Month: July 2016

IndustryHub
EuropeInterviews

IndustryHub: Connecting Real Estate Projects and Creative Teams

Interview with IndustryHub founder Savannah de Savary:

What was the inspiration (lightbulb moment) behind IndustryHub?

There was definitely a “lightbulb moment”. I was working for a big real estate development firm in New York, sitting in a meeting about a large development site they had in Brooklyn. The CEO wanted to transform the site into an office complex that would attract the hot tech companies and grew frustrated when his development team couldn’t easily identify the architectural firms and interior designers who had a rapport with such tech companies. We needed a team who knew their design preferences and had the necessary reputation within the tech community to attract them to our site.

However, finding out who those firms were remained as time consuming as it was 30 years ago. We had to leave the meeting with his questions unanswered and call round our word-of-mouth networks until eventually we found someone who could identify a suitable candidate. It was time consuming and frustrating to say the least and was mirrored on a frequent basis when we wanted to know who was behind a specific project we admired or was regarded as up-and-coming for a specific service. I began to think how useful it would be to have a search tool that enabled us to know the answers right off the bat.

Is this full time or are you and the team still working elsewhere?

Full time and still struggling to find enough hours in the day for the pace at which we are growing – IndustryHub is a 7-day a week job!

Describe the process / challenges of putting it together.

We spent an enormous amount of time on the UI/UX design. I think in a way it helped that I approached the user interface without a tech background. The priority was simplicity of use: ensuring that the product was intuitive for people with real estate backgrounds. A key part of the process was getting feedback from our future user base as often as we could. We’re not looking to be a “disrupter” – changing both the means and methods by which developers source consultants, just the “means” by taking word-of-mouth insight online – so it was important to hear from our user-base how best we could do this for them.

A key challenge of putting it together has been making sure we create a two-sided marketplace that adds value to both sides. We simultaneously need to provide unparalleled marketing exposure for consultants, search tools for developers and collaboration tools for both. Our discovery tool enables developers to find consultants by their experience with a particular project type, client, specialism or even by their involvement with a specific project the developer admires. However, it is the data from the consultants’ profile pages that powers the developers’ discovery engine. We therefore have to ensure that the majority of top consultants are on board and showcasing their projects before we invite our waitlist of developers to begin using the platform. Deciding when we’ve reached this tipping point of enough consultants is our primary challenge.

This is both a platform for developers and consultants – which target market has responded best to the concept?

We’ve been pleasantly surprised to find that consultants across the board have responded with enthusiasm. Even the largest firms like CBRE want to have their projects visually mapped out and showcased to a wider audience of potential clients. We are in an earlier stage with the developer side because, as mentioned earlier, we have not yet invited our waitlist of developers to use the search functionality except to provide feedback. That said, we’ve noticed a lot of developers are already signing up organically and using the beta platform.

From reaching out to them, we’ve found there isn’t uniformity in what has attracted them to the platform. Some are using the platform to discover innovative new consultants such as up-and-coming interior designers and to be kept abreast of the new projects being unveiled by leading consultants. Others say they have had the same go-to consultants for decades. What they’re frustrated by is how much time they waste researching precedent and inspiration for their projects.

For these developers, the exciting part isn’t the consultant discovery tool as much as the project search tool which enables them to discover relevant inspiration for their projects. We have a wide variety of search filters that enables them to browse the most applicable images with more added every time a consultant uploads a new project. Such developers have been the driving force behind us creating the Pinterest style notebook feature which will enable them to save project ideas, browse those curated by their colleagues and create project-specific notebooks where they can collaborate with their consulting team during schematic design. We’ve found it is well worth taking the time to find out which aspects of your offering users are responding best to. For example, by doing so, we’ve discovered a lot of fund managers and developers see IndustryHub as an opportunity to showcase their own projects. Sourcing consultants, attracting investors and joint venture partners remains largely reliant on word-of-mouth referrals. Different developers therefore have different needs that can be met by IndustryHub without us expanding our focus.

Is there anything like it in the market already?

Surprisingly, there is relatively little competition currently, although if there was none it would be a worry itself! There are great sites connecting designers with furnishing and products and directories focused on specific verticals, such as listing architects or engineers. However, if you want to discover the professionals behind a specific project you admire, you still have to rely on your personal network or a laborious google search.

Having already built out this search functionality and integrated with google maps, we are pretty far ahead of any competitors that may emerge. By having professionals themselves power the content in exchange for free marketing exposure, our data is multiplying on a scale that is difficult to maintain on a platform that is manually researching or scrapping data.

What is your business development / sales approach? (are you marketing, word of mouth etc)

We extend invitations to a wide variety of consultants, from the leading structural engineers and sustainability consultants to lighting designers and landscape architects. We have a great business development team who’ve recently been reaching out to top architectural firms and interior designers in the UK and inviting them to join the platform. As we offer free marketing exposure on a scale unprecedented in the industry, the response has been unanimously positive.

