Karl Runft, CEO of House Crunch


Tell us about yourself. What makes you uniquely you and can you tell me a bit about your background, your hobbies, your human experience?

Yeah, well, I would say this. I've always sort of, I guess, been someone who's always come at most of my life with a bit of a skeptical view, I don't know, a view that one should always try to find out how things work before you just give into it. I guess that parlays into House Crunch just to the extent that you practice law and you could really just go along with whatever the legal field you're in and accept sort of its premises and just grind along. But as I say, I've always had a sort of an itch to say, well, okay, fine, we can do it this way, but why are we doing it this way and is there a better way to do it? And are there problems which are making the way we're doing it inefficient or problematic or unjust? And I guess that's always been somewhat of my attitude to my life in general, for good and for bad, is growing up and being somewhat of a bit of a I don't want to say contrarian, but someone who's at least willing to say no to the rules, I guess. Which, when I was a kid, wasn't always the best thing to get along with school teachers and stuff.

Although you got to know what your limits are. You can't just run the machine gun fire constantly. But I would say if any personal quality I had that I don't even know where it comes from, just ingrained that's what I would say would be something throughout my life, I've always been somewhat of a willing to at least ask questions as to why are we doing it the way we're doing it. So that would say sort of be the impersonal quality that kind of has brought me to House Crunch and where I am now. And I'd say just on the downside part of that, I guess, not being a total joiner and everything comes with costs because you end up bucking the system and the system bucks back and you find out, well, I start asking questions and the system says, well, you're asking questions, you're not going to advance any further. So there's been some of that in my life over time.

Yeah, I'd say ironically, I chose a very conventional career choice trajectory. I mean, I went through high school, university, Chicago, then law school, and then practiced law for almost 20 years now. Hard to believe. So yeah, I've had, at least on paper, a pretty conventional career path. Well, I shouldn't say that. When I graduated law school, I had an opportunity to work in a large law firm in Chicago, and instead I ended up moving back to Idaho and practice law with my dad for several years. Well, it was sort of an interesting situation. I was a clerk at the Idaho Supreme Court. My plan was to move to the west coast. But long story short, I ended up working with him on some very interesting cases for a couple of years. And then I eventually did move to the west coast with my then girlfriend, now wife, landing in the Bay Area. I guess in that metric, it hasn't been a conventional legal career. I kind of started over when I was six, seven years into my law practice here in the Bay Area. And yeah, sort of just took what I could and found my way into a real estate law, which is the sort of intersect with House Crunch website.

I was really practiced. My legal career was more focused on sort of a hodgepodge of election law.

Replutional law stuff and also some personal injury stuff, an interesting hodgepodge. But when I moved to the Bay Area, I ended up just by circumstance, really getting more and more into real estate law now, over the last, I'd say, seven, eight years, which has really been an exclusive area of my legal practice. I guess in that sense, yeah. Instead of following some straight line trajectory right out of law school, I ended up really zigzagging and landing in an area of law that was really the launchpad for going into house crunch.

I want to start this off with a question and I definitely mean to put you on the spot. I never knew you wrote and published a book! Tell me a bit about that and how that came to be. That is definitely one of our goals and we would love to hear how you came to write and publish something seemingly off topic from the rest of your career as an attorney.

Yeah. It was really big, like 10 years ago, I think, maybe more. Oh, my God. Before my first kid was born, I had time to do this thing. Yeah, I did write a novel. That was an itch I always had since college. A sophomoric desire to make your statement, put your thoughts and your ideas into some book that everybody can read and you're going to plant your flag.

Ideological flag out there. It's funny, I looked back at it recently just in connection with house crunch, just thinking, Oh, my God. This thing is out there. I looked at it. It was worth a laugh. It definitely was a first time effort. But I always tell myself, Well, you did something that most people say they're going to do and they never actually get around to doing it.

Yeah, it's called the Rum and the Theory. It's on Amazon. I think I have to... It's available in hardback and it should be available online. I think I need to re up that online, but I'll do that shortly. But it is available.

