Marcela Sapone, CEO & Co-Founder at Alfred, joined the Daily Beat for an interview. We discussed how her startup seeks to use technology to transform the future of living.

Daily Beat: Can you please describe to our audience what you’re building at Alfred?

Marcela Sapone: We are a resident centric management platform that helps owners achieve maximum net operating income. Residential real estate is the largest consumer product in the world and the product experience should be as seamless as pressing a button to call a car. We are the number one app powering a seamless residential living experience – all the utilities, experiences and amenities are brought together at your fingertips in an Alfred-powered building, which in turn allows managers to be more efficient and successful.

Tenants aren’t simply looking to rent four walls; they are looking to rent a lifestyle and an experience. The Alfred platform helps landlords achieve this new paradigm.

Daily Beat: Who are some of your clients?

Marcela Sapone: We began working exclusively with Related Companies, which was a great first partnership because they are best in class when it comes to high-end management and resident experience. Today, our software is running in close to 150,000 apartments in 44 cities. Most institutional and many regional owners and operators are our clients; everyone from Brookfield, JP Morgan, Invesco to Greystar.

Daily Beat: I know that Adam Neumman is extremely bullish on your firm and the multi-family sector as a whole.

Marcela Sapone: Adam Neumann made a substantial investment in our company because he saw firsthand the importance of tenant experience vis-à-vis real estate. He recognized that we are a leader in the future of residential. We don’t take leases, but instead offer unified resident technology to run a property and a marketplace of amenities, and community programming that are now table stakes for residential communities. The evolution of offerings available in commercial real estate is now accelerating in residential and we are excited to help owners and operators take advantage of this opportunity to recognize new yield.

Daily Beat: Aside from the obvious tax reasons, why do you think he recently invested in the multi-family asset class?

Marcela Sapone: Doesn’t everyone want to be the next Sam Zell? Multi-family is a bigger, untapped market when compared to office. The level of hospitality now required in apartment buildings, and rental communities simply didn’t exist a decade ago.

Daily Beat: What’s your pitch to a landlord?

Marcela Sapone: They own the building and we make their assets more valuable by delivering higher revenue and a lower operating budget through technology and amenities. We offer software and services at a fair price that guarantee owners and operators make more money. Specifically, any properties that adopt the AlfredOS technology for residential communication and engagement create proven cost efficiencies and introduce new revenue streams that increase yield.

Many of our customers are our investors as well because the pitch of our business is simple. Less than 1% of the budget to operate a building is going towards technology today – which is crazy compared to all other industries. Adding technology and a consumer lens to traditional businesses with steady cash flows is good business. For example, Compass took brokerage and made it consumer first with a greater emphasis on technology and centralization. Lemonade took a consumer-friendly, technology-first approach to insurance. Alfred is bringing consumer-first technology to property management.

Daily Beat: How does Alfred’s technology increase Net Operating Income?

Marcela Sapone: Our technology increases an owner’s top line in three ways: efficiencies, new revenue, and higher renewals. First, our technology streamlines digital lease signing, tenant communications, rent payment, amenity booking, and package fulfillment. We integrate every key process in the building into a single unified platform. This automation cuts man hours. It also provides data that drives better outcomes.

Here is a very specific example: we often know 4 months before a lease ends if a resident is going to renew based on how they engage with the building. Our app serves up a digital renewal, or confirms they plan to leave, which allows the apartment to be listed early. This allows us to lower the effective vacancy rate by shrinking the amount of time before a new tenant is found. Second, we offer the most comprehensive resident rewards and services, which support an increase in amenity fees, which we split with the landlord. And lastly, we also offer marketplace services, events, and programming that increase the average lease duration by 30%. Knowing your neighbor and strong habits become a reason to stay in your community.

Daily Beat: What type of data are you able to gather?

Marcela Sapone: The key of course is the technology that allows us to provide an incredible amount of data about one’s properties and portfolio comparing it to other operators. This allows us to reap the benefits of tremendous cost efficiencies and make recommendations on increasing yield. It’s not only doing everything online and on your phone instead of on paper, but our workflow lets you have fewer people on site to reduce expenses. We specialize in finding elements of property management that can be remote, which allows the services from building staff to be better and cheaper.

Daily Beat: Difference between residential tenant management and office?

