As a 14 year old technology “startup,” we regularly have conversations about our company’s history, trajectory and in particular, the factors that have led to our success and longevity.
It’s always a bit of a struggle, even with the benefit of hindsight to pinpoint a single factor or even a combination of factors. Some of that is probably because we are too close to the action and have some bias in one direction or another. That’s certainly true if our answer includes anything about our own technical or managerial brilliance.
I thought about this recently after returning from this year’s terrific Realcomm conference in San Antonio. I’ve been asked several times “what was different” or unique about the event this time around.
In my opinion, it was clearly the energy and buzz generated by the new crop of technology startups. Many of them are VC-backed, have raised a bunch of money in several rounds of funding, and seem to have terrific initial traction.
While most of the funding and startups are on the leasing, deal management/CRM and financial side of the commercial real estate business, there are some operational startups out there as well. Companies like VTS, Hightower, Honest Buildings, Compstak, 42 Floors, Realty Mogul, Building Robotics, and others are generating lots of discussion.
The next obvious question is “Will they make it?” Will they be here 14 years from now writing with the benefit of their experience?
No one knows the answer to that question as the variables and intangibles to run and grow any business in any market successfully are too numerous to contemplate here.
There was a recent Ted Talk (“The single business reason why startups succeed“) from Bill Gross, the legendary founder of startup incubator, Idealab. Bill’s talk was about his efforts in trying to identify the primary factor’s linked to a company’s ability to succeed.
Interestingly, his research showed for the single most important factor, contributing 42% of the basis for success, was timing. Was the market a company was entering ready for the product or service they were selling? This was followed closely by team & execution, and then…the idea or product.
So, is the timing right in the commercial real estate market for these startups? No one knows for certain, but it sure does feel that way. A common conversation at most events, in blogs and online is about the new era of technology adoption in CRE… But talk and action are very different things.
The challenge has always been and will continue to be getting people to change long entrenched behavior and business practices. And that’s no easy task. It takes the hard work of educating and supporting clients and the market, and making sure the value promised is the value delivered.
And that, I’d propose, is where the second most important factor contributing to success that Bill Gross identifies – team & execution – comes in.
I do think the timing is right for the current technology wave in CRE. The demands of institutional ownership, millennials and the needs of firms to differentiate are contributing factors there. And I’ve seen some of the terrific new products entering the market place that appear to address and solve very real business problems.
My 11+ years working in the space tells me that what will really make the difference between who makes it and who doesn’t are the folks who do the best job executing on core business fundamentals. Those folks who do the best job winning the hearts and minds of their customers with outstanding service and a commitment to educating the market on why changing the way they have done things in the past will create value.
Great new technology and firms in the space will make all us better. I’ve met a number a number of the folks who have started and work at these companies and I’m impressed by them and what they’re doing. I wish them all the best and hope their timing is perfect.