When a recruiter from Till first reached out to Johnny Ray Austin, he didn’t hesitate: “The answer was no. Flat out”. But it turns out Johnny Ray couldn’t have been more wrong about the startup, and what he’d interpreted as a potentially exploitative loan scheme is actually a life-changing new platform that helps renters stay in their homes.

Here’s Johnny Ray Austin on Crafted, Artium’s new podcast.

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Johnny Ray Austin: ... reading feedback and people thanking us because we helped them avoid eviction or they didn't have to decide between paying rent and feeding their kids that month. Right? I mean, that's just something you don't get everywhere.

Dan Blumberg: Johnny Ray Austin loves the mission at Till, where he serves as chief technology officer. Till is a platform that helps renters stay in their homes.

Johnny Ray Austin: Fundamentally, what we do is we provide a way to pay rent much more conveniently and in a way that's more in line with people's positive cash flow. That's our underlining value proposition.

Dan Blumberg: Today, Johnny Ray Austin joins us to share how Till has learned to convey trust through their product and user experience, how it uses interesting data to decide who to lend to, and how COVID and rent moratoriums affected Till's roadmap and growth. Oh, and he'll also tell us why he almost turned down the job.

Johnny Ray Austin: It was just like, of course not. The answer is no, flat out.

Dan Blumberg: Welcome to Crafted, a show about great products and the people who make them. I'm your host, Dan Blumberg. I'm a product and engagement lead at Artium, where my colleagues and I help companies build fantastic software and recruit dynamic teams. Before we get into Till, there was something I was curious about. Johnny Ray's social media handle is Recursive Funk.

Johnny Ray Austin: Yeah, Recursive Funk is interesting. Basically, the way I explain it is it's trying to address the split brain. Obviously, I am an engineer by trade. I really like numbers and computer science and highly technical concepts. But, on the flip side, I'm really into music, particularly like jazz and just things that are artsy. I really embrace both sides of that persona.Dan Blumberg: Johnny Ray is also passionate about social inclusion. He gives his time to Black Girls Code and Bite Back, two organizations that promote empowerment through technology. So, how did he react when Till first reached out to him?Johnny Ray Austin: When I read the job [inaudible 00:02:09], it was all about loans, and I was triggered by the word "loan," and then clicking onto the website and just seeing a stack of cash just kind of reinforced that reaction. And so, for me, it was just like, of course not. The answer is no, flat out, and I'm not going to go work for someone who's going to take advantage of people, particularly people who are failing to pay rent.

Dan Blumberg: But the recruiter convinced him to meet with co-founder David Sullivan.Johnny Ray Austin: I figured I'd at least take the meeting, and so I met with David for a couple hours in Chinatown here in D.C., just to kind of get a feel for what his vision was for the product and the platform, and just kind of fell in love with the mission.

Dan Blumberg: At that point, Till was only a couple of years old, and if the optics of this new service were a problem for Johnny Ray, he knew they would also be a problem for potential customers.

Johnny Ray Austin: They knew exactly what they were doing and what the mission was and what they were trying to accomplish, but helping convey that and actually build a product that helped convey that message as well was really important. And that was the very thing that they were missing, and which is the reason they were talking to me.Dan Blumberg: So, what's the mission that Johnny Ray fell in love with?

Johnny Ray Austin: The mission statement is to help renters pay, stay, and thrive in their homes, which does sound really good, but what does that really mean? The value proposition is that what we found when we were operating the early versions of Till, is that, when people fail to pay rent in this country, it's not generally because they don't have any money. It's because they don't have all of the money on the first of the month, which is when landlords prefer to get paid. Obviously, this is the way it's worked for a very long time. What we found is the problem is fundamentally a cash flow alignment. Right? People have a lot of bills. Rent is generally their biggest bill, and so they generally do prioritize it, but it puts them in a very precarious situation the rest of the month with regard to other obligations, whether it be groceries, health bills, school tuition, whatever. What we wanted to do was find a way to make this biggest obligation something much more manageable. So, we wanted to even out how people deal with rent over the course of the month. Fundamentally, what we do is we provide a way to pay rent much more conveniently and in a way that's more in line with people's positive cash flow. That's our underlying value proposition.

