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 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.
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…