Building Better Cities with PropTech

Historically, the real estate industry has often perpetuated inequality in cities. As PropTech booms, could technology enable industry leaders to build more equitable cities?

This past Tuesday, we announced that Noelle Francois, Executive Director of  Heat Seek, has joined MetaProp as an Entrepreneur in Residence (EIR). Noelle is researching how technology can improve life for tenants living in government-owned, subsidized and affordable housing.

When I moved to NYC a year ago, excited to work on urban issues through technology, I was introduced to Noelle. Noelle advised I look into working at MetaProp because - she explained - one critical way to make cities more livable is to address issues in the environments where people spend most of their time: the buildings where they live and work. Now, almost a year later, I feel so grateful for that initial conversation I had with Noelle. Working at MetaProp has been, and continues to be incredibly meaningful.

Noelle’s NGO, Heat Seek, offers tenants affordable temperature sensors that collect and transmit ambient temperature data to Heat Seek NYC’s servers. Heat Seek then crunches this data and provides it as a comprehensive report indicating when the building's temperature is below the legal limit. Heat Seek has shed light on a little-known problem: many New Yorkers suffer from apartments that are too cold and lack the resources to advocate for safer conditions.

Despite excellent, cutting edge technology and tight operations, after four years of fighting for tenants through the nonprofit model, Noelle and her team have found that nonprofit funding for new technology is limited and slow. Ultimately, it has been hard to scale and maintain Heat Seek services.

Unwilling to give up on tenants most in need and determined to help more tenants, Noelle has begun to ask if those with the most resources in the sector -- the owners and property managers -- might actually have a profit motive to make tenants safer and healthier. Noelle is begging the question: what if the NYC real estate industry, notoriously a promoter of an increasingly unequal city, could actually find profits in making life better for those in need?

Noelle will spend the next four and a half weeks taking a new approach to her work: she will work with MetaProp to research the market demands for technology in the government-owned, subsidized and affordable housing sector. Her research will enable her organization -- and its mission -- to sustain itself by attracting resources for tech-enabled tenant advocacy.

I am so excited to work with Noelle to research how technology in real estate can make our city a safer, healthier, and more equitable place to live for all New Yorkers.                                   

***

Apply for MetaProp NYC’s 2017-18 Accelerator

The 2017-18 MetaProp Accelerator only has four openings remaining. Applications close on August 15, 2017. The companies already committed span the industry and focus on issues such as door-access, retail site selection, parking and indoor climate control. PropTech startups interested in applying for the 2017-18 Accelerator class can get further information and apply here.

How An Idea Becomes A Company

(From left) Amol Sarva, Knotel| Susannah Vila, Flip | Jonathan Wasserstrum, TheSquareFoot | Zachary Aarons, MetaProp NYC | Stu Ellman, RRE Ventures

(From left) Amol Sarva, Knotel| Susannah Vila, Flip | Jonathan Wasserstrum, TheSquareFoot | Zachary Aarons, MetaProp NYC | Stu Ellman, RRE Ventures

People have ideas for companies all the time; sometimes they come from personal experience, sometimes they come from a hunch.  Some ideas are good and some terrible.  Very rarely, does an idea moves past that stage to become a product or feature; even more rarely, does that product become a company; and, almost never, does that company becomes a successful company.  Usually, for an idea to become a company, an entrepreneur needs the following attributes: intelligence, energy, charisma, stubbornness, and luck.  A founder also usually needs to rope in cheerleaders and champions along the way.

Over the past couple of months, both Andy Weissman and Fred Wilson of Union Square Ventures have written excellent blog posts about why they a huge investment opportunity in the MetaProp NYC portfolio company Flip.  Posts like these as well as an ongoing content marketing effort has helped Flip grow its customer base significantly over the past few months.  Like all startups, as evidenced by the comments on these posts, Flip still has its fair share of super fans and skeptics.  While the company still has a long way to go, customers are seeing the pain point and using the service. Although it is very much still a nascent business, Flip has made the transition from idea to product and now recently to a company.  The next challenge will be executing on the vision.

I’m not writing this post to extol the value of Flip (although I think it’s immense), or even to discuss the company’s business model.  Instead, I would like to take the opportunity to show aspiring entrepreneurs what it takes to turn an idea into a company: the correct mix of intelligence, energy, charisma, stubbornness and luck combined with a stable of cheerleaders.

