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How We’ve Built a Killer Affiliate Program to Acquire Over 5000 Customers
Episode 5621st March 2024 • B2B SaaS Podcast • Upendra Varma
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In this episode of the B2B SaaS podcast, host Upendra Varma sits down with Dana Dunford, the CEO of Hemlane, a property management platform. Dana sheds light on Hemlane's unique approach to property management and the strategies that have propelled its growth, particularly focusing on the development of a robust affiliate program.

Here are the key takeaways:

Company Overview:

  • Hemlane offers a hybrid property management platform catering to rental property owners seeking an alternative to traditional property management services.
  • With a portfolio of 23,000 rental properties across all 50 states, Hemlane stands out in the market for targeting small mom-and-pop property owners.

Customer Acquisition:

  • Dana emphasizes the challenge of creating a new category within an industry and discusses Hemlane's early reliance on referrals for customer acquisition.
  • The company leveraged its network and personal connections to initiate warm introductions and gather valuable feedback from potential customers.
  • Dana shares insights into Hemlane's affiliate program, which contributes to over 50% of customer acquisitions through strategic partnerships and referrals from satisfied customers.

Sales and Pricing:

  • The average customer pays just over $79 per month, with an average portfolio size of eight rental properties.
  • Hemlane's sales approach is low-touch, with demos provided as needed, reflecting the self-service nature of its target market.
  • The company maintains a churn rate of less than 1%, focusing on maximizing revenue retention and ancillary services to drive additional revenue streams.

Funding and Growth:

  • Hemlane has raised over $12 million in funding through Series Seed and Series A rounds, positioning the company for continued expansion.
  • The company's strong performance has surpassed key milestones, with current projections well exceeding the $5-10 million ARR benchmark sought by investors for the Series B round.

Vision and Future Plans:

  • Dana envisions Hemlane as a catalyst for eliminating the stigma associated with rental property ownership and empowering individuals to build passive income streams through real estate investments.
  • The company aims to further scale its operations, enabling property owners to manage and expand their portfolios seamlessly from anywhere.

Transcripts

Upendra Varma:

Hello, everyone.

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Welcome to the B2B SaaS podcast.

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I'm your host Upendra Verma.

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Today we have Dana Dunford with us.

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Dana here is the co founder and

CEO of a company called Hemlane.

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Hey, Dana.

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Welcome to the show.

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Dana Dunford: Thanks

so much for having me.

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Upendra Varma: All right, Dana.

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So let's try to understand

what Hemlane does, right?

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And why customers pay you money.

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Dana Dunford: Yeah, so, uh, Hemline

is a property management platform.

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So if you own a rental property,

you can manage it through Hemline.

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The big differentiator, um, with

Hemline is that before Hemline.

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There are basically two ways

to manage your rental property.

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One is do everything yourself.

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Two is hire a full service

traditional property manager.

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72 percent of people self

manage their properties.

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So they're not using a property

manager, but they complain about it.

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They say, I don't want to have

to drive out to do a showing.

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I don't want to repair call at 2 a.

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m.

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I actually wants to build wealth

through real estate passive income.

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Um, and so we launched 10 lane, um,

in order to make that more accessible,

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affordable property management.

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And so what we are is a

hybrid model, a plug and play.

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Um, the software automates about 70

percent of the day to day management.

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And then we have tech enabled services

such as 24 7 repair coordination,

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um, self guided tours for tenants

to to go into our properties, all of

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that fun stuff as part of the product

itself that you can opt into at any

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time and get the services you need.

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Upendra Varma: Got it, right?

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That, that makes a lot of sense.

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So, so we'll understand, you

know, how this is played, but

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just help me understand, right?

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So how many, you know, customers do

you, like how many paying customers

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you've got on your platform as of today?

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Dana Dunford: Yeah, we have 23, 000

rental properties across all 50 states.

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Um, so we're nationwide in

the U S and, um, I'm pretty

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sure I haven't found another.

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property manager that goes after the,

you know, small mom and pop that has, uh,

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that, that large of a portfolio today.

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Upendra Varma: And so how many properties

does a typical owner or, you know,

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customer, you know, own on average?

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Dana Dunford: Ours.

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Yeah.

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So ours are, um, our average is eight.

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Our median is sex.

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But if you look at the industry

itself, it, the average is, um, two.

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That folks own.

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So it's very, very small.

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Um, a lot of folks are accidental

landlords, um, through, you know,

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properties being passed down,

holding onto a property when they

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purchase a new one, et cetera.

