Remote World In Real Estate Investing: Does It Improve Productivity?
In the real estate industry, it's becoming more common for agents to work remotely. With this shift in the industry, we wanted to know: does working remotely actually improve productivity?
This episode will discuss what it means to be a remote worker and how that affects productivity. We'll also talk about the benefits and some of the challenges that come along with it.
The Occupier Team combines their deep experience in the commercial real estate (JLL) and proptech industries (VTS, ProCore, WeWork) and applies it to the world of the occupier.
Tenants face unique real estate challenges, and Occupier set out to build digital solutions that automate and streamline the management of their lease portfolio and transactions.
Occupier was started to connect brokers, real estate teams, and lease accounting professionals to make smarter, more informed leasing decisions for the business.
Remote World In Real Estate Investing: Does It Improve Productivity? With Matt Giffune
On this show, we are joined by Matt Giffune, the Cofounder of Occupier, who has $16 million in venture capital. They are pioneering the future of lease management and helping real estate executives make smarter real estate decisions. Matt, it has been a while since we spoke. How are you?
I'm doing well. Thanks for having me on the show. I appreciate it.
Tell us a bit about your background and how you ended up as the Cofounder of a fast-growing venture startup.
I have a professional background in commercial real estate. I graduated from college in 2003 with no real plans of what I wanted to do with my life. That's what you get with a Liberal Arts education. It does prepare you to be resilient and figure things out on your own. I figured out that I wanted to get into the real estate industry. I didn't know exactly what I wanted to do but I knew that I wanted to be on the commercial side, whether that was in development, leasing or property management. I ended up working at JLL, which is one of the big boys in commercial real estate services globally. My first job there was as a tenant rep analyst. Essentially, corporations that relied on JLL to manage their real estate portfolios would hire us to execute their transactions.
Each one of those transactions has an underlying cashflow. Some analysis has to go into, “How much money did we spend with my CapEx? What's my rent? How does that compare to the market? How does that compare to other buildings?” I was basically the spreadsheet jockey for all the brokers that were doing the deals.
I did that for a couple of years and then graduated and became a broker myself, where I spent most of my time representing tenants and landlords in their lease negotiations. It was like a hybrid sales role but also a client service role, where you are actively advising people through a process that is usually foreign to them to some degree. We will get back to that and how that led me to do what I'm doing.
I felt around 2014 that the industry needed a lot of modernization. We had all sorts of CRM tools and technology at JLL, some were great but the vast majority of it was not purpose-built for how brokers would work. I thought there was a lot of innovation runway in this space. Rather than try to change JLL myself, I went and worked at a company called the BTS, which at the time was pivoting from a video touring marketing software platform.
They are doing it again now, which is awesome into more of like a data management, SaaS, leasing, and asset management software platform. I thought that was something that was sorely needed in our industry. I went and worked at BTS. I stayed there for a little more than four years. I met some great people there. That was my startup MBA. I learned how a company scales from that series A and on.
I cut my teeth from an enterprise sales perspective there as well. I learned how to sell software in complicated deals. While I was working there, it became clear to me that while BTS is building a great product that was super valuable and sticky for its users, there's only addressing one half of the market, and that was the landlord, which is a huge market.
It's a huge multitrillion-dollar asset class. The tenants that occupied commercial space were also sorely underserved by technology. I started scratching the itch of what it would be like if tenants had a central infrastructure software that they could use to make their real estate decisions, whether those are transactional, portfolio management or generally centralizing their work. I will pause there because that's when we started thinking about Occupier seriously, and that was about a few years ago that we jumped into startup land.
You mentioned that in 2014, you felt the industry needed a lot of innovation. We are here now in 2022. A lot of people still feel the same way. A lot of folks in PropTech feel that this industry is ripe for disruption but it's getting tiring hearing this for years. All we at that cost of major change. Did COVID accelerate and bring that or it's just going to continue being slow with adoption? Let's unpack that. Tell us more about what you feel and why?
There have been two questions in there, “1) Has the industry made it up the learning curve? 2) What are what's changing that's going to make it flip into a modern industry like stockbrokers used to trade on paper?” Now, it's all algorithmic trading. Will that ever happen in commercial real estate? I don't know, but if you bring it back to 2014, I would say PropTech started becoming an actual investible category by venture capital in 2010, ‘11, and ‘12. It's about many years since PropTech has been a thing. The misnomer is that everyone is trying to disrupt commercial real estate. I don't even think that's the first phase of what PropTech is.
PropTech is bringing technology to commercial real estate, and it's a huge industry. There are multisector of it. There’s commercial, multifamily, and pretty much anything that is an asset. It could be defined as real estate in some sense. Each one of the corners of that industry needs to be innovated, and innovation is constant. It so happens that real estate is one of the last corners of the industry that hasn't been innovated yet.
Up until now, and the pandemic has accelerated this, and we will get into that too, most of the capital that has been poured into PropTech has been focused on property owners, landlords, physical world. There's nothing wrong with that. It's that the tenants, the people that are occupying space, creating workspaces using it to sell goods to distribute goods, have largely been ignored. That was the thesis that we had when we started this business.