In March of 2015, MetaProp did not yet really exist.  Aaron and Clelia, in anticipation of the upcoming public launch of our accelerator program in August of 2015, were pushing me to “get out there more” by doing things like panels and thought leadership.  The executives at the Paul Milstein Center for Real Estate at Columbia University were kind enough to allow me to moderate my very first panel on PropTech at the University.  The panel was a big hit and featured really interesting startups like Compass, Honest Buildings, Travtus, The Square Foot, and SiteCompli.

After the panel I was bombarded with students from the business school coming up to me and pitching me on their ideas for a startup.  After the mayhem subsided, one final student came up to me and explained what she was working on.  I can’t remember exactly why I decided to pay attention to her as opposed to the others; maybe she seemed more poised and less scattered.  Regardless, she mentioned that she and her classmates were experiencing frustration with the rigidity of the current apartment lease structure and she was building a product to help ease this pain.  

I was intrigued and gave her my email address to follow up.  Below, please find a screenshot of that original email:

The following week we decided to meet at a Breather space near my office for a white boarding session.  One of the things I liked about Susannah was that she really lived by the Lean Startup methodology.  Between the time she had emailed me and the time that we met a few weeks later, she had already released a prototype of her product in private beta with her friends up at Columbia.  She had received feedback on the product and was already iterating.  

We discussed everything from residential leases to commercial leases to a vision of the future where leases exist on the blockchain and are completely fluid.  I could tell almost immediately that I wanted to invest in this company, but I wanted to make sure that she was going to do it correctly.  I told her that she needed to find early investor champions as well as a co-founding Chief Technology Officer if she really wanted to make a go of it.  I also let her know that an accelerator would be a good idea and she should apply.

After another month or so, she was ready to graduate business school.  She was taking a venture capital class that I had taken a few years before with Stu Ellman and Will Porteous of RRE Ventures.  We took the deck that she created for that class and got her some very valuable angel investor introductions with that, including Joanne Wilson, who became an early champion for Susannah and ultimately joined the Board of Directors.  The deck can be viewed here.  It’s certainly come a long way since then…

The next major domino to fall, and in my opinion when Flip made the transition from idea to product, was when she began the TechStars New York accelerator program in the Fall of 2015.  Alex Iskold, the program director, immediately understood that Flip could be a massive business.  He also understood that Susannah couldn’t do it on her own and needed a strong technical co-founder.  Luckily for both of them, Roger Graham was hanging around TechStars at the time and entertaining many different offers.  A talented full stack engineer, Roger was unfortunately feeling the pain of carrying three residential leases at the same time.  He joined the team within a week and they were off to the races.

In the Spring of 2016, we began to discuss with Susannah the possibility of Flip joining our second MetaProp NYC accelerator class.  While she was now steeped in technology and the startup industry, she had still never had a job before in commercial and residential real estate.  We could offer her a 22 week crash course that she needed on the industry itself, and how to navigate within it.  We were lucky to convince her to join, and she became a valuable contributor to our forum sessions.  Since she had already gone through TechStars, she was able to serve as a mentor for some of the younger entrepreneurs in the cohort, especially the co-founders of Bowery Real Estate Systems.  

Fast forward to the summer of 2017 and it’s safe to say that the idea has now become a company.  Thinking back to that first meeting at my panel in 2015, it’s amazing to reflect on all they have built in such a short time.  However, now the truly hard work begins. She now has a working product, product/market fit, a great team, and fantastic investors behind her.  It’s time to get to work!

Apply now to our 2017 accelerator program. 

How to Sell

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When an entrepreneur tries to sell a software or hardware product into a large commercial real estate company, they often make a huge mistake by assuming all the stakeholders at that company have the same motivations, goals, and incentives for adopting (or not adopting) a particular technology solution.

In fact, part of the reason why PropTech is such a hard nut to crack is because often entrepreneurs have to make three to four separate sales pitches within one organization before they find the internal champions that are key to securing at least an unpaid pilot and ideally a paid recurring revenue contract.  The different personalities that an entrepreneur needs to convince to close a deal in this industry are: the property/asset manager, the building engineer (when hardware is involved), the Chief Information Officer (CIO), and the CEO/COO of the company.  Each of these players has their very own quirks.  