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Upendra Varma: Got it.

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And on an average, like how

much do they typically pay you?

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I could see a lot of plans

on your website, right?

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But how does it typically work?

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Right.

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So strictly from a software perspective,

how much do they pay you on an average?

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Dana Dunford: Yeah, our average

customer pays us just over 79 a month.

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Upendra Varma: Got something

like around a hundred dollars

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a month, something like that.

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Dana Dunford: Yeah, around 100.

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You could round up

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Upendra Varma: Yeah.

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All right.

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All right.

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So let's, let's move on.

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Right.

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So, uh, So I just want to get a sense

of like where you're getting all

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of these, you know, property owners

to, you know, like, how are they

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discovering you in the first place?

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Like what's really working for you today?

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Like, what's that growth channel that's

driving all of these leads to you?

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Dana Dunford: Yeah.

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Good question.

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Um, so at the beginning,

it was all referrals.

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When you think about creating

a new category in an industry,

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um, what basically happens is

people aren't searching for you.

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People are searching for like

free landlord software, or I want

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a Uh, local property manager.

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And so it's hard because Google,

people won't find you, you

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know, through searching you on

Google from that perspective.

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It's very similar to the Airbnb

model of like no one searching to

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like live on someone's couch, right?

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And so when you create a new

category in space, um, you have

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to find other ways to grow.

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Our, um, source is through referrals.

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So referrals of, um, of other, um, Rental

owners, so real estate investors on the

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platform all the way to communities.

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So what I mean and define as a

community is like a real estate

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agent referred business to us.

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Those people are really happy with us.

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They continue to refer business to us.

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Um, so it's a lot of affiliates as

well as referrals that continue to

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help with that flywheel and growth.

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Upendra Varma: So I just want to

take you to the beginning, right?

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So, I mean, for it all to make work,

it's got to start somewhere, right?

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So how did it all start for you?

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Like how did you manage to sort of get

those first 100 odd customers, right?

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So where did they discover you strictly

from a top of funnel perspective?

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Dana Dunford: Yeah,

that's a great question.

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Um, so the first 100 customers,

what I did was, I don't know

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if LinkedIn still has this.

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I went to my LinkedIn and I

have about, I think it's like

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6, 000 connections on LinkedIn.

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And most of them, you know, I know.

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Um, And so I went through and there's

a CSV export in Excel, uh, that is or

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that exports from LinkedIn to Excel and

I exported it and it has everything from

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who the contact is to what their email

address is to what their even phone number

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is if they put it in there, what their job

title is everything and I created another

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column at the end of my spreadsheet.

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And it was a variable that said, you know,

hi, and then it would say, like, first

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name and would concatenate the first name.

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And then I would always put

something personal in there.

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I'd have, like, another column that

just says something personal, like, you

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know, haven't seen you since college,

um, hope you're doing well, or whatever.

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And I would kind of lump them into

that, so I'd filter for, like,

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hey, I used to work at Apple, so

anyone at Apple, I have this, this

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personal template, this and that.

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And then it would just

concatenate together.

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And I emailed, I think the

first, uh, the first would say

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900 people in that 5, 000 list.

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And my goal was not to

say like, um, use Hemline.

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It was just to build, rebuild

the connection of, Hey, started

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this company called Hemline.

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We work with rental owners

looking to get feedback from

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people who own rental properties.

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Do you own rental properties

or know anyone who does?

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And what that did was basically get me

warm introductions to a ton of people.

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And then some, it was really interesting.

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Some people I worked with, I had no idea.

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They're like, yeah, you

own six rental properties.

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I was like, wait, what?

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And they're like, yeah, I'd

love to try your product.

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Let me go ahead and get started on it.

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And so that really helped.

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And that actually helped build from a

product perspective, um, us wanting to

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make sure the product worked really well.

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Because when you go to your personal

network, you know, you want to make

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sure you have a good reputation.

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It's really pushing that level.

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And then the biggest thing or the, the,

the thing I just have to warn others,

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if they do that and go through their

LinkedIn to get those first 100 customers.

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Um, the biggest thing I have to warn you

about is you have to tell these customers,

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to be honest with you, because sometimes

if it's a personal connection, They'll

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say like, Oh, I love your product.

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It's amazing.

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Cause they don't want to let you down.

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Like you guys went to college

together or something.

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So what I did make sure to tell them

is, Hey, I want your honest feedback.

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I want you to tell me, I might

not move forward with that.

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So like, I want your totally honest

feedback of would you use this or not?