Marcela Sapone: The idea of having a tenant engagement platform seems to be pretty similar across both asset classes, but if you are on the commercial side, the business owner decides, not their employees. Ultimately, tech-enhanced opportunities will increase rent.

When it comes to multi-family, on the other hand, the residents themselves are more willing to pay for convenience and quality. Think of it like an Uber effect for the most crucial services of living that covers things from insurance, moving in, to pet care. These are all part of the Alfred app when a tenant signs a lease. The opportunity is an ongoing relationship with the resident by making a completely seamless transition through the leasing, home setup, and renewal process – we can introduce the right services and assistance at the right time.

To illustrate, when a tenant moves in, we help make the transition seamless. We provide support to help coordinate their move, set up their renters insurance, and ensure a handyman is available. They can start their normal routine immediately for services like pet care, groceries, laundry, dry cleaning, and everything we were initially known for. We then take it a step further by helping them make connections with their neighbors through our curated experiences and clubs, so they feel at home and part of the community immediately.

Daily Beat: Is tenant experience in the domain of the landlord or consumer?

Marcela Sapone: When it comes to residential, you are looking at a much smaller space and units come in all different shapes. We tend to focus on managed communities, which can be single family rentals, student housing, or multi-family (high-rise and mid-rise). If you’re a property owner with one building and 20 units, it’s actually even more imperative that you use technology, because it’s unlikely that you have a fully built-out property management function like a full-scale owner.

Daily Beat: I remember that when you started the company at the height of the gig economy, the focus was on providing services like cleaning services and food order directly for tenants. Is this still like a major focus of the business?

Marcela Sapone: No, we have grown up by working closely with the real estate industry. We learned a lot about what the residents value and how to earn their trust. I know we inspired services like Walmart that just made an announcement that they’re expanding their in-home, delivery service. We created that category. However, we don’t want to be a service company, but to be the service technology evolving the entire industry of service professionals in property management. I look to companies like Salesforce as inspiration. They created an entire ecosystem and introduced the concept of a CRM, which is hard to imagine a business not having today. In 10 years we think it will be hard to find real estate that doesn’t use technology to serve the end user.

Daily Beat: What do you tell the landlord who says that proptech is all hype and they’ve been disappointed with other companies they’ve worked with?

Marcela Sapone: I get that. We’ve been around for seven years and worked with the best of the best owners / operators within the industry in a real and meaningful way. Our cap table is full of our customers, which is proof in the pudding. I think a lot of proptech companies fail because they lack an understanding of how real estate works.

An average multi-family building with 250 units might be generating $5 to $6 million in rent a year, but there is $50 to $60 million of commerce that’s flowing through that building. The more trust you build with tenants, the longer they stay and the more services you have the right to touch. We help owners take a bigger share of that wallet and play a more meaningful role in their life. In this post-COVID world, the home is the center of everything. We view this as the perfect window for the real estate community to take advantage and increase the size of their TAM.

Daily Beat: Are you selling enterprise SaaS to landlords?

Marcela Sapone: Yes. That’s our core business, and I think our focus on building deep technology has been an evolution that not everyone might have realized. We’ve gone very deep with our customers to digitize property operations. And while property management will always require some headcount, there is a lot more technology can do for owners and operators. I know we offer the absolute best software on the market for tenant engagement that increases real NOI through cost efficiencies and top line growth.

*The interview has been edited and condensed for clarity.

Mitchell Moinian, Principal at The Moinian Group, joined the Real Estate Daily Beat for an interview. We discussed the resilience of New York City, the firm’s venture arm – Currency M, and how he envisions the future of the office.

Daily Beat: How has your rental portfolio occupancy been since March 2020?

Mitchell Moinian: Prior to the pandemic, the multi-family rental market in New York City was at an all time high.

When COVID-19 hit, there was a mass exodus; with many predicting the death of New York City. I never shared in that perspective because New York City remains the most resilient, high-demand, prominent residential market on the planet. Even when cases increased drastically at the height of the pandemic, the city was still filled with millions of people. While the occupancy rates decreased 10% to 20% this was more reflective of the city being at such a peak pre-pandemic, leaving abundant room for a slump.

Daily Beat: Does The Moinian Group own any multi-family outside of New York?

