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Editor’s Note: This article is the second part of a series about Utah tech companies that may be on their way to unicorn-dom. The first part can be viewed here. The third article in the series will run Friday, June 30.
LEHI — In the fantasy world, the unicorn is a rare creature. In the tech world, it’s even rarer.
In corporate culture, “unicorns” are what techies and investors have started calling private startup companies valued at $1 billion. The term was first coined in 2013 by longtime tech venture capitalist Aileen Lee when she began researching the probability of discovering and investing in one of these companies.
After some research, Lee found that only 0.07 percent of venture-backed companies reach $1 billion (though the percentage is now slightly higher). There are currently only 234 unicorns in the world. Utah is home to four of those including tech companies Domo, InsideSales, PluralSight and Qualtrics.
Thanks to Utah’s rapidly growing tech economy, however, there are a few other startups that may be on the path to unicorn-dom, according to TechCrunch.
Lehi-based Entrata — a property management software company previously known as Property Solutions — began in a college dorm room in 2004, but has since witnessed exponential growth. Entrata has grown from three to 1,500 employees and is currently on track to reach $120 million in annual revenue this year.
So how did that happen?
Thirteen years ago, Entrata CEO Dave Bateman just wanted to pay his rent online. As a student at BYU, he was baffled that so many of the apartment complexes in Provo didn’t have the resources in place to let their tenants take care of their rent in a more convenient way.
So Bateman, along with fellow students Ben Zimmer and Mike Trionfo, wrote a business plan to build a software platform that would allow landlords and ladies to manage their apartment communities through one simple tool.
The business plan won a competition at BYU, then went on to win a competition hosted by Fortune Magazine, beating out other student business plans across the U.S. With the win came some seed capital, and soon, Property Solutions was born. The company would later change the name to Entrata.
“Our biggest challenge was our own naivety and inexperience,” Bateman said. “We were college kids trying to start a big business, and if I were to go back and do it again today, I would have done it so much better.”
While Entrata did initially rely on a few angel investors in the first few years, they have mainly bootstrapped to where they are today.
“Bootstrapping was difficult,” Bateman said. “For our first eight years, we were in a little, tiny 8,000 square foot office space down by the railroad tracks in Provo. We were figuring out how to pay for engineers and to compete for engineers in a market that was quite difficult, quite competitive. But we figured things out and we hit our stride.”
It was five years ago that Entrata began to see exceptional growth, and in March, the company moved from its little office in Provo to brand new headquarters in Lehi. Entrata now boasts four big offices globally in Provo; Lehi; Dallas, Texas; and Pune, India.
What makes Entrata different?
According to Bateman, 25 percent of the U.S. population live in apartment complexes and one-third of U.S. apartment complexes use Entrata.
“If someone owns 500 or more apartments, they could come to us and get everything they need from a software standpoint to operate their business,” Bateman said.
The core of Entrata’s software platform is the accounting system, but the platform also includes about 40 different products. There are tools for the resident, including a website where tenants can log in and pay their rent online, and tools for the landlord to help optimize pricing, deal with renter’s insurance, manage utility billing and process invoices.
“We always focus on product, and so we’ve always poured the lion's share of our resources into product development,” Bateman said. “Our industry’s small enough that you can’t market your way out of a bad product, and you can’t hide a good product.”
“We just really focused on building a really, really strong product that exceeds the capabilities of the competitive offerings in the space, and we’ve relied on our customers sharing their experience … and that’s created the massive growth we’ve seen over the last five years.”
What’s next for Entrata?
Unlike Utah’s other unicorns, Entrata hasn’t relied on venture capital funding to grow — and may never.
While Entrata has huge plans for growth, they don’t really see investment capital being a critical component of that growth strategy, according to Bateman.
“We have been very profitable. Our profitability doubled over the last year, and so we have the resources we need to self-fund,” Bateman said. “We really aren’t seeking and don’t need external capital to continue to see growth with the company.”
Successful startups usually become unicorns when investors come in and value a company above a billion dollars. However, though Bateman says Entrata doesn’t plan to take on investors (and therefore doesn’t plan on receiving that valuation), he believes the company could be “very much in that ballpark, in terms of being a unicorn.”
Entrata is currently focusing on growing their customer base and plans on venturing into the smart home tech arena with an announcement next week of a new addition to their software that will allow users to manage smart home technology tailored for apartments.
“We’ve built a product that really caters specifically to smart homes for apartments ... and we have a lot of plans to develop products that are specific to the apartment space,” Bateman said.