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And I felt like then that helped

us build an even better product.

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Upendra Varma: So, so the

first hundred customers, right.

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Were they like, were a majority of

them, your first level connections, or

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I'm assuming they're like intros that

your first level connections gave you.

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Dana Dunford: Yeah.

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So of those, the first like

900 emails that I sent out and

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I did them each individually,

so it wasn't like a mass one.

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Um, I would say that there was probably

of their 10 percent who had rental

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properties and would talk to me and

then, um, everyone else was, Hey, my

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next door neighbor has properties.

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My sister has properties.

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And then I would just take all of those.

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Um, I also use something called boomerang.

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I'm obsessed with it in Google.

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So every time I send an email,

I say like boomerang me in two

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days if they don't respond.

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And so that was just kind of my

project management to make sure

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I stayed on top of everything.

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Upendra Varma: So like, so talk

about the generation of a hundred

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to let's say three or three, 4,

000 customers that you have today.

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Right.

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So like.

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I'm struggling to understand.

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It's just referrals.

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I mean, you, you must have

done something there, right.

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Do you know, let this affiliates,

you know, go and spread the word.

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Like, what have you been doing?

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Is it more than just

referrals and affiliates?

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Do you have any other channels going on?

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Dana Dunford: Yeah.

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Great question.

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Affiliates are big.

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And how affiliates came

was through referrals.

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So it was customers who were like,

Hey, I own the largest real estate

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investing group or something like that.

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Can I refer customers to you?

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And at the beginning we were like, great.

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Yeah.

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Refer customers to us.

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And then we were like, Ooh, we should

probably build out an affiliate referral

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like program that is specific for them.

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Upendra Varma: So then the, can you,

can you just quantify this year?

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Right.

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So over the past 12 months, right.

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Let's say you've got a

number of customers, right.

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How many of them actually came through

this, you know, affiliate program of

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yours that you've just explained us.

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Dana Dunford: Yeah, good question.

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It's over 50 percent um,

that are affiliate and we

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do an affiliate and partner.

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Um, and then that's through some of like

the, um, landing pages, content they help

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write about us, all of that kind of stuff.

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Um, but a lot comes through that.

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And the other thing is on the real

estate, um, uh, association side, working

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with associations, working with others.

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Like we consider all of that as

part of our affiliates and partners.

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Um, so that's been super helpful.

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And then organic is another

interesting one for us that I didn't

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put too much emphasis and time into.

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But we're definitely doing more.

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I remember like I wrote an

article in the early days called

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like Venmo for rent collection.

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And I was like, it's terrible way to

collect rent as a landlord, this and that.

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It was really interesting

as we'd randomly get calls.

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And back then, you know, we

didn't have a sales team.

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So I would pick it up and I'd be

like, how did you hear about us?

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They're like, Oh, I read one of your

articles on Venmo for rent collection.

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And then I Google search.

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I was like, wait, we

got to the top for that.

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And because people were thinking

about Collecting rent through Venmo.

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And of course, Venmo is not going to

like worry about that minute detail.

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And so, um, certain things like

that of like being out there, I

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think is really important as well.

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I'm just like, you know, being here today.

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I think being out there and letting

people know what your vision and passion

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is and what makes you different, um,

is really important as a founder.

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Upendra Varma: So like, then I

talk about what it takes to close

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a typical deal of yours, right?

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So like, like, do you have any salesperson

in your team who's, you know, hand

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holding these, you know, property owners

to close a deal or is it just happening?

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Can you just walk us

through that sales cycle?

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Dana Dunford: Yeah, that was something

we should have built earlier.

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So we basically have always

a sales person there for you.

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Now, there's some customers who say

I can self, um, I can self onboard.

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I do not myself needed

all any handholding.

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But we do have someone there

because the second that a customer

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gets to us, they're so valuable.

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That we would hate because they didn't

understand the new model and how

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Hemley works that they didn't convert.

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And so we do have someone there

sends them an automated email.

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Just as a heads up, if you have any

questions, feel free to reach out to us.

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Upendra Varma: But it's,

it's low touch, right?

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So it's not somebody in your team, you

know, sitting and, you know, trying to

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walk, walk them through a couple, for a

couple of weeks and, you know, getting the

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deal closed because it's just a thousand

dollar deal, you can't afford to have

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your people, you know, just doing that.

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Dana Dunford: Yeah, I mean, they do demos.

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They definitely do demos.

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Um, but you're right.

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Like as far as like every day

going on zoom or meeting in

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person, no, they don't do that.