I got to say, this is my only piece of advice. This is fiction. Nonfiction, I think, probably it's a different world. But non-conviction or fiction writing, at least from my own personal experience, is that I think you just have to have it all in your head already set out. A lot of people, I think, get stymied because they have an idea or nucleus of this story, and then they think this is going to be the springboard to finish the whole thing out. That may work for Stephen King, because I think he said that's how he writes his books. He just has an idea and just runs with it. But of course, he's a professional writer for all his life. My only recommendation is if you're not a professional writer and you want to write fiction novels, to sit down and just, at least as much as you can, think from A all the way to Z as much as you can.

You embody the type of founder story that Mike and I fall in love with? Your career as an attorney in realestate presented a gap in technology. You adapted to this gap for your entire career, until you decided to do something about it. The idea of HouseCrunch was born. Which fills a massive gap and practically gamifies the home ownership and real estate record keeping.Tell us about the journey here.

Pain is a good word because the nucleus of the idea, really, as I say, the last seven years, I found myself calling... We're moving more into real estate litigation. And one area of real estate litigation, the firm I work for, we ended up doing a lot of work in is buyer seller litigation. The basic set up being you buy a house, you find out the seller misrepresented the condition of the house and should have disclosed the issues, and therefore the buyer therefore sells the seller in an attempt to get some compensation for the undisclosed problems with the house. This is a classic problem. It is timeless. We go back to ancient England. We have common law. This is as old as this is the Hills, right? This buyer seller disputes about buying real estate. Anyway, so you get into this, especially with residential properties here in the Bay Area. I always tell people 90 % of the cases we handle are just losses. I mean, the person, the buyer will sue, the seller will make up excuses. They'll end up paying the attorneys a bunch of money. At the end of the day, maybe some money changes hands, but at the end of the day, nobody's really compensated.

The attorneys are the ones who end up making any money. And I said, God, this just sucks. You end up fighting the court case, and yet at the end of the day, no broader justice is served. Basically, it's a net social loss. The buyer ended up spending more money on attorneys than they got compensation. The seller did the same thing. They ended up losing a bunch of money paying us. I thought, What if there's a way? What's wrong with the process here? Why is this happening? Why are these problems in the sale that... Granted, as I say, 90 % of the cases probably aren't worth suing over because what people are complaining about are not big enough problems to warrant the litigation. 10 % of the time, Okay, problem with the house is so huge, you got to go for it. You got to try to try to claw back the sale. But 90 % of the time, it's not worth it. But people still sue. They still go through the motion of just blowing up the thing. I thought, what if there was a way to at least push back against that? Why is this happening?

And you investigate the industry and as a litigator, I'm knee deep in it. I see the whole dirty under site, the contracts, the way the sale is done. I get the whole underbelly A to Z transactional picture. I know exactly what happened. Who did what when? I can see right where things started to go wrong where somebody just didn't quite tell the truth or fudged or something wasn't done. Then you can see that's where the ball starts rolling and the whole thing is going to collapse. So I thought, Well, why is this happening? I think one of the reasons, probably the reason, a lot of deals go bad, a lot of residential real estate deals go bad is because of essentially an asymmentry of information that the seller and his real estate agent control the flow of information to the buyer. This is again, timeless problem. This is as old as the Hills. The seller knows the properties, like they live there, they know the secrets. They don't want to let them all out because if they do, that will impact the price now, which results in California, especially, it's a dance where there's certain disclosure laws which require the seller to make certain disclosures and blah, blah, blah.

The buyer can take that under advisement. The buyer has some duties to do inspections and so on. It's this dance. But the seller is still in a position of great power, of tremendous power to make disclosures. This has magnified over the years, especially recently been magnified by the fact that most people at least initially start their home search online. So most houses are presented in Zillow and Redfin and Tulia and these online websites. It's all just seller based information. So again, you go to a house and it's all pumped up. My favorite example is this is the real estate agent photos of houses online. You go there, you look at these photos of these houses, Oh, my God. This house looks great. This room looks really big. Oh, this is like the... My favorite is the third bedroom. The third bedroom and otherwise, it's a two bedroom bungalow with one bath. But no, this is the third bedroom. You see these pictures and you're like, Oh, this is great. Then you actually go in person. You're like, Oh, my God. This is a closet. Somebody took a closet and modded it into a bed. This is not a third bedroom.