It’s imperative to understand these dynamics and we spend a large amount of time working with companies in the MetaProp accelerator to drill into these.  To further complicate these issues, often different real estate companies will have different power dynamics.  At some firms, for example, the CIO has a lot of power.  At some other firms, the CIO has no power and all decisions are made at the building level.  If you want to learn more about how each firm deals with new technology, please apply to our program, but for a cursory introduction, please continue reading here.

The Property/Asset Manager

The property/asset manager is often the first person to become acquainted with a new technology. They are typically younger than those in the C-suite, very ambitious and often more open to new technology. Ultimately, though, they only care about three letters: NOI — and they know that technology can help them exceed their goals.  If they can increase the NOI on their property, by either increasing revenue, decreasing expenses, or ideally both, they will look like a hero and have a better chance to catch the attention of C-Suite executives, move up the food chain and advance their careers.

Thus, the property manager is often the simplest target for an entrepreneur to make a sales pitch. The pitch to these people is simple: purchase my technology product for $1 per year, and increase NOI by $2 per year or more.  If your technology can accomplish that, then chances are the property manager will become an internal champion.

The Building Engineer

The building engineer has a very different set of incentives from the property manager.  In many cases, especially when hardware and IoT solutions are involved, it’s the building manager and their staff who are actually implementing the technology on a daily basis.  Building engineers are typically not compensated like property managers; they do not make more money when the building has a “good” year or less money when the building performs financially poorly.  They also do not have the same upwardly mobile career trajectory that a property manager might. Once someone attains the status of building engineer, that is typically the job they hold until retirement.

Therefore, building engineers want technology solutions that actually work and save them time.  They don’t want to spend a huge amount of time deploying the solution and training their staff to use it.  They also don’t want to deploy a piece of technology that will make them or their staff obsolete.  They are fiercely protective of their turf and their staff, rightfully so.  Thus, to sell a building engineer, an entrepreneur has to focus 100% on efficiency.  Deploying solution X will lead to Y fewer hours of time for your staff.  However, solution X still requires a full staff to run it, and is not displacing anyone on your team.  

The Chief Information Officer

The CIO is primarily concerned with two things: security and integration.  They do not care how much money the product will make for the firm, or how much time it can save the building engineer.  The CIO wants to know if the technology is secure and encrypted.  S/he does not want to worry about yet another potential breach in the infrastructure of the company, or worse yet, the physical building infrastructure itself.  Also, the CIO spends the day trying to integrate between twenty to thirty disparate technology solutions that are not built to integrate neatly with one another.  They want to understand how your product will integrate seamlessly with what they already use.  If it can’t integrate, the CIO will most likely kill the deal, even if the property manager and building engineer are on board.

Pitches to the CIO, therefore have to focus on security and integration, not NOI and efficiency.  

The CEO/COO

The top of the organization varies the most on their incentives for adopting technology.  Of course, they are motivated by revenue growth, expense reduction, and efficiency.  And like the CIO, they also are concerned with cybersecurity.  However, what they are most concerned with is corporate culture, both internally and externally.

The CEO wants to know how the company is perceived as an early adopter of technology.  Does this make the company more desirable to the ever elusive potential millennial employee?  Do marquee tenants want to be in the company’s buildings because they embrace innovation?  Are current employees more likely to feel content in their jobs because of this technology adoption?  

That’s why pitches to the C-Suite need to be primarily driven by culture.  As an entrepreneur, you need to understand how to tug at the heart-strings of the CEO.  Make them believe that their company is special for adopting your product.

Conclusion

PropTech is not an easy business. This is the unfortunate reality that entrepreneurs face when selling into this industry.  Instead of throwing up your hands and bemoaning the difficulties, embrace the challenges and quirks associated with the space, because once you finally close a deal, it will be all that much more rewarding…

The Global PropTech Awards

Next generation PropTech is coming of age. How can I tell?

