How Technology and Interactive Maps Changed the Real Estate Market
Technology has always had a profound impact on the real estate industry. Today Renters and Buyers expect real-time information. This episode explores how technology has changed the real estate market and how interactive maps have played an important role in this change.
Deep Sentinel is the only security system that delivers the experience of a personal guard at every customer's property. It uses deep learning with wireless security cameras to enable live guards to intervene within seconds of a perimeter breach and before the criminal enters the property.
Know more https://www.deepsentinel.com/
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How Technology And Interactive Maps Changed The Real Estate Market
David, let me highlight that for a second. As a venture capitalist, I get pitched every variation of the Redfin model, and it just seems like such an obvious idea. Looking back in history, everything looks obvious. You say this is a crazy idea, but it sounds obvious to us right now. Why was it crazy? Was it because it was hard to build and develop or because of the concept of having a website where you go and browse?
Three key problems. 1) was the first one that you just said, which is the concept of a website that someone's going to use a website to make a multi-hundred-thousand-dollar decision was not accepted at the time. 2) no one had built any technology like this before. We were taking on technology risks. Let me just zoom you back. The mapping at the time was MapQuest and Yahoo Maps, where you would click on a map and they would click an arrow. I want to go to the North, South, East, West, and then you would wait twenty seconds while a new map loaded and it would show you. The idea of an interactive map all by itself was a 1-0 exponential risk for any investor. 3) no one had proven that you could use user experience as a differentiator to create a business.
We had three major problems. Now in retrospect, they're obvious. I love this article. I keep it in my office. I don't usually have it that close at hand, but I had just been looking at it because I’ve been talking to my team at Deep Sentinel about how important user experience is. The title was A Sit Down Fly By Real Estate Overview. You didn't even know the term interactive map. They didn't know what to call it. No one had built an interactive website where you transact it.
There was an entire industry around GIS, Geographic Information Systems. It's just a few lines of code and you can have an interactive map and you can use Mapbox or any other technology to do wonderful things with maps.
We had to build all of that from scratch. We literally wrote an engine and flash to do this. We had to write a map and image splice. We bought raw satellite data. We spliced it into pyramids. We had to reassemble it. We did everything from scratch. No one had ever done anything like this. What's cool about it is you're talking about it being an industry now. That was so inspirational to people.
Without that step, the story wouldn't progress.
The very first day we launched this, we had that article written about us in The Seattle Times. It was picked up by a couple of trade rags nationally. We went from no one knowing what Redfin was. Literally, it was our friends and family and they told us we were crazy. We had 400,000 unique visitors in the first 24 hours. Redfin launched and our ISP, the internet service provider, shut down Redfin for about twenty minutes because they told us that there's no way that traffic spike is due to anything but porn.
“You guys are running a porn site. We get it. It's cool. Lots of people try to trick us.” We're like, “No, dude. I promise it's not porn.” They were like, “No, dude. We get it. We've only seen this pattern a million times. We know what you're doing.” Michael Dougherty got on the phone with them and he's like, “No, please. Can you come to our office? I'll show you what we're doing.”
That's what it took for them to turn us back on. They turned us back on and we took off. It was like this user experience magical moment. I lived about four blocks from our office at Redfin and on the way to work, I used to stop at this coffee shop called Caffe Ladro in Seattle. This is a super snobby Seattle thing to say. I was in Seattle, so you can do that thing.
I'd go to Caffe Ladro every morning and I get this mocha. I turned around as I was in line and I realized nobody was reading a book. Everybody has a laptop out. I may be a little bit uncouth, but I looked at everyone's laptop screen to see what people were looking at. I was blown away. I had just woken up. It's like 7:00 AM. I still haven't had my coffee. Every single laptop had Redfin on it. I launched the thing at midnight. I pushed go on the Apache server and then go to coffee at 7:00 in the morning when I wake up and everyone's looking at Redfin. I go to the Starbucks between my apartment and the office. Everyone in Starbucks is doing the same thing. It was that kind of revolutionary user experience.
It's a real feeling when you have to pinch yourself, wondering if you’re dreaming. I had a very similar experience at an advertising company. I was on a trip to Japan where we set up an office and focused on user experience. I was on the plane and I was thinking as I was going to the toilet. I just remember looking.
I'm like, “There's someone playing a game on the plane. There's my ad. Nice. There's my ad in this. This guy's coming through the Wi-Fi. There's another one.” It was a surreal moment. We were like, “I'm stressing out about my Japan trip and people that are using my product. People are playing games and clicking on ads.” I know that feeling. It's unbelievable. Of course, it's not an overnight thing. I guess in your case, it wasn't an overnight thing, though.
