So it's a really strong family connection. Yeah, deep connection. And so when I shared that with one of the players at Morningside, he goes, "Mate, you have no choice but to be a Demon supporter." And the next day, word had got around and someone dropped off a whole lot of merch to me. So I felt obligated. Now I've got a whole lot of scarves for the demons.

20:52 Chris Titley: Yeah, yeah. And you follow the AFL now or not really? Still follow the union?

20:56 Speaker C: No, no, no. I watch probably more AFL than union now. So I watch the big union games. So if the Wallabies play, et cetera, but I tend to watch more of the AFL week in, week out.

21:06 Chris Titley: It's a really fascinating paradigm shift from junior participation here in Australia and watching it, comparing to my era growing up and your era growing up, you know, with the union being so strong and the World Cup, you know, wins that Australia had. And now we haven't won the Bledisloe for 20 years. I think it's 21 years.

21:24 Speaker C: Embarrassing now.

21:25 Chris Titley: Since Don Eales and those days. And then also now with, you know, the programs such as Auskick and whatnot really engaging the kids. And Brisbane obviously making the final last year put us on in terms of the map. But no, I get out to the Gabba. It's quite a good atmosphere. With the Lions, yeah.

21:41 Speaker C: Great atmosphere, they fill the stadium. AFL just has nailed the concept of grassroots footy and they've done it well for over a decade. It's everybody volunteers their time, gets involved and my kids every year get another footy.

21:54 Chris Titley: And the backpack and the footy and the trading cards.

21:57 Speaker C: It is just clever. Like whoever is at the AFL doing this needs to—

22:00 Chris Titley: Well, they should listen to this podcast firstly to get the clicks up.

22:04 Speaker C: Of course they're gonna listen.

22:05 Chris Titley: Right, Jeremy, thanks so much. Thanks for coming and having a chat about Hutley, from negative day one to day one to where we are now in terms of the growth and the scale of the business and where you wanna take the business. And congratulations on what you've achieved and really looking forward to tracking the progress.

22:19 Speaker C: Oh, thanks very much, Chris, and thanks for having me.