Dan Blumberg: And then, for landlords, can you describe what the value proposition is for them?Johnny Ray Austin: Well, we de-risk their portfolios. So, for a landlord, if you know that your residents are ... If they have a tool at their disposal that allows them to pay rent in a way that's more in line with their positive cash flow, all of a sudden, you have renters that are much more likely to succeed in paying that rent.

Dan Blumberg: To make this happen, Till operates as a middleman between tenant and landlord. The tenant signs up and chooses a payment plan, and Till gives them a line of credit. Till then pays their landlord.

Johnny Ray Austin: Immediately, the resident is made whole in the eyes of their landlord. They're good to go. There's no risk of late fees. There's no risk of eviction or anything like that. And then we work with the renter to create a schedule that's more convenient for them, for them to pay that same rent amount during the course of the month. And then, as long as they pay that obligation by the end of the month, whether it's towards the beginning, in the middle, whether it's back heavy, we don't really care. It's all about you. It's personalization. We do the dance all over again the following month. We renew the line of credit. You pay the subscription fee. We pay the landlord, and then you pay us over the course of the month and all over and over and over again.

Dan Blumberg: There's some similarities here to the buy now, pay later industry companies like Affirm, Klarna, Afterpay. Where does that analogy work, and where does it not work?Johnny Ray Austin: We don't facilitate a purchase the way BNPL does, right? This is a line of credit that's only used for rent, and we come into the picture post-transaction. Right? So, you've already signed the lease with your landlord saying, "I agree to pay this amount of money every single month." We don't change that. We don't add to that transaction or anything like that. We just help you pay that same transaction down, whereas BNPL could arguably encourage people to facilitate transactions that they normally would not if that BNPL structure was not there.

The other big differentiator is we don't allow the concept of debt stacking. Right? So, if you were to go to Macy's and use BNPL to check out, then you can go to some online watch store and use the same BNPL provider to take out money to pay for that watch or whatever. We don't allow you to do that. Right? You can only use it for rent, and you can only use one line of credit at a time. So, in that way, it's the only way that we think we can do this responsibly, and we want to do it responsibly because, remember, we're trying to keep people in their homes not put them in debt that they can't pay back.

Dan Blumberg: So, just to spell out the concerns of BNPL you sort of alluded to, but I think the criticism is you see a firm or Klarna or Afterpay or one of the 12 dozen other ones, on a Peloton checkout site, and you buy a Peloton that you couldn't afford, and now you're stuck with payments to your BNPL provider, and you've got to pay for that Peloton that you probably shouldn't have bought in the first place. So, how do you do it in a responsible way? How do you approach this?

Johnny Ray Austin: It's all about going back to principles and always understanding that obviously keeping renters in their home is the main thing. If it doesn't serve that purpose, then it's a nonstarter. But there's also another thing we talk about internally. It has to be a win-win-win. It has to be a win for residents, a win for our partners, and a win for Till. Right? A win for residents is it keeps them in their homes. It doesn't burden them with undue debt. A win for our partners, that's de-risking the portfolio, but also has to be a win for Till. One of the things that we've always wanted to put forth was how do we get to profitable unit economics, right? Obviously, we're a startup. We're not going to be profitable from day one, but having a business that has an eye towards profitability is super important, so that's a win for us. And so, because of this, we do charge a subscription fee, so it's not a free service that we just put people on and maybe we serve ads or something like that. It's you get a service for a fee. And so, these are the things we ask ourselves constantly before we change the product structure or consider doing whatever else we're going to do on the platform.

Dan Blumberg: What are some of the hardest challenges that you're facing? And I'm especially curious how you figure out who you should be working with, whether that's renters. I imagine there's some people who apply, but they get turned down, or maybe the same thing happens with landlords as well.

Johnny Ray Austin: On the landlord side, that can be a tricky one. Obviously, we want to work with landlords who are responsible and ethical. I mean, how do you measure that? It's really hard to say. A lot of this has to do with the relationships, pre-existing relationships the co-founders have with a lot of landlords and property management companies that can be hard to suss out. But we also try to make sure that we're doing the right thing there.

So, if we start working with the landlord, and we find out that they're doing something they're not supposed to, we have a really good partner engagement team that engages with them to try to figure out what the root of a problem is. We've fired landlords before, flat out, because of things that we didn't think that were right on behalf of the residents. And so, that is something we were willing to do. We have done it before, and we'll probably continue to do it in the future. With renters, it's a lot more nuanced, right, because we have to make sure, obviously, we're catching people who need help, but we also need to make sure that we are catching people who actually want to pay us back. So, there's a difference between someone who is unwilling or unable to pay rent. We always want the people who are willing but unable, for whatever reason.