That's the thing a lot of people don't know about Redfin. It literally redefined the speed of an internet user experience from 0 to 400,000 in less than 24 hours. It was crazy. The other crazy thing is I’ll appeal to some of the geeks out there. The whole website, all of this stuff, ran on a Dell 2650 and a Dell 1650. That's a 2U and a 1U server, no redundancy, no backup, and no server pool. We designed it. We engineered the living heck out of this thing so that it could scale and handle that much traffic on two pieces of iron. This was before cloud and AWS. AWS came out of the team that I was on at Amazon a couple of years later. It was at the same time that the AWS services that we're familiar with, S3 and EC2. Those came out a year or two later.
Redfin was just an amazing experience in terms of everything about what one little group of people could do to change the trajectory. That, to me, was mind-boggling. I remember about a year and a half later, there was a presentation of interactive maps based on what we built at Redfin. No credit to Redfin necessarily, but no one else had done it. I'm going to assume some credit here, but that ultimately became the inspiration for Steve Jobs to make multitouch interactive screens on the iphone.
The fact that this group of fifteen guys that just stayed up late for a year building this thing could ultimately directly be the inspiration for all the mapping products and the inspiration for all this other stuff opened my eye to what entrepreneurship really can be. It's truly a kernel of a snowball that becomes the influence of the entire world and people's daily experiences. When my kids open up their iPads and their iPhones and they open up a mapping application, I love that now I can tell them, “I'm part of that story.” I'm not the headline in that story necessarily, but I'm an important step that, without that step, the story wouldn't have progressed.
David, looking back, it feels a bit like your timing was impeccable. Stanford at the right time. You were involved in the dot-com craziness, Amazon, and Redfin. It sounds like the only opportunities back then were this good where you could find arbitrage is where you could buy users at $1.50 or where you could go from 0 to 400,000 unique visitors. Do you feel like the heyday of innovation was back then where it really was about Wild Wild West? Do you feel like opportunities like that exist nowadays or those days are special and that was like the most inflection point possible for technology?
Luck is always involved.
You could certainly make a case for that. If you happen to own Solana for the last twelve months, you'd say no. If you happened to start Solana fourteen months ago and you're now worth over $20 billion, nobody really knows how or why. Every time that we say that was the heyday of innovation and the fastest that things could change, we're proven wrong. I think that's why we see all these mega-funds coming up right now. I think this is a problem, but that's why VC has gone into this mode where it's really seed funding where I’ll give you a couple of hundred thousand to $5 million and then you've got to get to a $1 billion valuation.
From a finance funding perspective right now, I'm going to spread out 40 investments really early and then just see what sticks and gets to the next phase. That next phase leap is so big. If you think about it from a finance Civ perspective, that wouldn't be able to be possible if it weren't possible to take $5 million and build a billion-dollar company. That's why VC is so focused on $5 million to $100 million right now because it is fundamentally possible to do that.
It's a great thing for VCs. It's a neat thing for budding entrepreneurs and it's a frustrating thing for great entrepreneurs. Maybe not to the trillionaire entrepreneurs, but great entrepreneurs that are at like $50 million or $150 million valuation. There is a big hole in the market right now for companies that are at that stage.
I think you alluded to the technological challenges just to launch an experience in the old, early days of Web 1.0, Web 2.0. It was very hard. Nowadays, you have these no-code platforms and you can plug and play things. Rather than even investing in products, you can invest in distribution and just build your basic concept out with third-party software.
Look at Apes. For the love of God, there are 100 different platforms that look like that and you don't know which one it's going to be necessarily, but that one took off. NFTs and crypto doodles and another NFT. Twenty others didn't succeed, and none required a huge investment. The one thing that I don't like as an entrepreneur is that the financial model looks a lot more like high risk, high reward gambling than it does the grit and energy of hard work result in a great outcome.
This is a little bit of a metaphysical debate here. Is that good or is that bad? Has that ever been the case? Luck is always involved. You said, “You were born at this time where you got the first dot-com and then all this other stuff,” luck is always involved. I think anybody who takes credit for their success is an a-hole. Anyone who takes 100% credit for their success is just a straight-up a-hole. It is luck. I have asthma. Let me just make it super blunt and clear. Had I been born 100 years ago, I would have died in my infancy. Luck is involved
We've all won the birth lottery in that context, especially if we have readers in the Western world, where the problem was very different. I would not even say unlucky because that assumes the probability is minimal. We are the lucky ones.