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And usually our customers don't want that.

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The customers are very much of, hey,

tell me about these five different

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questions I have and a five minute

call will change something so much.

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Upendra Varma: Got it.

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So then talk about your

go to market team, right?

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So who's in there and what are they doing?

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Dana Dunford: Yeah.

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So our go to market team, um,

it's, it's very interesting.

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We're very collaborative, cross

collaborative, uh, company.

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So a lot on the go to market side

is thinking about product as well

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and, um, product helping support and

aid and facilitate that of getting

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to customers at the right time.

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Um, then we have a marketing team and

then a sales team that work together

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that roll up under an org called revenue.

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And so revenue is like the, the org that

both sales and, um, marketing report to.

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Upendra Varma: Got it.

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Uh, all right.

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So like, talk about the whole,

you know, retention, right?

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So, I mean, you've got tons

of customers here, right?

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So, and like, how does retention work?

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Like, do they churn out typically?

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Like, how does those numbers look

like and what are you doing there?

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Dana Dunford: Yeah, we, um, target and we

also have a hundred percent MRR retention.

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So even if a customer sells their

rental property, we have others

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who are upgrading, um, adding more

rentals to basically keep it there.

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I think with SMB, like we're SMB,

we're small mom and pop, right.

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That we go after.

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I think, you know, getting to 130 percent

MRR retention is much more difficult

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to do because you're not growing your

employee headcount like, like enterprise

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does or whatever it is to increase that.

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But on the SMB side, it's

like, if you think about how

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often someone buys a property.

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It's like, maybe once every

four years, maybe never.

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Right.

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And so, um, for us, we try to aim to

keep that 100 percent MRR retention,

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um, rather than, and then we have add

on ancillary separate another 20 to 30

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percent in revenue, um, just based on,

hey, you need, um, uh, you need insurance,

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you need background and credit check,

all this other stuff that goes into it.

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Upendra Varma: just to interpret

this correctly, you've got no churn.

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Is that what you're saying?

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Dana Dunford: No, we do have churn.

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Um, but our, our MRR,

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Upendra Varma: Okay.

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You're talking about revenue

retention as such overall.

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Dana Dunford: Yeah, our MRR retention

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Upendra Varma: So what's, what's the logo

churn here typically, like for every, like

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say a thousand customers you have, right?

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How many of them stick for

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Dana Dunford: Oh, our, our, yeah,

our churn is less than one percent.

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Like, we're always, from that

perspective, making sure that churn

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is controllable, in other words.

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Like, that a customer is not churning

because they hate the product or

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Upendra Varma: That's 1

percent per month, right?

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Something like that.

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Dana Dunford: Yeah,

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Upendra Varma: Yeah,

that's, that's very healthy.

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And just talk, like, talk,

talk about your funding, right?

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Have you raised any external funding

so far to build your company?

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Dana Dunford: Yeah, we have.

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So we raised, um, series seed

and series a, um, and we did

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those in 2019 and then 2021.

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Upendra Varma: And how much in total did

you raise to build the company so far?

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Dana Dunford: We raised

just over 12 million.

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Upendra Varma: Got it.

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And, and just what,

what's the vision here?

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Like, Dana, so where you see

a company going in next, next,

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let's say three to four years,

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Dana Dunford: Yeah, great question.

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I think, um, there's a lot of folks

who are in jobs who say, how do I get

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out of this 40 or something like that.

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Um, and real estate is

the best way to do it.

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If you can buy real estate and

build up a portfolio, then you have

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passive income every single month.

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And, um, a lot of people

don't know how to do that.

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And so for us, it's one, um,

eliminating the stigma associated with

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renting or owning rental properties.

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And then just providing the ability not

only to, um, manage but eventually be able

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to purchase rental properties anywhere

and then manage them from anywhere.

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Upendra Varma: that makes a lot of sense.

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And one question I missed, like, where

are you in terms of company as you

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know, your overall ARR approximately?

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Dana Dunford: Yeah, so we're, um,

just help and we're very healthy.

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Like, when we raised our series a, we

were over, I think there's a 1M dollar

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marker and we were well over that.

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And then for series B, where we're

going, you know, they're wanting

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5 to 10M in ARR and, um, we're

already, we're already projected to

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be, uh, well over well over that.

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So

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Upendra Varma: Okay,

that sounds wonderful.

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Thanks Dina.

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Thanks for taking the time to talk to me.

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Hope you scale Hemline to

much much greater heights.

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Dana Dunford: great.

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Thanks so much for having me.

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