In light of the firms we are working with having each completed hundreds of projects in the past few years, when they create an account, our data entry team can temporarily join to add their past projects for them. This makes creating an account a painless task for consultants, although firms with large marketing teams often enjoy creating the profiles themselves. Word-of-mouth also plays a large part. Many consultants that join don’t just add the images of a project but also who collaborated on the project with them. If these companies are already on IndustryHub, the project links through to their profile page. If not, they can automatically be invited to join. For the company being invited, the proposition isn’t just to have a profile – it is to have one that is visible to any potential client browsing the page of the consultant they’ve collaborated with. This makes for a pretty effective business development strategy.

What are you the stats?

So far we have just over 12,000 projects listed, 49,000 project images and 4,500 profile pages. Some of these were created during our beta by IndustryHub and an invitation then sent to the company in question to take ownership. However, increasingly we’ve seen companies join organically from around the globe. During the past month alone, nearly a third of the AJ 100 architects have joined.

What are your long term plans (5-10 years)?

Our initial launch city is London; however, our road map goes global. Especially in fast-growing emerging markets, developers find it extremely difficult to identify the players with local connections, experience and credibility. IndustryHub will change this.

Is the site complete or are you still rolling out new features?

We are still rolling out new features. It is similar to LinkedIn in the sense that everything you see is and will remain free with premium features available for an annual subscription cost. We will be rolling these premium features out in Q1 2017 and are pretty excited about unveiling them.

Is this also for individuals – ie. linkedin for real estate?

At the moment our focus is on B2B with the personal profiles simply having an “About Me” section and profile picture. For company profiles, there is significant peer-to-peer connectivity: you can follow company profile pages and send inter-company instant messages, reminiscent in format of Bloomberg Chat.

In time, I think we will look to develop personal profiles to enable blogging, Ted Talk style videos and the ability to follow and message individuals on the platform. The objective will be to provide a platform where members can establish themselves as thought leaders in a specific field. We are in the early stage of developing these personal profiles, so any feedback as to what you’d like to see them include is most welcome!

DREA Singapore
Asia PacificInterviewsResidential

Interview: Digital Real Estate Assistant (DREA) Singapore

Singapore’s DREA aims to radically improve the property buying process giving buyers access to market data analysis and insights previously limited to professionals, while giving agents highly targeted leads and a platform for digital marketing. A husband and wife team (seemingly the perfect combination with one an ex-banker, the other the CTO), we sat down with the later, Yuet Whey, to discover more:

What is the story behind DREA? Was it a lightbulb moment or a slow burn idea?

The idea for DREA started 3 years ago when I was looking to buy my first home in Singapore and was actively seeking information on the real estate market. I wanted a way to search for homes that would give me a minimum of 3% rental yield. However, it would require crunching through thousands of data points on Excel, a daunting task to many

Even as I shortlisted homes, I realized that there was an information gap in the market for real estate insights and more importantly, insights that could be accessed easily on-the-go. I then set about to create the first ever Digital Real Estate Assistant (hence the name DREA) that would offer any daily buyer, tenant, seller and landlord access to high quality, instant real estate information that is at the same time, easy to understand.

Tell me about the process of building the site (ie. first while working on it on the side, then to moving full time)?

When my partner and I first started designing and building DREA, we focused primarily on the consumer lens. Each time we had a house viewing or visited a show flat, we would think about what we would like to have as buyers and tenants. We then proceeded to create them. Being in the shoes of a consumer allowed us to identify gaps in the market and more importantly things that matter to the consumers. For example, the ability to search homes by drive time and the ability to get instant property insights such as supply risk and pricing around an area.

The product development process was exhilarating. We were essentially imagining possibilities, and then making them come to life. We took time to build up a truly differentiated and proprietary data set that went beyond common real estate data like prices. We also spent time talking to others and getting their inputs. More importantly, we took time to properly understand the industry to refine our business model. That is how we concluded on the need to shift away from the already commoditized market for posting online real estate classified listings.

I left Investment Banking when I knew we were ready to hit the market. Running a company is an entirely different experience from Banking. There was no one to tell me what to do. I had to learn new skills, set goals and be disciplined.

You are a husband and wife team – how does that work?

We complement each other by leveraging on each other’s strengths. It is not always easy and we recognize how critical it is to maintain clear boundaries between work and home. We constantly remind ourselves that the objective of working together is to build towards a common goal and (simple as it sounds) be happy. The focus on a long-term shared goal helps us look beyond individual moments of conflict which are unavoidable.

What are the key features your site offers in terms of market research?