Mitchell Moinian: ​​When it comes to our apartment portfolio, it’s reflective of our dedication to New York City, with all each of our buildings developed within The Big Apple except for Bezel at Miami Worldcenter, a 43-story, 434-unit, luxury rental high rise in a commanding, high-visibility location in the heart of Miami’s new world-cass mixed-use project. We opened the leasing office last month and the velocity has been and continues to be off the charts. In Miami, I think the standard for the rental market has historically been a little lower than Manhattan. We have brought our unmatched standard of luxury to the market and people are recognizing it.

Daily Beat: What are your thoughts on the overall resurgence in the market?

Mitchell Moinian: The bright spot in our experience during the market’s has been the major flight to quality. We benefited from this tremendously because all of our residential buildings are luxury high-rise, full-service properties. While they may have had their headwinds and moments of exodus, but they really bounced back quickly. As such, even though we took hits like everyone else, our vacancy rates were really on the lower end relative to others in the market. For example, PLG, our new 26-story, 467-unit entirely unobstructed building floating above Prospect Lefferts Gardens, opened in January 2020. We leased the entire building basically from day one of the pandemic all the way until about the end of the summer. A big part of that was Brooklyn versus Manhattan.

Daily Beat: Brooklyn really stood out at the time.

Mitchell Moinian: Yes. Even amidst the pandemic, we ended up being above pro forma for that building.

Daily Beat: Why has there been such a flight to quality?

Mitchell Moinian: The people who have money have seen their wealth grow. Unfortunately, it’s the people that are typically used to middle market products that were really put in a bind. The luxury demographic never really suffered economically, so as the prices of units went down, they took advantage of this arbitrage to pick whatever kind of state-of-the-art apartment they wanted.

Daily Beat: The Fed put out a data point saying the greatest economic impact was for the 25% of the lowest quadrant of earners. On a slightly different topic, what are your thoughts on the future of work?

Mitchell Moinian: Remote work has always been a part of the workforce. People never paid attention to it in the general public, but once the pandemic hit, everyone suddenly became remote work experts and virologists! Work from home is a viable option in a global emergency and will work for some positions moving forward, but we are big believers in the return to office, as nothing beats in-person collaboration. COVID-19 This reminds me of 9/11 in a sense. At the time, people said that we’re never going to go on a plane or in a skyscraper again. A few months later, people were back to flying all over the world and a few years later new office developments were fully occupied. There is this kind of shock factor from the pandemic, which is also affecting people’s psyche and existence. Contrary to a lot of what people say, I think this will ultimately make the office and the workplace better than it’s ever been, as it becomes far more than a 9 to 5 repository for desks, but a holistic, adaptable environment.

Daily Beat: Offices will be like a hotels in a sense?

Mitchell Moinian: Yes. Office buildings will demand a certain level of hospitality that did not previously exist. Companies are going to be forced to kick it up a notch. I do concede that entrepreneurs and founders will be more flexible to working a bit more privately at home within a hybrid model.

Daily Beat: Assume the hybrid model is the future, what does that mean for a company’s office footprint? What are tenants saying?

Mitchell Moinian: There are really two different markets. The first is small businesses that look for anywhere between 5,000 to 10,000 SF and that’s sector is leasing as it typically would. These companies want to be back in the office. For example, if one of their employees wants to take Fridays off, that’s not really going to affect their footprint. The added flexibility and convenience doesn’t change the amount of space these small businesses need. The second is corporate tenants who seek larger spaces. From what I’m seeing, these companies are keeping the envelope the same as it would be, but are re-prioritizing the use of certain spaces versus other things.

Daily Beat: What are they doing differently with the space?

Mitchell Moinian: For example, take a financial company that has 500 traders on one floor. Now, they’ll put 350 of their employees there and have another space for flex employees. They also need space for the collaborative, amenitized fun areas. The result is that the general envelope is more or less the same. Granted, it didn’t grow as much as it should have, so perhaps it’s frozen in time from three years ago, but it’s still a substantial space.

Daily Beat: Do you think law firms are going to still provide their attorneys with their own offices?

Mitchell Moinian: At first, I was a little wary about COVID-19’s impact on the legal sector because their job entails a lot significant amount of research and paperwork, but they’ve held consistent with the best leasing numbers. Back when I was in college and worked at Cushman & Wakefield, I remember seeing these law firms’ utilizing thousands of square feet just to store paperwork.

