There's been a lot of talk in multifamily technology lately about compliance. It's worth understanding for what it tells us about a disconnect between sellers and buyers of technology.
I recently watched a webinar featuring Foxen, a provider of renters insurance and screening products, and NetVendor, the market leader in vendor credentialing. The webinar was about compliance, which describes some aspect of what each company does. The question is whether that framing helps us understand the business processes these solutions actually support. Let’s dig in.
Some Background
Foxen offers a suite of customer-facing products, predominantly built around renters insurance, which is a well-established Achilles' heel for multifamily operators. Every resident in a community needs to be insured, so every household is a potential gap in compliance that could expose the property to unwanted risk.
Companies like Foxen and GetCovered plug this gap, making it as easy as possible for residents to obtain the appropriate insurance while ensuring compliance.
Netvendor, on the other hand, is a market-leading B2B platform that helps communities manage their suppliers. Compliance is important here too: every time a supplier walks onto a multifamily property to perform work, they create potential risks. An accident could expose the property to severe financial liability, so vendors must have the appropriate certifications and insurance.
On the face of it, both companies are in the compliance business. But as regular readers know, 20for20 is mostly interested in why companies evaluate and buy technology. And when viewed through this lens, compliance appears to be doing something quite different in the B2B and B2C examples above.
Where Compliance Fits
To understand the difference, let's think about the problems that each solution is trying to solve. The B2C problem monitors residents' compliance with insurance requirements and provides an easy way for noncompliant residents to obtain coverage. That offers control to the community and convenience to the resident, with the objective of making all residents compliant with the requirements set out in their lease.
The B2B problem in this example is mostly about managing a vendor base. Multifamily communities require a blend of suppliers, some of which perform regular services (e.g., landscaping, pool maintenance), and some less frequent services (asphalt, concrete, tree work, etc). It is hard to maintain the right network of suppliers: compliance is a big factor, but it is far from the whole story.
It takes time to find suppliers with the skills to complete specific jobs. Finding compliant ones makes the process harder still, especially when that search takes place under time pressure (e.g., emergency repairs). It is obvious why there is value in a service that not only credentials companies, but also provides a network of pre-credentialed suppliers.
While compliance is important, in this case it is more like a hygiene factor: i.e., the operator does not want to waste time with suppliers that do not have the right credentials. The value of the service lies in making it easier to identify and engage the right suppliers quickly, not simply in verifying their credentials.
Why This Matters
Both products in this example are “compliance solutions.” The more interesting observation is whether that shared terminology should lead us to think that they belong in the same product category.
They probably don't. With renters insurance, compliance is the objective. In vendor management, compliance is an important prerequisite, but it is not the primary source of value for those considering the technology. Distinctions like these matter because software categories are becoming harder, not easier, to understand. As AI reshapes technology markets, buyers need better ways of thinking about software, not more labels.
Labels anchor us to semantics: i.e., inferring a shared value proposition from shared terminology. This example shows how shared terminology like “compliance” and “risk” do not necessarily imply shared economics, shared buyer personas or even shared competition.
As technology evolves, the skill of distinguishing between the language used to describe a product and the reason that product exists becomes more important. That is harder than ever to do in an environment where low-quality information about technology is coming to dominate multifamily LinkedIn, the podcastosphere and other uncurated channels.
Where to Learn More
Renters insurance compliance forms part of a broad transaction we call “applications.” As the last couple of 20for20 Annual Surveys identified, operators increasingly accept that applications have become burdened with too many disparate pieces of software. The overall process is ripe for radical simplification.
Vendor management forms part of an overall set of skills broadly known as "sourcing" and "procurement." These skills represent an enormous upgrade opportunity in multifamily, as I look forward to discussing next month on a panel at Blueprint in Las Vegas. During that session, “What Does AI-First Have to Do With NOI,” we will explore how AI is impacting sourcing and procurement, along with some other NOI-driving multifamily processes. The conversation will focus on innovation and value, not labels.
There will be more to follow about this topic in these pages. But in the meantime, if you haven't yet registered for Blueprint, please don't forget to do so (link and discount details below).
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