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#CRETech Is A Complete Failure. And Here Is Why.

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#CRETech Is A Complete Failure. And Here Is Why.

Some of you may say “finally this guy will shut the hell up.”

How about me just calling it as it is and not backing off so that I don’t hurt anyone’s feelings?

We are now realistically five years into this tech cycle. Specifically this #CRETech cycle.

Let’s start with the reality.

How many companies can you name that have real customers and are making money?

Easily less than twenty? Hell, it may be less than ten.

Is that considered a success? By who’s standards? Sure as hell, not mine.

Why so few success?

Why so few positives to champion?

The easy and most used explanation is that #CRE is “too relationship and hands on to be digitized.”

That’s  just saying “fuck off we are making a shit load of money and don’t want to mess it up.”

I get that why ruin the third largest asset class in the world? If it ain’t broke….

Interestingly residential is has been and will continue to blow itself up with technology and then some.

Don’t think so? How about Zillow, Zoopla, Compass, RedFin, Matterport, Opendoor. Check the numbers. The real numbers. Billions with a B.

Every day there is another company going way out there. Doing everything they can to completely piss people off and digging straight into the industry pockets and going after milk and bread money. People opine about the fire and hell it will bring to the world. They push back. They decide how to hate on the idea. They rant rave and declare all out war on the arrogant and audacious startups and the sheer gall to even attempt to “disrupt” their precious business.

What do we get? What does #CRE get?

Companies with tall good looking CEO’s using artfully crafted “thought pieces” targeted and placed for optimal coverage in the correct eye-catching demographic media.

And the response? The response from us the actual users? The people in and of the business? NOTHING. NOTHING.

Oh, sure there a few “outliers” who pop a few comments in here and there. Who reads that kind of stuff anyway?

Residential just flat out kicks our ASS!

Innovation, Disruption, Controversy, Funding, Bad Ass Ceo’s, Hell Fire Business Models and …….

$$$$$$$ or human beings willing to pay $$$$$.

So, how are we in #CRETEch doing on all of those fronts?

Fucking Zilch!

Kissing ass and changing NOTHING! NOTHING!

A simple part of the problem is that we are only going after the low hanging fruit.

And do you know what that low hanging fruit means to a startup? It means ” I don’t know what we are doing, but it looks easy as hell so let’s go after that first.”

Where are the BIG IDEAS?

When Zillow started, it was like “no way, not even possible.”

How about Opendoor? They are getting hammered in the press. Let me give you a hint. It’s called a REIT.

And just recently there is Compass. A BILLION dollar valuation. BILLION. How many residential brokerages are worth a Billion Dollars? Not many?

How many radical commercial brokerages have come along in the last five years? NONE! Fucking NONE!

Where are the balls out ( yes, I know it’s sexist) radical leaders of that movement? How much money is paid in commercial commissions a year? How many times can I say BILLIONS in this article? Not big enough to chase after? WOW really!

Settle in I am just getting started.

Let’s step back for a minute. Let’s go back to the beginning of this #CRETech cycle. Five years ago and it was a heady time.

The entire world was changing. FaceBook, Amazon, Apple, Google, and Twitter were just beginning to show us how to communicate interact buy and source the entire world. We were becoming a connected global society.

Commercial real estate, on the other hand, was what? Siloed, Inclusive, Analog and Entrenched.

Think of all the possibilities that lay before us.

Technology along with the rest of the world would need to and could change for the better of all.

And what have we in #CRE done in the last five years?

Without doubt stayed Siloed, Inclusive, Analog and Entrenched with PRIDE!

The rest of the world has moved on! Moved ON!

Finance, Insurance, Transportation, Logistics, Technology.

All are progressing at a breakneck pace.

Five years later we have done nothing!

We still:

Pay for data.

Have no data standard.

Consume more global energy than any other asset class.

Refuse to adapt the physical environment to today’s reality.

Look at the facilitators of a transaction as a source of revenue.

Silo the most important source of data from all possible users. The building itself.

Do not fully utilize the building as a source of revenue.

Do not understand that the people inside a structure create value beyond the structure itself.

Fail to understand that the data of the building has more value than the structure itself.

Treat the process of the transaction as a special skill set only available to a few.

Refuse to have market transparency that allows consumer confidence.

Neglect to integrate data with other industries.

Deny a digitized central public property database.

Fail to see the value of a digited central public property database with blockchain protocol.

Completly undervalue a national industry-backed BIM education system.

Not understanding that discovery and search should be predictive.

Have no advocate for the end user or industry accountability.

And as an industry not even attempting to fund any of the above….out of ignorance.

What am I missing?

Go ahead and tell me how none of the above can not or will not change commercial real estate. Forever!

Why is that not even a consideration by this industry?

Why?

I don’t understand.

I will give you this.

The people in #CRETech to this point have done what?

FAILED!

FAILED MISERABLY!

They thought they wanted to change the world.

But…..

#CRETech Is A Complete Failure. And Here Is Why.

 

 

+1. You would _____ someone’s_____in public for a billion dollar valuation.

+1+1 Yes, you would!

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  • Ryan Taylor

    VTS.