It's a pool. Anyway, long story short. I see the transactions that go bad. I wonder why this happens. I realize it's just the fact that there is a definite hand on the scales in favor of sellers to push properties and to distort the reality of what is actually being bought by the buyers. And this is magnified by the internet in which there's no interaction on any of these websites for buyers to come online and say, Hey, wait a minute. I saw this property. I saw it. I was there. And what they're putting on here on this website is not accurate. And I thought, But you could actually expand that, not only just to potential buyers going to these properties and then being able to go on there and directly comment on a listing, you could expand that to get historical knowledge beyond it. Let people in the neighborhood come on there too and be like, Hey, wait a minute. Two years ago, the seller clearly did unpermitted work, which is, again, one of the classic failure to disclose issues. Somebody will buy a house and then the local city or county person will come by and be like, Oh, yeah.

All these walls, apparently, were put in there without proper permits. The buyer is like, What? They're like, Yeah, sorry. You're going to have to do $20,000 or $20,000. Jeez, you're going to do $50,000 of repairs anyway. Long story short, I thought, boy, if there was a neutral information clearinghouse for residential real estate where somebody could go to find third party information, not provided by the seller, third party information that at least, I mean, is it reliable, but at least we could put people on the right track. You could find a place you could go to get some ideas about what is the true value of this property. Is there third party information I can get upfront before I actually put an offer on the property or engage with the seller and do that, as I say, this dance that takes place between a buyer and seller where the buyer will say, Okay, I'm willing to buy your property, but you have to make disclosures to me. I want to conduct inspections. What if you could go to a website where there's information already on the decks that you could look at before you even have to get to that point where you can make a more educated assessment as to whether you're interested in this property or not?

Because as I stated, all the online real estate websites that I know of that I've seen do not allow any third party input at all. I think truly, strangely had an ability to comment on properties, but the exclusions of what you could say were so broad, I don't even think it was going to be useful. I think the exclusion, in fact, said the terms of service said, yeah, you can comment on general aspects of the neighborhood, which was about it. I wouldn't be surprised if that's gone now. I should probably check, but I bet they probably nuked that after a couple of weeks. But anyway, the point being is that it became clear to me that there would be a very much a... There is lacking in the ecosystem of residential real estate, a tool that could be very useful to buyers by which, again, you could make an attempt to engage in some independent investigation upfront about real estate that has input from all various sources, not only other buyers who are interested in the property who may have seen it, but again, neighbors. Also archival information. If people would upload documents that they know would be useful or relevant to the home, such as maybe an inspection report that they saw or got their hands on.

What a valuable tool this could be for prospective home buyers to push back against a seller dominated market, particularly in the last couple of years. It was a seller dominant market from, I don't know, 2019 to at least last year. Things are a little bit flux now. But how great that would be. And I don't have any illusions. I don't think it's such a website would be the end all of real estate, but it would be a very viable tool and a place where you could really do a lot of fun things, too. One of the aspects of the website is the crunch price, which is the idea that people could come in, look at a property, see what it's being offered for according to the seller, and then say, Maybe, maybe not, and then put their own price up there and say, This is what I think it's worth. Then people can look at that as a community rating to say, Well, 50 people came on here and the aggregate price that they think it's worth is less than what the seller is putting up there, which could be a red flag to any potential buyer to think, Maybe I got to be more cautious about what I do.

Because as I say, in a hot seller market, people are just putting bids out there 20 %, 30 %, 40 % over asking right out of the gate. You're just like, Oh, my God. There's got to be some way to push back against that to get some better idea of what you're putting your money down on instead of just falling over yourself to buy a property.

In early 2023, through a referral, you were introduced to Mike and I. I wonder if you could recap your early experience with us. I am sure you did your due diligence, but why did you ultimately select COAK to be your earliest architecture and build partner for what is now, housecrunch.com?

