Real estate is generally considered a late adopting business full of dinosaurs who don’t embrace new technologies. While widely true (ok, almost entirely true), it certainly didn’t feel that way at Art Assets event highlighting real estate innovation. The event featured Riggs Kubiak of Honest Buildings, Ben Miller of Fundrise, and David Eisenberg, founder of Floored, a revolutionary 3D mapping program.
While Ben and Riggs are real estate practitioners who saw inefficiency in the business and set out to improve it, David is a non-real estate guy who’s shaking up the business.
Jason Freedman, founder of the offices space search firm 42 Floors, wrote an interesting article on Hacker News about the type of people working at 42 Floors. The first seven people hired by the company had a combined 0 years of commercial real estate experience. He saw this as a positive because he believes that in order to transform the real estate business, you need people who are not educated in how the industry has performed up until now. This was important to him because he’s not simply trying to improve the industry; he’s trying to flip it on its head.
This got me thinking about the current real estate tech landscape and the types of people who are shaking up the business. There are a few key areas where innovation is happening in real estate:
While real estate companies have traditionally guarded data and services like Costar and Loopnet charged large fees to access information, start-ups such as Compstak are changing that model. Compstak, founded by a former real estate broker, uses a unique model to crowd-source lease information enabling real estate participants to easily compare properties.
Fundrise is just one of many start-ups which believe crowdfunding is the future of financing real estate deals. A recent Forbes article highlights 10 companies that are taking varying approaches to crowdfunding for real estate. This segment of innovation tends to be full of industry veterans who have a deep understanding of real estate and how the financing landscape has evolved over time. There’s a good article over on the Fundrise blog which explains how big money took over real estate and why crowdfunding is key to realigning interests.
While 42 Floors was started by non-real estate guys, their competitor, TheSquareFoot, was started by a few savvy young real estate professionals. Each takes the similar approach to office search with the mission of improving the way companies find office space.
Real Estate versus Non-Real Estate
Many real estate start-ups are run by former real estate professionals because they see the inefficiencies first-hand and understand the intricacies of the business that need to be improved. However, most real estate professionals are old-school thinkers; they do things a certain way because that’s how they were taught and that’s how those before them were taught. This leads to a business that lacks innovative thinkers.
For this reason, guys like Jason Freedman who see the world in a different light, can successfully shake up the business while having no prior real estate experience. However, before starting 42 Floors, he had to learn the business. He spent a lot of time speaking with tenants, brokers, and landlords. He went on tours and read through leases. After all, it was this deep understanding of the flaws of the business that has enabled him to successfully shake up the business.
What do you think?