Daily Beat: That was really expensive storage area!

Mitchell Moinian: Obviously, no one’s really doing that anymore. That was the first layer that went away. I was curious what the law firms were going to do post-COVID-19, but ultimately they really pride themselves on collaboration.

Daily Beat: How would you compare the overall office vacancy rate of nearly 17% to higher quality buildings?

Mitchell Moinian: We’re really seeing a flight to quality when it comes to office buildings. Everyone is looking for the latest and greatest and we fortunately have a lot of class-A buildings. The TAMI (technology, advertising, media, and information) tenants, including the tech giants like Facebook and Google, are dominating the office leasing market right now. These types of tenants are not looking for commodity office space – they’re either going into something brand new or something that feels brand new.

Daily Beat: Is tenant experience on the landlord or tenant to solve?

Mitchell Moinian: The answer is different for corporate tenants and the smaller businesses. Google doesn’t really lean on a landlord for service experience, but when it comes to multi-tenant office buildings, the landlord serves as the quarterback for tenant experience. We have both in our portfolio, but our tenants typically fall in the latter. The big corporations that are best suited for 3 Hudson Boulevard — our highly-anticipated tower with 56 floors and 1.85 million square feet of office space — are amazing at how they design, program, and amenitize their spaces. These decisions about office experience are deeply rooted within their corporate culture and we tend to not be heavily involved in it upon leasing the space to those types of companies.

Daily Beat: Do you think tech platforms like HqO and VTS are an important part of the solution?

Mitchell Moinian: Everyone needs some aspect of technology. That said, no app is going to be as strong as showing up to one of your commercial tenants with a bottle of wine after ten years of being there and the lease is coming due; however, these startups very clearly provide owners, residents, and tenants alike with a layer of of technology that provides the necessary infrastructure for a property to operate efficiently. We have a startup in our Currency M portfolio called Eden Workplace led by Joe Du Bey, which serves several of these functions. It’s more for the hybrid work amenities and services – not only tenant experience.

Daily Beat: How’s The Moinian Group’s venture portfolio doing?

Mitchell Moinian: We now have about 20 companies within our portfolio. A majority are real estate centric, but not exclusively. Our timing was prime – we started around seven years ago, before everyone rushed into it. It’s a very patient business. Some are doing amazing – others got really affected by the pandemic. We’re always keeping a close eye on the space and looking to take more beats on the ever-growing marketplace.

Daily Beat: Have any companies gone public yet?

Mitchell Moinian: Not yet. We’ve had several exits in terms of acquisitions and now have a few that are in conversations about going public. With that said, over the past decade, the number of PropTech companies has increased by 300% and 2022 could be the biggest year yet. We are on the frontlines, investing in the ones to watch.

Daily Beat: Can you speak to some of your portfolio companies?

Mitchell Moinian: One I’m extremely excited about at the moment is Bilt Rewards – the first credit card designed for today’s renters to pay rent. We launched this past summer, and I am a founding partner. Its adoption has surpassed anything that we could have imagined. The cardholders and landlords alike are all very happy. From us to Avalon Bay, Related, Equity Residential, Trammel Crow, and Starwood Capital, a majority of the biggest residential landlords in the country have been using and deploying the program for their tenants across the nation. The growth remains out of control – there is no slowdown in sight!

Daily Beat: How does it work?

Mitchell Moinian: It’s a high level diamond elite MasterCard that residents you can earn points on each purchase similar to any other credit card, but it has the stark differentiator of no additional fees when it’s utilized for rent. Another startup I’m excited about is Moved. It’s best described as an Uber for moving services. The company started off as an aggregator where individuals would fill out information on their move and a qualified vendor would then show up at your apartment to help. The founder, Adam Pittenger pivoted just around two years ago to become the fundamental onboarding move-in software platform service for any tenant moving. When a resident signs a lease, a link would be sent to them and anything they would need for their your move is readily available within a portal that they’d created, including all moving services, which they already had.

Daily Beat: What’s your biggest regret in tech investing?

Mitchell Moinian: The co-living industry came to a screeching halt at the onset of the COVID-19 pandemic, with the average monthly rentals continuing to decline by 10-25 percent to this day, as health and safety concerns, uncertain economic conditions, work from home, and the drastic shift in migration patterns has affected all shared spaces. I still really fundamentally back many aspects of the co-living space, and more generally shared economy and I hope to see a bounceback. I think it might just be ahead of its time.