Yeah, that's a good question. I mean, just to start out, I'd say, I came to this with zero, well, not zero, but pretty close to zero technical background on building websites. So I was at a very much a disadvantage in terms of knowing who to choose, how to choose, or even what I needed. And as you said, I did have a prior developer work, actually two prior developers. One, which ended up ghosting me, which was a bad experience. The other one was more, it was a different situation. Long story short, I came to the realization that what I really needed was somebody who, this was building a website, right? I would think this is my advice to people in my position of no technical background, I would say, knowing exactly what you wanted, which was just to build the website and not any other bells and whistles, just the, really just the construction, right? I wanted a... somebody could build it, not, you know, anything more or nothing less. That's what I wanted. And basically, and already having two sort of experiences that didn't, well, one didn't work out. One was just sort of a half workout. I did have some experience in kind of the lingo and understanding some of what the universe of development was from those experiences. And so then I really buckled down and did a little... research on what kind of firms out there are the kind of firms that would meet my needs.

And yeah, you're right. I don't recall exactly how I came to Cause of a Kind, but it was through a chain of recommendations, which I really just pressed. I pressed. I contacted people and I was like, this is what I want. Very, just a paragraph. I just, this is it. I don't want anything else. This is it. And I insisted on that and that really did get me to somebody who just said, look, here's who you want. And they gave me like three names. And frankly, I'll tell you guys this, you were the probably the most responsive. It was frankly, your guys' personal people handling that really won me over because, you know, in every walk of life, if you respond and you're positive, your people will react and then they'll follow through, which is what you guys did. You guys immediately contacted me back. you understood my issues and that was really the only way to go as far as I was concerned. And because I had already drilled down to the point where I knew you guys would offer what I wanted, it was really just a choice of who amongst like three choices. And it was just because you guys, again, I even think you guys had some solutions that had eluded me in the past regarding the architecture, which was impressive because I think some of the some outfits, you know, we were like, well, you know, we would have to look into how we'd set this up, et cetera.

Whereas you guys, I think responded immediately with answers to questions that I was probably going to ask at some point, but given you guys sort of up fronted it, I was like, all right, we're already 30% down the road. You know, this is great. I don't have to like, you know, go walk through the whole like, well, how are we gonna do this? And then what are the actual like, you know, scaffolding that we need to build? You guys were already down that road quite a bit, which was very refreshing because as I say, the first bad-ish experience I had, that was one of the problems is that they didn't know how to actually get the thing off the ground, technically speaking, on some of the technical aspects. Whereas it was so refreshing that you guys are basically already there. You guys are like, oh yeah, this is how we can do it. We have the databases, we can set all that up. That's it. And I was like, all right. That's great. So yeah, that was the two things. You guys responded immediately, and two, you guys already had solutions to the problems that I hadn't even broached yet to you guys. So that was a real confidence builder from my end.

What is it like to put an MVP out in the market? What is your current pursuit and near term goal for the platform and what steps are you taking to achieve these goals?

Yeah, so I mean, we do have an MVP. It's a little bit of a minimum product, I guess, is the way to best describe it. It doesn't have a lot of bells and whistles that eventually, hopefully, it will get. Yeah, I mean, I'm excited and a little, you know, part of me is just worried about my doing enough to push this forward because I still have a full-time job practicing law. So that is a concern. It's like, how much time can I dedicate to this, to push this forward? So it is a concern.

Right now, I think the idea and pushing it forward is just to get, it's two tracks really, is to one, get as much exposure to the product as possible by people who are interested in real estate, and two, to try to reach out to more institutional players who might be either interested in becoming partners or investors in the product. So that's sort of the two track I'm aiming to do. How I plan to do that. One is I'm going to try to have an integrated, I'm trying to develop sort of integrated system where I will go through recent house listings and just myself make a post on it and get it out there just so that the site just starts building up a little bit of exposure on that front. Because I think the main challenge of the site, and this is something I've talked with people ad nauseam and very well aware of it, it is the one major hurdle is like. How am I gonna drive people to use a site that requires them to do a little bit of work? So, that is the big obstacle, right? Are people gonna be willing to come to the site and actually put a star rating on a house, et cetera? And how many people are out there who are willing to do it? And that's the great experiment. I mean, we're gonna find out. I mean, are people really gonna be interested in doing this kind of thing? Maybe they are, maybe they're not. Maybe I'm going down a dark alley. We'll find out, that's the key.

