I have been deep in the weeds recently with quite a few companies in the #CRE ( I’ve heard some people are trying to pronounce it “creeeee” lately and that’s just shit! The world could give a fuck! That’s like saying “proooooooop tech, again WTF!) and #Tech space lately. They are all at various stages of development, everything from basic seed with a few people to fully funded companies staffed at two hundred or more.
We talk about anything and everything you could imagine, product, engineering, competition, funding, recruiting and on and on. But without fail, I always bring up sales, scale and market share. It’s what dominates my mind.
They all started with an idea and someway somehow created a product that they think has a place in the global market. And for just getting beyond that point I cannot applaud them enough.
For the most part, I emphasize sales and scale more than any other for the simple fact that without either of those two their companies are worthless. The subject of market share slips in there occasionally but most are still too early to pay that much attention yet.
So, with those companies in mind, I thought I would lay out a little primer for them to digest and possibly reference later as they continue to grow and grow as we all know they will.
Market Share: Market share represents the percentage of an industry, or a market’s total sales, that is earned by a particular company over a specified time period. Market share is calculated by taking the company’s sales over the period and dividing it by the total sales of the industry over the same period. Source- Investopedia
Basic stuff and I’m sure we all grasp that basic idea but I think it is now and has been undervalued as a strategy within #CRETech.
It’s the quickest way to success and the quickest way to failure!
Example, who is the largest global #CRE brokerage in the world? We all know who that is. How long have they been at the top? A year, a decade, five decades? When did they actually get started? The answer, the entity we all know was technically started in 1906. That’s 112 years ago!
Of course, they were not the market share leader way back then but how many can remember when they were not? I can, and it was not that long ago. How did they get there? M&A, Private Equity and just damn good leadership. It’s not exactly a bleeding edge concept. Who did they overtake, when did they become that market share leader? What happened to the companies at the top and why did they fail? That’s a much deeper dive for another day.
The simple point is that they hold the dominant position in the marketplace. Their brand is top of mind, they attract and keep exceptional people and they make $$$$. Is it a position to be envied? Well, yes and as we all know there are many trying to attain that dominant position.
And I am sure those same people have all kinds of strategies and road maps to do just that. I’m just assuming they are all way smarter and more experienced at executing those strategies and roadmaps than I would ever be. But what if you were just a small company in comparison to all those big established and dominate companies, what would be a strategy today that would gain you not only market share but enable you to compete on a level even they might not have imagined?
I did say I was here to help.
The first thing I would do is define the pipeline of revenue. What is that pipeline? Do you even understand what a pipeline is? In the case of a dominate brokerage, it’s obvious. It’s the brokers within the company and the deals they make. The more brokers you have making more deals the more dominant position you have. Again, obvious, but what brokers should you have and who should you target. It’s the old 80/20 rule. 20% of brokers do 80% of all the deals. Go get them. It’s that simple. Pay them out the ass and figure out a way to make money off of the deals they make, not their commission. They will make more $$$ per deal and be as happy as hell and keep cranking them out.
The second thing I would do is target a specific geography. Go right to the top ten markets. Set up bases and own it all. How, again by recruiting and paying brokers to do deals. Brokers drive the market and brokers will create market share. Fight right at the top and let the world know you are here to stay, no matter what.
What would be the strategy to recruit those same high producing brokers beyond just money? Actually not much, money flat out talks. You can always come up with some BS about how your tech is so new and tricked out that nobody has anything close. I know it’s BS you know its BS but it’s always a good pitch. Most of the newer companies pitch their culture as a distinct advantage, fine but after a couple of foosball games it’s all about work and getting shit done, so why not create a culture of deal-making, sales, and cashing checks. If your people don’t want or like that then you don’t want them in the first place.
The third thing I would do is target any and all brokerages and try to buy them. You don’t want their tech, you don’t want their company culture or anything other than, their brokers and the relationship they have in the marketplace. Target the top ten in each market and just go buy them. How many want an exit, how many NEED and exit, how many just want to get paid for busting their ass for the last ten, fifteen, twenty plus years? My guess, it’s at least three to five of them. Let’s say you get five to agree, what did you just do? Created instant market share. Now some of the other companies may be publicly traded and are not available for sale. That’s a good thing, as a matter of fact, that’s an advantage. Why? They can’t do anything to stop you. You can eat them alive by just recruiting their brokers into your new techy and up and coming money making machine.
If and when you do this some things will just happen like getting sued for, whatever in the hell any attorney can think of. Prepare for this, build it into your strategy from day one. When you start kicking someone’s ass and taking money out of their pockect they will (as a last resort) try to use the government or trade laws to shut you down. Don’t bend an inch. You are only doing what someone did long before they got into that dominant position, they just happen to be on the wrong side and are trying to keep the pool man paid, which is weak as shit and should make you smile. That means you are winning. Besides when the lawsuits are over and nothing comes from it where are you? Still growing and building market share.
I need to make a point about those big publicly traded companies, they are the easiest targets for about a thousand reasons but the one that only matters is stock price. It’s what they live and die from. Start gaining market share and the analysists and traders will do what to them? Hammer their stock into submission. It will cripple them for years and put their company into chaos. Ironically they will at some point come out in the press with a “new” strategy and that will be to focus on…yea you know what…..gaining back market share. Which means that you are winning!
You are now loving life and growing at a ridiculous pace but there is one thing you must remember and that’s what it took to get there and that was MONEY. You had to raise BIG money to get there and at some point, you will need to pay those investors back. Everyone in the world will question every one of your moves every day, but with all that money in the bank to continue to buy market share you are doing just fine. All you have to do is figure out how to make more money from the same pipeline the people you just took it from, or end up like they did when the next hot and techy big money startup comes along.
Because Your Survival Depends On Market Share, But At What Cost?
How About At Any Cost!
+1 It’s called Compass and if #CRE is not paying any attention then they deserve what they are going to get!
+1+1 Nobody paid any attention to WeWork either.