Daily Beat: What have you seen with construction costs on development projects?

Mitchell Moinian: Some things have gone up, while others have gone down. We’re definitely seeing prices go up from what we were anticipating pre-COVID-19. At The Moinian Group, we will continue to closely monitor and control the process, while striving to make the purchasing exercise as efficient as is possible.

Daily Beat: How do you deal with so many deliveries in your residential buildings everyday?
It must be like running a micro-fulfillment center in a building.

Mitchell Moinian: Excess package space! We have one building that received over 100,000 packages last year. It has been a fun, challenging exercise for our operations people. Long-standing technology companies and entrepreneurs alike are starting to finally offer innovative tech-based property management solutions to meet the continued, unforeseen, increased e-commerce boom. While relatively new, it’ll be exciting to watch the growth.

*The interview has been edited and condensed for clarity.

Timeline: How Adam Neumann broke into the Real Estate World

Adam Neumann’s first space was at Josh & Jack Guttman’s 155 Water Street in Dumbo. Ironically, the 2008 deal was a joint partnership where they split the profits, which is the same business model now employed by many in the co-working sector.

• Neumann and his co-founder Miguel McKelvey then decided they wanted to rent space directly from landlords and sublease it, but couldn’t find a landlord to hand over a building to two kids with an unproven concept. They ultimately convinced Abraham Talassazan to let them experiment on his troubled 154 Grand Street in Nolita.

• In his late twenties at the time, real estate investor Joel Schreiber met Neumann by happenstance when touring a building in the Bronx. Within a day of meeting, Schreiber agreed to invest $15 million at a $45 million valuation.

• In 2012, David Zar was looking for a tenant to fill 349 Fifth near the Empire State Building. This became WeWork’s second location and the lease was guaranteed by Schrieber.

• Real estate investor Marc Schimmel, an ex-boyfriend of Madonna who met Neumann at the Kabbalah Centre, was the next to invest in the startup. 

• By the end of 2012, Neumann was already friendly with Boston Properties’ Mort Zuckerman and began borrowing his jet. He successfully ingratiated himself with the industry elite, including executives at Forest City Ratner and Rudin Management. 

• Regus CEO Mark Dixon had someone from his company rent a WeWork space. Dixon and his team concluded that WeWork had an identical business model. 

Entities controlled by Neumann have extracted more than $2.1 billion from the company since its founding. Here are some anecdotes that reflect peak delusion:

• When meeting the Crown Prince of Saudi Arabia, Neumann said, “You, me, and Jared Kushner are going to remake the region.” After the murder of Saudi government critic Jamal Khashoggi, Neumann said that the Prince Mohammemed needed better guidance. Who could offer such counsel? With zero hesitation, Neumann replied, “Me.”

• Neumann believed a Middle East peace treaty would one day be signed in a WeWork office space.

• When advisers suggested he hire a more experienced executive to advise him as Mark Zuckerberg had done by bringing on Sheryl Sandberg, Neumann responded, “I am both Mark and Sheryl. He wasn’t.”

• In 2018, Neumann told executives he believed WeWork was going to be a $3 trillion company. To help achieve this goal, he started an internal real estate firm (ARK) and pondered buying Cushman & Wakefield and CBRE to dominate the services business. SoftBank’s Masa believed Neumann wasn’t “crazy enough” and the Unicorn would be worth $10 trillion by 2028. 

“The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion by Wall Street Journal reporters Eliot Brown and Maureen Farrell, is available for purchase July 20, 2021, by Crown, an imprint of Random House, a division of Penguin Random House LLC.

VTS CEO & Co-Founder Nick Romito joined the Real Estate Daily Beat to discuss PropTech, SPACs, WeWork, the future of office, the company’s recent acquisition of Rise, and other topics. 

Daily Beat: The pandemic has clearly been an accelerant to tech adoption, but budget cuts have hit the industry hard and have made large contracts more challenging. Commercial real estate tech software companies have experienced a massive increase in usage without commensurate revenue growth. How has business been for VTS in general and what have you seen in the crowded space? 