Maybe it's the $30b WeWork valuation? Maybe it's the Redfin IPO? Maybe it's the VTS/Hightower merger? Maybe it's C&W, CBRE and JLL all making major moves in the innovation space? Maybe it’s the influx of sector-focused professional investment capital from our own MetaProp Ventures of from friends at Camber Creek, Moderne, Corigin, Tusk, Fifth Wall, and others? Maybe it’s the rise of local organizers and influencers like James Dearsley and Eddie Holmes in the UK, Wouter Truffino in the Netherlands, Julia Arlt in Austria. Maybe it's the increasing volume of technologies sprouting from ambitious entrepreneurs around the world?

It's all of this, actually.

MetaProp was recently asked to organize an annual awards program and winners ceremony for NYC Real Estate Tech Week. It's only fitting that the world's top next generation PropTech startups, founders, investors, corporates, executives and others will be recognized for their contribution to the industry and community right here, every year, in NYC. After all, NYC is widely recognized as the world's #1 city for real estate and the #2 city for tech.  

Nominations open tomorrow July 15th and close September 15th. Finalists will be announced October 1st and Award Winners will be presented at a ceremony during NYC Real Estate Tech Week 2017. The expert judging panel is independent and influential. The judging criteria is clear and simple. Each of the awards categories, six total, has a three or five-member team selected from the Awards Committee, made up of industry leading CEOs, global press, founders and producers. Judges give a numerical value based on the quality and merit of responses to a series of open ended questions within the corresponding nomination form. The scores will then be combined, resulting in a cumulative score for each nominee. Awards will be given to the highest-rated nominee in each category.

Congratulations to the entire community for, yet again, making NYC the center of it all. Special thanks to James, Kate and Wilson at the NYCEDC and our esteemed Awards Committee from around the world including Columbia's Patrice Derrington, EG's Emily Wright, Real Estate Weekly’s Linda O’Flanagan, CRE.Tech’s Travis Barrington, REBNY’s Ryan Baxter, Warburg Realty/MetaProp NYC’s Clelia Peters, PropTech Consult James Dearsley and Reed MIDEM’s Arnaud Simeray,

Nominate someone today!

Top 5 Highlights of NYC Real Estate Tech Week 2016

With NYC Real Estate Tech Week less than three months away, we wanted to take a look back at our favorite moments from 2016. Here are five of the best events and highlights from the NYC Real Estate Tech Week 2016. Don’t forget to reserve your spot at NYC Real Estate Tech Week 2017!

Did we miss anything? Share your favorite moments from 2016 with us in the comments section!

5. Real Estate Tech Leaders Breakfast Roundtable

Founders Marshall Cox, Radiator Labs (2nd from left) | Arie Barendrecht, Wired Score | Ross Goldenberg, SiteCompli at RETech Leaders Breakfast Roundtable

Ryan Slack, of GreenPearl, Ross Goldenberg, of SiteCompli and Aaron Block, of MetaProp NYC hosted NYC RETech Week’s only invite-only event at The Altman Building. CEOs from the 2016 MetaProp NYC accelerator class attended and had an open discussion about the issues facing PropTech startups and the real estate industry as a whole.
 

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4. Real Estate Tech Unbundled at Columbia University

(From left) Amol Sarva, Knotel| Susannah Vila, Flip | Jonathan Wasserstrum, TheSquareFoot | Zachary Aarons, MetaProp NYC | Stu Ellman, RRE Ventures

Zachary Aarons, Co-Founder of MetaProp NYC, moderated “The Founders” panel at the Columbia Entrepreneurship Mini-Conference: “Real Estate Tech Unbundled,” in the Convene Conference Center, 239 Park Avenue. The panel featured Amol Sarva Ph.D., Founder & CEO of Knotel; Stu Ellman, Columbia Business School professor & co-founder of RRE Ventures; Jonathan Wasserstrum, Co-founder and CEO of TheSquareFoot, and Susannah Vila, Founder of Flip, the anchor startup of MetaProp NYC’s 2016 accelerator class. Introduced by Columbia’s RED Program Director, Patrice Derrington, and moderated by Columbia University Trustee Marc Holliday, CEO of SL Green Realty Corp, the second panel, “The Practitioners,” featured Robert Entin EVP & CIO, Vornado Realty Trust; Denis Hickey, CEO LendLease the Americas, and Jamie von Klemperer, President KPF.