Dan Blumberg: And Till has identified other non-traditional indicators of credit worthiness.Johnny Ray Austin: We do look at credit, things like that, but we also look at other things. Rental payment history is a big one, right, because credit history alone doesn't give you a full picture of a resident. I think this is where a lot of the existing platforms fall short, and they don't give you a full picture of someone's priorities. And a lot of that has to do with people prioritizing rent over other things. So, maybe that derogatory credit is some Planet Fitness membership that they let go into collections a year ago. We don't care about that, frankly. It's a problem if you're underwriting people for a credit for a gym membership, but not for rent. And so, it allows us to really personalize outcomes for people and take their personal situations into account so that we can expand the circle of people with whom we can ultimately work.

Dan Blumberg: Till has also found that it needs to be careful when lending to people who are in the final month of their contract. And just like banks that require a down payment before offering a mortgage, Till has found it's less risky if they require lenders to pay 15% to 20% upfront.

Johnny Ray Austin: The reason why we do this is we found very, very strong correlation of success with people who have a little bit more skin in the game. So, the people who pay the upfront payment are vastly much more likely to continue on with the program and pay us throughout the month and then re-enroll in following months, rather than people who do not pay that upfront payment. There's enough correlation of those people being unsuccessful subsequently, that we just made it a hard and fast rule that, if you don't pay the upfront payment, we won't enroll you in the products.

Dan Blumberg: When Till introduces new features or changes to its algorithm, it has to do so very carefully.

Johnny Ray Austin: People out there are smart, and so, whenever we change a rule in the product, there's always going to be a certain amount of fraud. People will always find a way within the first month of the change to take advantage of the system. We have no eviction powers, and so people know this, right, and so a lot of people will come to us, borrow for a month, let their landlord get paid, and then pay us nothing back. Right? We see that every so often. I mean, it's not widespread, but it's a thing that happens. And so, we may look at behavioral data to figure out, well, if this person is in the last month, is this something they're trying to do to help them with their expenses to move? I mean, people have reasons for this.

Dan Blumberg: Of course, to even get to the screening phase, Till first has to reach new potential customers and convince them to trust this startup that they've probably never heard of, to, again, pay their rent on time so they don't get evicted.Johnny Ray Austin: We're very small. Vast majority of people have never heard of Till, and so it can be a bit nerve-wracking for residents to kind of trust that this company on this separate website is actually going to go and pay your rent on your behalf, and if you pay us, everything will work out fine. And so, we had to test language, different versions of the UI that translated that trust in such a way that allow people to come on board.

Dan Blumberg: When the pandemic arrived, and people started losing their jobs, demand for Till's guarantees shot up, but there was a leaky bucket problem.Johnny Ray Austin: People were really antsy. Landlords were panicking at this point, and it was just a lot of demand for what we were offering at that time. And so, rolling this out to different communities, just out of nowhere had some very mixed results in terms of whether or not people trusted us, and we started to see this by looking at just the engagement data.

Dan Blumberg: So, the team changed the messaging to convey more trustworthiness and adjusted the onboarding sequence as well.Johnny Ray Austin: When we were looking at this data, one of the big steps that we saw was this step where we would obviously ask for KYC information, but also the big one was payment information. Right? When was the right time to ask people to essentially link their bank account because this is how people generally pay rent on our platform. And we found out we were just doing this way too early. Right? We were basically asking for ... We knew your name and address, but we would confirm this information. Then, immediately, it was like, "All right, how are you going to pay us?" And we just saw people just falling off completely at that step.

Dan Blumberg: So, they dug into the build, measure, learn cycle and ran experiments. And if all of your experiments work, you probably didn't take enough risk.Johnny Ray Austin: So, we had a one failed experiment. What we did was we would ask people a few pieces of information, and then we would give them the impression kind of that they were essentially done. They were already enrolled. So, we had a confetti thing. This is so silly. We were like, we had this confetti step. "Great, you did it. You're done. Now give us your payment information." And it helped a little bit, but not as much as we thought, but it created a different problem. When people saw the confetti, they thought they were done, but then they would just leave. So, we would never actually get their payment information, and they wouldn't actually finish the process. And so, this is something we learned just by trial and error, looking at the data.