Nick Romito: I’ve always thought that the amount of companies and capital poured into the space was maybe overweight to the size of the TAM {total addressable market}. I don’t know if there’s enough of an addressable market for 4,000 PropTech companies. I think there’s one for 40, so I think if you’re in an enterprise or scalable position like VTS, you kind of love that because you’re going to pick up great products and teams at a discount. So we view the current market conditions as highly opportunistic for us given our scale and our channel. 

Daily Beat: So it sounds like you guys are hyper-focused on growth and not so worried about revenue.

Nick Romito: You know we’re growing. We hired 125 people during COVID, and have been cash flow breakeven on multiple quarters. So our growth is astronomical. I think we’re in a unique spot given what we do, but lots of folks to your point are struggling, and there are lots of companies that didn’t survive last year.

Daily Beat: There are a lot of startups that our Daily Beat team has interviewed in the past three years that are now out of business. Truss as an example. It’s just incredible to see how much money has been spent on the marketing side without yielding revenue growth. How do you view WeWork in the future? What’s the co-working space going to look like? Do you see it more on the management and franchise side, essentially as like a Marriott or Hilton? 

Nick Romito: We’re super bullish on flexible space. Coworking for me is a small component of that. Flexible leasing is here to stay. I think every major owner agrees with it. You’re going to see people like Tishman Speyer who has Studio, and lots of others do their own thing. In the UK, where most of this started, that’s more the norm for owners to have their own program in place, versus an outsourced one.

WeWork obviously had a pretty turbulent 18 months, but the reality is they have the most scale and this is kind of a scale game. So if they can truly get the business to break even, I would be pretty long WeWork if that were the case. Now, that’s not easy to do, especially trying to restructure loss leases – their burn is still magnificent. They also might have issues with owners doing deals with them. But I think because of their brand and their scale, they have the biggest chance of continuing to own the category. I do think the partner model is the one that survives. I don’t know how profitable it will be for the flexible providers.

Daily Beat: The owners are going to be very tough, especially after getting messed over on so many leases. I think the days of essentially subleasing large spaces to the likes of WeWork and Knotel are over. 

Regarding the future of work, Goldman Sachs CEO David Solomon described working from home as “an aberration that we are going to correct as quickly as possible,” while large tech companies like Google and Microsoft will offer hybrid-models where workers are only in the office three days a week. Others like Twitter, Shopify, and Square will allow employees to work from home permanently. Which approach do you believe is most likely to reflect the future?

Nick Romito: I can give you my perspective as a CEO. I think obviously most landlords want tenants to go back. I won’t name names, but some of the biggest landlords I know never left. They’re like, no, we’re staying right here. 

Daily Beat: If they don’t lead by example, the sales pitch to get tenants to return is definitely tough. I know RFR even offered their employees free hotel rooms to keep them working from the office! 

Nick Romito: So I will tell you what our recruiting team sees. Applicants are pretty quick to tell you what they are seeing elsewhere. Every competitive technology company is going to have to offer flexibility. Candidates will remove themselves from the job if they find out that you don’t offer that. 

And that could mean two to three times a week I could work from home or wherever. Trying to create a culture is really hard.” So my perspective is we’re going to do some portion of flexibility, but we are an office culture company who likes to be together and collaborate. And I think for somebody to get great at their job, you have to see what great looks like. And seeing you work over Zoom is not the same as seeing you like at the water cooler, and watching how you interact with people and the things that you see when you’re not in a meeting with people. And that’s how you grow as a professional. And you can’t do that on video – sorry.

Daily Beat: Sales, especially in the real estate world, is definitely a challenge over Zoom.

Nick Romito: I hate working from home. I have two kids, and am probably 30% as productive. I love my kids, but get me back in the office!

Daily Beat: In my mind, we’re definitely headed towards the hybrid model. 

Nick Romito: One or two days a week working from home is fine, and I can do that. But to say that offices are gone is just delusional. 

Daily Beat: On a different topic, Latch plans to go public by merging with a Tishman Speyer SPAC in a $1.56 billion deal. I was talking to a prominent CEO of a publicly traded REIT yesterday, and we were kind of laughing at the fact that Latch is being valued at a whopping 59 times last year’s sales. They only had $18 million in net revenue last year. Why doesn’t VTS go public via a blank check company? How much revenue is the company generating?