You don’t need a massively disruptive business model to build a big company. You just need to do something that solves real-world problems for users. The more users you can solve for, the stickier your product is within that enterprise.
The second part of your question, “Has the pandemic is going to be the black swan event that makes everybody light bulb like, ‘We got to figure this out?’” The answer is yes. The vast majority of our customers, who are all tenants, commercial tenants, have used this moment in time to evaluate, “How are we managing the second-largest expense on our balance sheet? We had all these thousands of people working in our offices. We paid the rent and gave them a desk. Now they are all working from home. They are demanding things from us. None of them want to come back.”
Some of them do. They want to be remote. They want to have a different work experience. If you want to unpack that from a traditional real estate while we also have all these leases that were confined, what do we do with all the information in those leases? How do we negotiate out of them? How do we restrategize our portfolio so it suits the needs of the new employee? Unless you have a technology backbone that you are using for all of those decisions, it's going to be hard to make sense of anything.
The reason is that there are so many constituents within a business that touch that real estate decision. It's the C-Suit, the real estate department itself, the finance team, human resources, and business unit owners that have to occupy that space. It's this mushrooming problem. The timing is right for a platform like ours to come in and be that infrastructure software for a business to make its real estate decisions. I know I threw a lot back at you there. If you can unpack that a little more, we can dive into some of the questions that people keep saying.
I'm familiar with the company for the readers’ context. I can probably dig deeper here. I regret I didn't invest in Occupier. They have done fantastically well. That's the nature of venture capital. You are going to miss amazing companies when you have a good deal flow. This is an example. What do you think about my opinion as a venture capitalist who's investing in PropTech?
To me, it feels like if you are going in and there is an existing budget in place already for a specific problem the company is trying to solve, when you have that situation, they already have a lot of solutions because everyone is going off of the easy fixes. There isn't much of an incentive to adopt a new player even if the value proposition is superior, and I don't mean disruptive.
The disruptive value proposition is 10X better or a huge discount on the cost, whereas when you have a new set of problems that the industry has never dealt with, let's take workplace occupancy, for example. You've never had this situation where a large part of your real estate suddenly needs to be repurposed and the large contingent used to work from home. You've now got this portfolio and differ in what you are going to do with it. When you have those types of new problems that emerge, where there isn't even an existing budget for it, it doesn't fall on a lease administration. This is like a whole new area.
That's where the massive big opportunities are. It's annoying to hear for founders who are trying to figure out, “Let me go build a company where there are at least 10 or 20 problems. The problem is there are lots of solutions already.” My opinion is when there's a disruption in the industry, and there isn't yet a clear budget defined for it, that's where there can be very large opportunities. Whereas when you are going after the areas that are well-defined in these competitors already, it's hard to switch out competitive products because people are comfortable with what they have. A lot of people use Excel, and it's hard to convince them to get off Excel even. What were your thoughts on all that?
I semi I agree with you. There are sleeping industries, and ours is one of them, where somebody can come in and unseat the incumbent way of doing things, even though there might already be a budget allocation for a type of software like that. It's about market timing. Let's talk about our company as an example of that. When we started the company, we knew that there were already legacy solutions in the market that have been adopted for lease administration, for example.
We also knew that the lease accounting changes that were coming down the pipe for every company to comply with were super complex. There was already a few things on the market that did. They had been around for a while but we also knew that people weren't that happy with those solutions like Web 1.0. They were either super point solutions. They only worked for one user persona within a business.
We started the company a few years before the pandemic. We couldn't forecast that. That helped our cause, as perverse as that may sound. If you looked at the forces that were happening in our market, that's what created that opportunity for us to come in and be different than everything that everybody has seen so far. Part of it is general basic, building a better mousetrap. We have a much more user-friendly platform than anybody that we compete with. We deploy it faster. It's much more intuitive. If you are asking somebody at a high-tech company that's less than ten years old to buy software. They are going to buy the one that feels like an iPhone.
I opened the box, and I knew how to use it. They are not going to buy the one that you have to open 10 Windows to get to the report that you want. That's what we are competing against. Every SaaS company competes with Excel in some fashion. If I was raising money and my value proposition was like, “We are going to get people off of spreadsheets.”
If I was in the DC on the other side of the table, I'm like, “I've heard that one million times. What's changed in your industry that is going to make everybody buy this?” The other part of it is the sheer size of the market you are going after. Ours is massive because these lease accounting changes essentially are forcing every company to understand their underlying real estate.
If those are all the data that drives that function is locked up in PDFs leases, then you are never going to even understand. Forget about the pandemic. You have to understand what you have. Deloitte made a study that said that 58% of companies still have all of their lease documentation on paper. Just right there. There's a huge opportunity to digitize a major function within a business.
The part I disagree with your thought is that I don't think you need a massively disruptive business model to come in and build a big company. You need to do something well that solves real-world problems for users, and the more users you can solve for, the more sticky your product is within that enterprise. If you are good at selling that, you can build a big business.
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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.