3. Startup Competitons at MIPIM PropTech Summit

(From left) Richard Santhouse & Tim Milazzo, Stack Source | Alex Rangel, Ravti | Sara Rozenfarb, Reed MIDEM | Cindy McLaughlin, Envelope | Aaron Block, MetaProp NYC

The MIPIM PropTech Summit hosted the North American leg of the MIPIM Global Startup Competition. The competition recognized the most dynamic international startups offering real estate and urban management solutions and provided those competing with an opportunity to meet and pitch their business to relevant investors, developers, financial companies, media analysts and other key influencers.

The winners of the NYC MIPIM Global Startup Competition were 2016 MetaProp Accelerator graduate Ravti in the Building category, Envelope in the City category and StackSource in the Transaction category.

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2. Eisner Amper Real Estate Private Equity Summit

More than 485 real estate leaders packed into Pier Sixty for the Fourth Annual EisnerAmper Real Estate Private Equity Summit. The full-day event brought together deal makers from across the country to talk about trends in development and critical issues affecting deal flow, investment and capital sourcing. EisnerAmper’s Lisa Knee led a “State of the Union” panel featuring Samantha Davidson, Managing Director at Goldman Sachs; Hugh Macdonnell, Managing Director & Head of Client Capital Management at Clarion Partners; Christopher Schlank, Founder & Co-Managing Partner of Savanna; David Schwarz, Managing Director at Colony Capital; James Nelson, Vice Chairman of Cushman & Wakefield, and Brandon Weber, Founder & CEO of Hightower. Partner Ken Weissenberg of EisnerAmper discussed the marketplace in a special, “Titans of the Industry,” session with Leslie Himmel, Founder of Himmel + Meringoff Properties; Jonathan Kaufman Iger, Chief Executive Officer of Sage Realty Corporation, and Phil Watkins, Principal at Megalith.

1. Star Studded Keynote Speakers at MIPIM PropTech Summit

Bill Rudin, CEO, Rudin Management Company

The MIPIM PropTech Summit, the flagship event in NYC Real Estate Tech Week drew an all-star cast of speakers. The Keynote Speakers included: Alicia Glen, Deputy Mayor for Housing and Economic Development for NYC; Brad Hargreaves, Co-Founder, General Assembly - Founder & CEO, Common, and Paul Massey, President, New York Investment Sales, Cushman & Wakefield. Bill Rudin, CEO, Rudin Management Company, made the day’s introductory remarks.

Alicia Glen, Deputy Mayor for Housing and Economic Development for NYC

Alicia Glen, Deputy Mayor for Housing and Economic Development for NYC

Among the other speakers and moderators at the the Summit were:

  • Arie Barendrecht, Co-Founder & CEO, Wired Score
  • Karin Brandt, Founder & CEO, coUrbanize
  • Michael Britti, Senior Vice President M&A, RealPage
  • David Eisenberg, Founder and CEO of Floored
  • Ned Gannon, CEO, eBrevia
  • Geoff Lewis, Vice President of Product, Honest Buildings
  • Ragnar Lifthrasir, Founder & President, International Blockchain Real Estate Association
  • Duke Long, PropTech blogger and CRE broker
  • Caren Maio, Co-Founder & CEO, Nestio
  • Michael Mandel, Co-Founder & CEO, CompStak
  • Nick Romito, Founder and CEO of VTS;
  • Maria Seredina, Senior Manager, Corporate Development, Zillow
  • Sara Shank, Managing Director and Head of Portfolio Management at Beacon
  • Adam Stanley, Global CIO at Cushman & Wakefield
  • Karina Totah, Vice President of Strategic Initiatives at the NYC Housing Authority
  • Bradley Tusk, Founder and CEO of Tusk Strategies and Tusk Ventures
  • Jameson Weber, Vice President of Product Strategy, Hightower
  • AND MANY MORE...
Adam Stanley, CIO, Cushman & Wakefield | Nick Romito, Founder & CEO VTS | Gunther Schmidt, Founder & Managing Partner, Medici Living | Raja Seetharaman, Co-Founder, PropStack

Adam Stanley, CIO, Cushman & Wakefield | Nick Romito, Founder & CEO VTS | Gunther Schmidt, Founder & Managing Partner, Medici Living | Raja Seetharaman, Co-Founder, PropStack