Dan Blumberg: Eventually, they got the user experience right and plugged that leaky onboarding bucket. Fast forward to today, and the big challenge is ...Johnny Ray Austin: Scaling. We had been in this phase so long of, is this the right version of the product? And then, COVID came around with the eviction moratorium, and we stopped offering credit, and then we had that version. And right when that was getting traction, the end of the eviction moratorium was in sight, and landlords wanted to get paid in full on the first again. So, now we have to think about a different version.

Dan Blumberg: The ever-changing landscape of lockdowns and rent moratoriums made steady growth difficult for Till.J

ohnny Ray Austin: So, we never really got to a place where we can hit the stride and scale we wanted to because we had to change the product so much. I mean, now, we have really good product market fit. Residents love this version of the product. Landlords obviously love this version of the product. We're all in on this version. It's really great. We have partners who are ready to go. They're ready to build with us. They want to ... We're talking millions and millions of units ready to come on the platform. And so, now we're transitioning out of this try it, see if it works experimental phase and really solidifying our product structure and scaling that to where we need it to be. That's kind of where we are right now, so that's the biggest challenge. So, things we were doing before just don't really work at the scale we're going to be in the next three to six months. It's a good problem to have. Don't get me wrong, but it is a challenge we have today.

Dan Blumberg: So, how does that challenge hit you in the face? Is it you have to refactor lots of things, or where is the scaling problem?

Johnny Ray Austin: Yeah, it's mostly technical because it really has to do with ... So, since we've had these different versions of the product, these different versions kind of were existing within the same code base, and the engineers are listening, then they know exactly what the problem is. And now, you have all these different code paths, depending on the version of the product that's being used, and we have these feature flags, and so it can be pretty hairy. And so, some things are being refactored. Many things are just being rewritten. We're reevaluating everything from data models and ownership and things like that. The good news is we've learned a lot, and so a lot of the things we want to do, we know exactly what we need to do. So, it's not as if it's going to take a long time, but it's just a lot of work to get there. Different partners means different data flows. There's going to be a lot more data, so the data pipelines we had before no longer are equipped to work with the amount of data we're going to be pulling in here in the next few months. So, those have to be rethought. And so, that's really the problem we have before us. Can we build fast enough to keep pace with the demand?

Dan Blumberg: Yeah, I imagine people that join Till are attracted by the mission of Till. And I'm curious how you incorporate that as part of, there's highly technical work, but it ladders up to a bigger vision, and I'm curious how you bring those two together.

Johnny Ray Austin: So, when I'm pitching candidates in general, I start with the mission. It's really important that everyone is mission aligned and wants to actually accomplish this because, one, we're a startup. Right? People can always go somewhere else and find a bigger paycheck and all this other stuff, and that's fine if that's what you're optimizing for. There's no judgment there. But that's not where we can compete, but where we can compete is, we are legitimately making a difference in people's lives. We literally have Slack channels where we get feedback from residents, and reading feedback, and people thanking us because we helped them avoid eviction or they didn't have to decide between paying rent and feeding their kids that month. That's impact you can't ... no Google salary can cover. Right? I mean, that's just something you don't get everywhere, and we're very proud of that. And so, that's something I lead with. And so, when I'm talking to candidates, it's like, first and foremost, here's who we are. This is the impact we have on the world, et cetera, et cetera. Oh, by the way, this is our tech stack. These are things that are important, and obviously, people need to show that they're skilled in that way. But the most important thing is that mission alignment, and that's resonated well with the people who are here. So, we're a small but mighty team, and I think we punch well above our weight.

Dan Blumberg: Johnny Ray, thank you. This was a lot of fun.

Johnny Ray Austin: Thanks for having me.

Dan Blumberg: That's Johnny Ray Austin, chief technology officer at Till. And this is Crafted from Artium. At Artium, we build incredible products, recruit high-performing teams, and help you achieve the culture of craft you need to build great software long after we're gone. We artisans love partnering with creative people to build their visions of the future. If you've got an opportunity you'd like to discuss or just want to learn more about us, check us out at thisisartium.com, or drop us a line at hello@thisisartium.com. This podcast is new, and we'd love your support. If you like today's episode, and hey, you've made it this far, maybe text a few craft-minded friends a link to the show. And please subscribe and join us as we highlight more great products and the people who make them. I'm Dan Blumberg. This is Crafted. See you next time.