    • John Doe II

      Yes, but the problem is that there is hightower, so you have some people on VTS and some on Hightower, and many on neither. So you have….fragmentation.

  • Workstation Wizards

    Somebody is going to be slick enough to combine these individual parts of the CRE Tech vertical into one simple, easy to use platform that ill handle it all from data to floor plans to leasing options. You name it, it’s right there.

    That my friend, will be the billion dollar valuation.

    • Duke Long

      DO IT!

  • Ryan taylor

    Ecosystem. That is what they are creating. The data they are harnessing is fueling their end result more and more everyday. 3 BILLION sqft on a platform doesn’t go away and neither does that data. They are seconds away from positioning themselves as the company that will finally revolutionize cre tech. COSTAR ??? Way to go. You have a ton of data. VTS on sheer efficiency and creating a magnificent new way to communicate will all parties dwarfs costar. 3-5 years VTS is giving costar a run for their money.

  • Topher Stephenson

    The ClientLook ad at the bottom defines awkward. Good read.

    • Duke Long

      Fair Point 🙂

  • David Music

    Every person in CRETech (that I have met, talked to, or read) starts from a false (unstated) assumption: that CRE professionals aren’t 30 years behind every other industry. I still read articles to this day about how your mobile phone should be your best sales support device and this is considered groundbreaking thoughpieces within this industry! We are not at a point where a platform or data standard is needed, we’re at the point where we need a sales disruption.

    Follow the money. CRE brokers are paid based on their relationships. They don’t want to sacrifice those relationships by opening up the industry for disruption and they also control the money because clients don’t pay for anything, the landlords do. Guess what, the landlords don’t mind the arrangement. So you have a bunch of 30+ year salespeople rolling in money incentivized to not innovate or invest in new tech that also control 80% of the money in the industry that could go to new tech. The top brokerage firms are simply representatives of their workforces which means they don’t want to rock the boat either.

    This is the fundamental flaw that needs to get addressed first – either convince clients to not use the traditional brokerage model or convince enough brokers to revolt against those that make more money than them. Neither option is going to be easy because in #1 the clients don’t have budgets because they don’t pay for our services today which means you need to convince their finance leads to give them money for something they’ve never paid for before. In #2 you have to convince people to go out on a limb and likely need to invent an entirely new revenue model from scratch because they are 100% commission today. Tech is actually the easy part of this equation because there are plenty of tools that can help once you get past the fundamental issue.

    #CRETech is not a complete failure from a platform standpoint, its a complete failure because it starts with the wrong problem statement (and the one they use isn’t even in the right sport).

    • Duke Long

      Beautiful and with no F-Bombs.

      • David Music

        I appreciate your elegant use of cursing too much to attempt it myself. Don’t play the game of the pros….

  • Andre Cuadrado

    Dude, this article is 100% spot on.

  • Alex

    “The data of the building has more value than the structure itself” — please elaborate?

    • Duke Long

      Data of a building turns over 19 times in a 30 year cycle.

  • Duke, you must podcast this post. It’s too good to just let it stand on its own without your voice. The CRE industry needs to hear this, and then it will go viral.

  • David Weaver

    I believe that residential enjoys an advantage in terms of innovation based upon shear volume of transactions that occur annually. Residential is more of a commodity or standardized transaction (95% of the time). Commercial real estate is a less commoditized. With regards to CRE Finance and Tech solutions, the innovators often missed that regulatory and compliance regime’s can stymy the gains of more rapidly processing paperwork. I believe that a wedding of tech and balance sheet abilities will ultimately change the CRE finance world.

  • David your assumptions quite frankly are absurd.

    While business relationships are the lifeblood of our industry, brokers are compensated upon the close of a transaction and not “paid based on their relationships”.

    Your analogy of the ’30+ year salesperson’ is equally off the mark and most, if not all, of the top performers that I know or are associated with over the past 30 years fully embrace technology that allows them to better serve their existing clients, attract new clients, and manage the cumbersome task of juggling their day-to-day responsibilities. Fortunately, firms like ours who continually fine tune or developed innovative technology will keep us ahead of the curve and not behind it.

    You can advocate a ‘new revenue model’ or a ‘sales disruption’ till the cows come home but at this juncture, data will continue to be the backbone of future platforms with which to move forward.

    • David Music

      I may have made some vast generalizations in making my point – there are plenty in the industry that are interested in technology that disintermediates gatekeepers and rent-takers – but there are far more that want to maintain the status quo. Or at a minimum segregate and silo control of their accurate client data for just themselves and not let it be used in the broader data ecosystem. We are fighting a law of probability problem and until a tipping point of people like you and the people you know is reached, posts like Duke’s above will continue to be true. Hopefully firms that use broad and open platforms take the lead and become clearly more profitable.

      Data by itself cannnot be an answer – especially when no one in the CRETech scene has yet to even come close to making our data truly usable.

  • Mike S.

    Definitely recognize this lack of ambition/innovation/procrastination. However, it is changing.

    How far off is the day when the answer to:

    Question: “do you think Proptech will threaten the agent”
    Answer: “sooner rather than later for those whose experiential knowledge can be done by some basic algorithms in BI system”.