So. Anyway, what I'm starting to do is to build up a presence on all major platforms. And my short-term goal is to just start plugging away and start just myself starting to rate houses, get some ratings out there, try to get some attention just on that front. And so that hopefully draw more and more people into visiting the site and maybe making some inputs and just hopefully build up some exposure that way. And then the other exposure that we talked about was using LinkedIn as a platform to reach out to more institutional players, players who could magnify the presence of the site.

I haven't really gotten into that quite yet. I've just been, it's, as I say, I have dual loyalties between my day job and the website, which has been a little bit of an obstacle, but things are looking up. I've overcome some hurdles on that front. So that's the short term plan. just get it out there, just start getting houses rated so that hopefully people who are looking at houses start picking up, start noticing that site's out there. And then at the same time, getting some more institutional players who are interested in real estate just to talk to them and maybe get some interest, maybe get some, I don't know, I don't wanna say partnerships necessarily, but just some backing from other people in the industry who would say, hey, this looks like an interesting product. I'm gonna tell some more people about it.

As homeowners, Mike and I absolutely love HouseCrunch. It provides a very unique experience for the homeowner, the real estate agent, the buyer, the sellers, the appraisers, the neighbors, the lawyers, and so many other personas simply by returning the power of homeownership to the homeowner. We like to say simply, this is Zillow with Comments. What do you see as the future of housecrunch? Why is it important to return the power if home ownership to homeowners?

I was just going to say that's an aspect of the site that doesn't really come out yet, just because again, it's in an MVP mode, is to bring out more abilities of this. Because right now, most of the stuff we're talking about is empowering buyers to be more informed about purchases. But you're right, this flipped dual side of this, the mirror image is for sellers to use the site proactively to get ahead of any issues.

One of the things I think would be a huge feature down the line if this takes off is sellers in maybe in conjunction with agents to purchase priority space in a site like this, not just out of a cynical like, oh, we're going to sell space just to hijack these people, make them pay to put their notes. So that if you go to a property, you can see, sure, there's third party people saying what they're saying about this property, some of it good, maybe some of it bad, but then you also have the perspective of a seller. who could put their own information. And as you know, one thing you did on in this conversation, which I hadn't quite, I mean, maybe intuitively understood, but you really nailed it was that, you know, there's a lot of aspects of a home that never come out in the actual real estate transaction process from the seller's side that you think would be, you'd want to know about, right? That the seller can say, you know, we love this house and we did this, and we really feel the value here and there because of the things we did. I mean, a little bit of that comes out in a real estate transaction, but not. I mean, the real estate agent, you know, for the seller can say, oh, you know, this family lived here and was so great and blah, blah. And you're like, oh yeah, you're just saying that.

Whereas if you can see in the seller's own words in a direct format, the value they have on it, maybe some of the emotional attachments, you know, it could have great value to potential buyers. So anyway, the point is, as you were just saying, I think there is real value from a seller perspective as well, not just, again, a cynical like, oh, this site is going to, you know. be the tool of buyers to tear down houses? No, I mean, there'd be some of that for sure. If you feel there's a lemon out there, somebody's trying to put a property on the market, which is clearly fraudulent, but at the same token, if there really is a special place that whose value could be augmented by some sort of direct input from the seller in a priority contact format, beautiful. People would value that. And we hopefully, as this thing matures, a lot of those tracking features can be included in a sort of a one button system where you can really just say new client, boom, just touch the button and it records the date and you can have that as, again, archival history of that kind of information.

The two features which are going to be the ground features are the rating system and the crunch price. If there's anything that's going to drop people in, I think it would be those two things because anything else is going to be more of an add-on that's going to require more of a presence. So yeah, if people are interested in rating houses, this will be allowing them to do so if they're interested. Not only are you a career attorney, an author, currently moonlighting Housecrunch, and distinguished member of your community, you are also a husband and a father. How do you find balance? What is it like to be a founder in not only business, but also in family? What do they think about your pursuits of HouseCrunch?