  1. Location-based insights: anyone can flip out their phone anytime and instantly discover suitable units nearby, show flats nearby, prices in the area, supply risk and more.
  2. Natural Language Search: redesigning how one searches for information or homes by streamlining a wide range of search parameters into a simple and intuitive user experience. For example, try searching for price trends in District 9 or find me a 3 Bedroom for sale under $1.2m with a yield of >2.5%
  3. Price Trends and Supply Risk: ability to instantly retrieve detailed district-level price trends and triangulate it against upcoming supply in each district.
  4. Forward-looking SIBOR Rates: we offer consumers the ability to discover where SIBOR rates will be in 3 months time based on market expectations.
  5. Comparable Condos: DREA is designed to help consumers identify truly comparable condos (beyond area) in terms of tenure, age, price, drive time to your office or even walk time to MRT.

Where does your data come from?

We pull together data and content (housing, demographics, transport, interest rates) from multiple avenues including DREA’s proprietary dataset and from public sources like Urban Redevelopment Authority into a single source to enable new forms of instant analysis and insights on the property market.

What features do you offer to agents?

  1. For agents, we offer the ability to select, target and actively reach out to potential home buyers or tenants based on their housing preference. This is a 180-degree shift from the “post listings and wait for leads” business model adopted by most real estate portals.
  2. In addition to that, we offer agents a full suite of information and analysis so that they can address every client ask. In the past, an agent may need to spend hours pulling data from URA and then analysing them just to find out something as simple as future supply in a given area. Today, DREA processes all this and presents this to an agent in a matter of seconds. In a market where there are more than 20,000 agents, the ability to provide fact-based answers at the snap of a finger is a tremendous competitive advantage for agents.

How do you compare to property portals like property guru / iproperty?

We have a different business model and revenue model. For DREA, our content and information tools drive traffic. DREA is not about listings and we do not have to first build a large inventory of listings before we can attract users to our site. Users come to DREA mainly to assess whether a property is in a good location, has good amenities nearby or whether it is appropriately priced.

Similarly, DREA monetizes subscription to content services and for the purchase of detailed property insights reports. For us, listings are free and forever will be. We are currently testing other products which are unique to DREA and will be rolling them out to the market soon

What stage are you at in terms of funding / revenue / growth?

We are currently in the middle of discussions with several Series A investors and we are already revenue generating thus far.

What is the long term ambition (5-10 years)?

We envision a future where every consumer walking into a show flat or house viewing will look to DREA for information. And that they will use DREA to differentiate facts from sales-pitch, ask educated questions and use it to negotiate effectively.

On the commercial front, we see ourselves being a global player who has materially accelerated the shift in real estate advertising spend from traditional to digital. Our goal is to be a sustainable and profitable business.

What’s the hardest thing about being a startup in Singapore?

Competition for talent. We compete against MNCs, SMEs, larger tech companies and other startups for talent. With the lean business model most startups have, it has become increasingly difficult to attract the talent startups require to scale quickly and efficiently.

Crowd Funding
InterviewsInvestment

Real Estate Crowdfunding: Interview with Ian Ippolito

Ian Ippolito is the founder of Real Estate Crowdfunding Review and a rare source of independent knowledge when it comes to the highly cluttered US market. Against a backdrop of recent troubles at LendingClub and ever-growing number of platforms, we asked Ian for his views on the state of the market:

Crowdfunding has different models. How should someone think about which option is best for them (eg. Debt, equity, P2P)?

There are several ways to invest in real estate, and the main choices are between debt and equity. If you invest in debt, you are loaning money. If you invest in equity, you are becoming a business partner and get a share of the profits. Debt tends to be safer because debtholders get paid before equity holders. However, with less risk there is less reward: there is no potential for over performance, because the debt holder simply gets the promised yield. On the other hand, equity is more risky because expected profits may never come. But at the same time, if the deal goes well equity holders can make significantly more than what was promised initially. So there is more risk but potentially more reward.

P2P lending is simply lending money directly to someone else, instead of letting a bank do it. By cutting out the middleman, investors make more and the borrower pays a lower rate.

What is the origin of crowdfunding real estate in the US?

The Securities Act of 1933 originally made it illegal for real estate companies to solicit money from the general public. So unless you played golf with a real estate developer, you didn’t even know opportunities existed. That changed with the passage of the JOBS act in 2012. Different provisions now allow companies to solicit different categories of investors for the first time. So many of these companies naturally have moved to the Internet, which has given investors a wealth of options to choose from.

What is the current state of the industry – ie. there has been an explosion of players at both the national and local level?