Nick Romito: I think the question kind of dovetails with what we discussed earlier around how many successful companies the PropTech ecosystem can system in terms of revenue. The SPAC and tech market for the past couple of years has been all about growth. Because with discount rates and interest rates being so low, the markets are all about growth. 

They don’t care if you’re profitable, and actually prefer a non-profitable company that’s burning cash – as long as you’re growing at 50%. There’s not that many commercial real estate tech companies doing that. All the big ones are at scale and growing in the teens at best. So you need to have a product that has a really kind of expansive TAM that you can go after, but also more importantly, have the scale and the growth rate right now to go after it. If you have those things, then you’re a great public entry. I actually think SPACs are a great way to go public. 

Daily Beat: The SPAC market is pretty frothy. What are the benefits?

Nick Romito: The SEC restrictions around how you can talk about your business during an IPO process are very limited. And for a lot of companies, your story is not that simple. Like you want to tell the story and talk about the numbers and projections that go along with that. And with a SPAC you can do that. You can say for the next three years, these are our projections and here’s why. In a normal IPO process, all you can say is in this quarter, we’re going to do X. 

Daily Beat: It’s essentially become more like a late-stage venture round. 

Nick Romito: One mistake that I’ve seen people make is viewing it as a Series D. You see what Airbnb and Peloton did when they went public –– a SPAC is like your IPO! Peloton spent like $100 million on CNBC ads. There’s a series of things people do when they go public that SPACs aren’t doing. And think it’s impacting them right now as the market takes this kind of air bubble. And they’re getting hit harder because they haven’t been treated like a real public company to your point. It’s like a series D, and here’s our deck, and most of them are usually pretty bad.

Daily Beat: What do you see in the next six to 12 months that’s going to be a massive growth driver? What are you most excited about?

Nick Romito: We’ve built everything except for Rise, but now that we a fully integrated platform, our business explodes. We’ve been waiting eight years to get here where we have in one platform with real time market data on a daily basis of what’s going on in the market. We can tell you on a daily basis how many new tenants are entering the market and the active deals being negotiated. 

We can tell owners that here are the four spaces you have rolling in the next six months – here’s if you should break those floors up or not, and how you should build them. And then in that same platform go to market with those spaces in our marketplace. When we do get inquiries, they come into our VTS leasing platform. One system. And when those leases turn into tenants you manage them in Rise.

So there’s data around that entire ecosystem that all keeps on compounding. So that’s, for me, this is the first year in our history, when that becomes real.

We’ve told this story for a long time, but now it’s real. And we’ve had to basically rebuild the company organizationally, with a market focus, which we haven’t had to do before. Everyone is on board and our data is market tested.

Daily Beat: That’s very exciting. We see on the sales side that real estate data is delayed – it’s coming six months later. And by the way, Reonomy, Cherre, and Skyline AI are all using the same data from third parties. It’s the real-time actionable data people are willing to pay a premium for.

Nick Romito: It’s called survey data and it’s garbage.

Daily Beat: CoStar still calls brokers asking for information on deals. Some of my old broker friends tell me, “Joe, you won’t believe it – I just got a call from CoStar.” And I’m always so surprised that this is the data juggernaut in 2021.

Nick Romito: It’s 3,000 telemarketers calling you and asking you for info.

*The interview has been edited and condensed for clarity.

GFI Realty Services has released a research report entitled The Tech Effect, which highlights the ascendance of TAMI tenants within the outer boroughs and the impact this has on real estate investment. 

Some of the specific neighborhoods in Brooklyn that benefit from the neighborhood amenities and culture that tech firms foster include:

• Williamsburg, which has become a hot place for startups including Vice Media and Bulletin.

• Greenpoint, now home to Kickstarter, Greenpoint Pictures, and Atlas Obscura.

• DUMBO, which has produced tech companies like Big Spaceship, Blankslate and Etsy.

Heard on the Street: GFI Realty’s Justin Fitzsimmons: “Once TAMI companies began to move to Brooklyn, the surrounding areas’ already-robust residential markets truly took off, as new residents were attracted to the new jobs being created and the neighborhood amenities and culture that tech firms foster. As a result, many Brooklyn neighborhoods inadvertently became live-work-play environments, a model that further reinforced investors’ confidence in them.”