Why I think real estate tech is one of the most attractive spaces:
1. We have EASIER problems to solve.
People are still doing things with pen and paper or impossible to manage excel solutions. online and mobile is a huge win for operators and they have mostly the same needs. there are very few TECHNICAL challenges in this space — development is essentially applying a known solution to a new problem space.
2. The bar for excellence is very low.
Just google for the real estate solution to any problem. The highest hits are just old companies that move very slowly. If any of their websites showed up on Hacker News, people would shred them for design and “looking sooooo web 1.0”. But they’re killing it because there isn’t an alternative that customers know about.
Consider this: the iPhone has only been around since 2007 in ANY capacity, and in the last 3 years, consumer facing apps have completely changed. These companies haven’t and are unlikely to. User interface and usability are still new ideas outside of Silicon Valley.
Beating the incumbents at product is surprisingly easy.
3. The market is huge and terribly underserved by tech.
Each of:
- apartment discovery (like craigslist and other listing sites)
- rental applications and tenant screening
- rent payments
- rental management software
- commercial
- residential sales process management
is worth on the order of a billion dollars a year in revenue.
Traction in one vertical facilitates traction in adjacent verticals. the prize is huge. The failure case is a lifestyle business. There is a known, straightforward path to linear growth with very low risk of failure.
4. The prospective customers already all agree that they need better tech solutions.
Every landlord in america knows that in the coming years they’ll be switching to online applications and online rent payment. there’s no question of IF. Only WHEN. The challenge is that its hard to convince people to move TODAY. The market is slowly shifting now, but there will be a cusp where the tides turn and people start switching en masse.
5. It’s relatively easy to reach players in the space.
I at least have the *option* of looking them up in the phone book. This is not true for a lot of other software products. “All hobbyist photographers” for example, is not an easy group to find.
* * *
Contrast these features to industries where there are relatively FEW dollars, customers need to be convinced that the product is needed at all, there are tons of really smart people working on it.
Instagram and Snapchat:
- arguably have a market that spends zero dollars (claiming total US adspend as their market size is a joke),
- are in a space with WAY more talented peers (sorry vaultware.com, I’m going to have to say I’d rather have an engineer from the photo team at Facebook),
- have problems that are on the bleeding edge of tech so that they have to INVENT new solutions (I will never have to invent a database for my real estate problems, and realtime async stuff isn’t important for me), and
- don’t have an obvious need or solve a clear business problem (how many people are *still* saying “I don’t get the point of Twitter”?)
- it’s not possible to look up their prospective customers in a list (get me an email list of all 13-16 year old teenagers with a Nexus 4).
Real estate has an easier path to positive EV outcomes with a massive upside tail. That’s my flavor.