So basically what I have to do is to say just block an hour, two hours. to do stuff. And sometimes maybe you end up not doing anything super productive, but you just get on your platform, do stuff. And that's basically my basic philosophy is, within the trap you can get into is to say, oh, I'm gonna do all this stuff, I have a plan, and it's all gonna come together.

And then you're just like, I have no time to do that. And you just say, look, just spend an hour, do what you can, set minor, that's how I call micro goals. You say, okay, you have one hour, here's two things you gotta do. And it would always surprise me, it's like how much time it actually takes to do those two things. You think, oh, I just want to register this or whatever, you know, or post something. That should be like 10 minutes. So you get on there and something you realize, no, it actually takes me 45 minutes just to get it right, you know. I've always, you know, it's the thing in this project. Because, you know, if you're practicing law for 20 years, things do can come quite quickly to you. You can really move things along, you know, because you've done it, it's rote. Something like this for me is not rote. I have to take a step back and just acknowledge like, doing this one small task you think should take five minutes is not gonna take five minutes, but just set micro tasks, just keep moving the ball forward slowly but surely. So that's basically it. That's basically how I'm operating these days.

What does Karl want to be known for ultimately? What is the most grandiose goal that you have for yourself? Essentially, what does Karl want to be when Karl grows up?

Yeah, well, you know... If House Crunch were to take off and become, you know, supplant my legal career, then that'd be something I'd let it do. If it was capable of doing that, I wouldn't mind that at all. In fact, that would be a nice exit point. I guess, you know, the thing about the laws, like people practice till they're like 80 something, they can, and then that's, some people love it, that's fine.

And I don't really see myself doing that, although God forbid, who knows. So if House Crunch were to become sort of the exit from a, I practiced law for 20 years, it's not like I was desperate to get out, but it'd be nice if it did become something, then if it became a way to sort of the next career step, that would be pretty amazing. I'd be pretty excited about that. Anyway, as I've always said from the beginning, if it became successful, but didn't make me rich or whatever, that'd be fine. I mean, if it became a way to reorient a portion of the real estate market to the benefit of consumers generally. That'd be quite a mark to make to say like, there was an idea, I ran with it and it actually did result in the betterment of an industry that was not serving the broader public that well. That would be definitely something to be proud of and to say there was a point to all this. So that would definitely be great.

And God forbid, if it actually became super successful, whatever, it's sold or whatever. As you say, as I was telling you earlier, what would I do if I grew up? You know, I can actually see myself going back to doing some writing. That would be something I might be interested in doing. Historical fiction, that was something I thought would be the next logical step from the first book I wrote would be to get into historical fiction. So we shall see.

Like the fringes of my mind kind of go like totally...

Well, I have to tell you this is a semi joke I made to my wife. So, you know, I'm from Boise, Idaho, So outside of this is a fantasy slash joke. But God, if I actually could do it, maybe I would. Was there's this giant plateau above the above the city, Boise, which has a giant religious. cross on it that lights up at night. That's always been controversial. Anyway, long story short, it's on a large plateau and I always thought it'd be hilarious. It'll save for whatever reason. I became immensely wealthy and I could do whatever I wanted. There's actually a giant chunk of private property on the back end of it and I always thought, I'm going to buy that back end of that plateau above the city and build a facsimile, a replica of the Acropolis or something like that, like a giant, just huge Roman Greek temple. just sort of a counterpoint, counterpoint. I mean, not to, I don't, you know, I'm not trying to be against the cross or anything, but I thought like, if they got the cross out there, I'm gonna put the Acropolis, like some giant, like, Zeus or something. Yeah, Anyway, that would be like my life, like that would be like life's testament, you know, like a giant, like, because you know, if you've ever been to Boise, it's hard to explain, but this like plateau I'm explaining, it dominates the city, it sits like right above it. And mostly it's a park, which is great. It's a public area and people hike to it. But part of it is this private, it's a quarry actually. And I think it's private property. Anyway, long story short, I think it'd be pretty bewildering and awesome to build this huge out of place temple. I think people would hate it at first, but this is just a blight on our Community. Been there like 20 years after I'm dead, they'd be like, this is a tremendous...

Tourist attraction, like, you know, ugh, ha ha.