The lucky sub 1%. We had this whole debate in America about the 1%. It's not to say that's not a real debate. If you zoom back a little bit and just say, “Of all the world's population in its history, people who are alive now live a better quality of life than ever before.” If you zoom back and look at it from a geographic perspective, if you eat three square meals a day and rent a car or own a car and go to a job, and that pays for that, you're in the top 1%.
Even if you're reading this, you're working on your self-actualization, there are other people you even have that luxury. They have no time. They burnt out. They're working hard just to make ends meet.
That's not to say that entrepreneurs don't work. That's not to say that he didn't work hard during the heyday of Mark Zuckerberg’s time at Facebook, and he's a little bit on the outs right now. I'm not saying that that's not a part of the journey, but it's a necessary or frequently necessary component, but it's not sufficient. Luck is a much more important component of success now than I think it ever has been.
You have the freedom to choose your legacy.
I think there is such a thing as improving your ROI on luck being around people, having platforms like Stanford or Amazon. Paying an interest in these areas is going to expose you to opportunities, which means your average bat eventually will increase. I feel like if you're at being an entrepreneur for like a decade or two, you're going to hit it big eventually, as long as you know when to move on to the next thing because it's not working.
That's the hard question now because if you statistically run this out, your best bet to become a multimillionaire, multi-hundred millionaire right now is to try things, give them 6 to 12 months max. If they're not on the path to becoming a billion-dollar company, then no. I'm just speaking purely statistically.
It's unconventional because I believe success comes right before failure or rather right before you feel like things are about to end. At that point, when you're about to throw the towel, you keep going for it and eventually, you hit it. What you're saying is a different perspective. I think in this day and age, it's true.
That's also why there's so much pressure from VCs to founders. They want that very quick, exponential high growth curve. You can have a company doing millions in dollars in revenue, but if its growth curve isn't looking exponential, no one's interested. That next funded competitor then comes along who goes from 0 to 100 quickly. It's that addiction because people have seen so much enormous wealth being generated so quickly. We've never seen so many unicorns and many billionaires being minted.
Unicorns actually used to be unicorns. In fact, Malcolm Gladwell's Tipping Point was the first attempt to describe this. What we've created is an industry that pumps those things out now and I like that. There are some really interesting things about that. At the same time, I’ve had to make the decision for me personally. I'll pivot to Deep Sentinel for a moment here. Deep Sentinel hasn't been an easy journey. Deep settles, been a four-year grinded hard journey. What's unique about Deep Sentinel, though, and I hope this is an inspiration to people, is after grinding it out, we hit that inflection curve.
We did hit that exponential growth curve, but it was unique. I don't think any of our investors would have said, “You're a jerk for walking away from this.” That's one of the challenges. For me, Deep Sentinel isn't a wealth-creating business. It is. I want to make money and I'm motivated. Deep Sentinel is a mission. It’s a security company that provides safety to families and business owners. I chose that as much because I saw it as a huge market opportunity. That’s because when I look at my kids, I’ve made enough money in my life that I could kind of peter out and stop now if I wanted to. I had the freedom to choose something that I wanted to be my legacy. The problem with that is that that doesn't interface incredibly well with that financial market that I just shared with you.
We're very fortunate that we went from a couple of 2X growth years to 3X to 4X growth. That's what it's going to take for us to make that next big leap in terms of venture capital. That's the thing that venture capitalists are looking for. We're already at over $5 million in revenue, but what it took was that combination of over $5 million in revenue in a 3X, 4X year. That's really the combination that investors are waiting for to pile in. That didn't come easily. If I were just to be optimizing financially, I think the world would have lost because what Deep Sentinel does, no one else does. It's hard and it's really meaningful. It’s a little bit of a metaphysical debate, but that's one of the challenges I see in the world right now.
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How to Leverage Data in Order to Make Managing Real Estate Seamless https://youtu.be/aGwxwSGKR1o
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What the Future of Property Management Looks Like https://youtu.be/zvOwrAkfpwM
About Zain Jaffer:
Zain Jaffer is an accomplished executive, investor, and entrepreneur. He started his first company at the age of 14 and later moved to the US as an immigrant to found Vungle, after securing $25M from tech giants including Google & AOL in 2011. Vungle recently sold for $780m.
His achievements have garnered international recognition and acclaim; he is the recipient of prestigious awards such as "Forbes 30 Under 30", "Inc. Magazine's 35 Under 35," and the "SF Business Times Tech & Innovation Award." He is regularly featured in major business & tech publications such as The Wall Street Journal, VentureBeat, and TechCrunch.
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