Yes, it seems like every week there’s a new real estate crowdfunding site that pops up. However, there’s also a lot of pressure in 2016 that wasn’t there in 2015. Many of the VC funded companies are having trouble getting new rounds of financing due to the recent problems with other fintech companies such as Lendingclub (financial improprieties, mass layoffs), Prosper (mass layoffs) etc. So yes, I believe there’s going to be quite a bit of consolidation, as well as some weaker players dropping out.

There are both national and local players because of the way the law works. Some local states allow crowdfunding, while others don’t. So most of the VC funded companies are going the national route. But other companies are trying the local state route. The problem for them is that it seems it will be a long time before a majority of the states allow it, so that is an impediment to scaling to a large size (if that’s their goal). Some of the local players are content to sit in a small niche, and if that works for them financially then I think they will end up fine.

How much of this industry comes down to the deal acquisition strength of each platform (ie. ability to pick a good property)?

I think deal acquisition strength is crucial, and unfortunately it is an industry-wide problem. Currently, volume is far too low: there is no single site that an investor can go to in order to create a fully diversified portfolio in real estate. And while virtually every site claims that they are the best at picking properties, too many of them fall short. I believe that the platforms that best address these issues will become the dominant players.

How important is the actual technology platform and who is doing that well?

I feel that the majority of sites do the core/essential technology well. There are a few sites that do a nice job with some of the extras (such as the yearly return calculator on Acquire Real Estate and the auto investing feature on Peerstreet), but no one company has an overwhelming advantage on technology. In fact, I wouldn’t be surprised to see the technology becoming a commodity in the next few years, as everyone copies the best features from other people. I believe that it’s the non-technology portions (due diligence and the ability to source an adequate volume of deals), which are the key differentiators.

You mentioned cooling VC interest – what’s happening?

VC interest is not just cool, it is freezing cold. The larger players are hoping to ride out the winter by conserving cash. No one wants to try to raise money and then have to suffer a down round, which will kill their valuation. Newer players are having to self-fund, or find ways to grow that do not depend on outside funding.

What are you expecting the industry to look like in 3-5 years?

In addition to less sites, I think it will be much more transparent than it is today, which will make it better for investors and easier to separate the best sites from the “also-rans”. In the past, real estate developers rarely showed all their past performance to potential new investors and deliberately tried to keep people in the dark about any failures. And most of the new real estate crowdfunding sites did the same at first. A few sites even tried their best to squelch investors who had “the nerve” to let others know about investments that went sour and didn’t perform as promised. In my opinion, the industry will never be accepted by the mainstream, if it continues to do this.

Recently Peerstreet became the first site to allow potential investors to see all their past performance. Practically every site claims that they have awesome due diligence, but being able to see their past performance proved that they really did have exceptional due diligence (and was the main reason that I rank them number 1 in my 2016 review of the industry). I believe that now one site has done this, other sites are also going to have to open up or will be looked at suspiciously by investors. My hope is that this is the start of a watershed moment that makes investing easier for investors, and allows the industry to mature.

What related industries do you think are being spawned by this (research, advisory etc)?

I wish I could say that there is a healthy research and advisory industry, but unfortunately there isn’t. As I mentioned earlier, more than one site has actively attempted to squelch research and advisory sites using lawsuits, etc. I do think this is a legacy of the “old-school” real estate investment mindset, and eventually will fall by the wayside. But in the meantime, the industry will not be able to move into the mainstream until it grows up a little bit. For example, investing in stocks and bonds wouldn’t be mainstream if it weren’t for research advisory services such as Moody’s, S&P, etc. Objective advice is needed to provide legitimacy to an industry.

Would you invest in a crowdfunding platform personally?

Maybe, although if I did it would have to be an awesome opportunity, because I would have to resign as the editor of TheRealEstateCrowdfundingReview.com (I wouldn’t be able to maintain objectivity if I had a financial stake in one of the companies). Right now I’m not seeing that awesome opportunity where I feel confident that one particular platform will be the one that grows exponentially. First, there are a lot of competitors so it’s difficult to know who’s going to end up on top. Second, from what I’ve seen so far, the profit margins are very thin and require the sites to generate a lot of volume to become worth investing in. And as I said earlier, the volume on 95% of the sites is pretty poor. Many of the sites have been around for several years, so if they haven’t been able to figure out how to solve that crucial problem it makes me wonder if and when they ever will. Without an exponential growth component, it’s virtually impossible to IPO. So I personally would not want to be in the position of having invested a lot of money in one of the “also-rans”.

Do you think crowdfunding will disrupt the traditional model of house ownership one day?

Yes, I can see that happening. I would not be surprised if in the future, people looking for a house loan would look first at the Internet before even considering a bank.

What is the future for your website?

I will continue do the same thing that I’m doing today – simply posting content that I find useful while making my own investment decisions. That includes more in-depth reviews of sites, industry wide rankings, news, tutorials, etc. And hopefully people will continue to find that useful.