Ep. 51 Jake Marmulstein

Chris Rising (00:00:02): Welcome to the Real Market, with Chris Rising. The only podcast that brings the real estate conference panel to your headphones. You'll hear from superstars from every realm of commercial real estate, the biggest brokers, the most well known architects, the largest investors, and the most visionary developers, you'll learn what they do, how they do it and what drives their success. We'll discuss the latest trends across regional markets and capital flows, both national and global, and we'll explore technology's role in shaping all of them. We'll take a clear-eyed look at where we've been, where we are now, and what's to come. Real conversation, real experts, real insights. This is the Real Market.

Chris Rising (00:00:50): Welcome to the Real Market with Chris Rising. I'm really excited about today's podcast. It's with the founder and CEO of Groundbreaker, Jake Marmulstein. It's a really interesting conversation. Jake's got some real interesting life experiences. He's lived in Spain. He's lived in Brazil, he's lived in Puerto Rico, and he's really built from the ground up a software that allows investors to interact with real estate firms. And it's a really interesting conversation. We talk a lot about how he built the company and a lot about the technology that they have built and how it interacts with the users and with the real estate industry. I think you're really going to this conversation.

Jake Marmulstein (00:01:34): I'm excited to be here, thank you for the opportunity. It's great to connect with someone who has your pedigree and background to be able to talk on your podcast. So thank you very much.

Chris Rising (00:01:45): Well, I appreciate it. We do tend to focus a lot on technology, because technology is really shaping the future of real estate. I always like to have a founder on, who's really zeroed in on some of the issues that are unique to real estate. So in that regard, can you tell us a little bit about Groundbreaker and what it does in terms of making our lives easier, especially for investors?

Jake Marmulstein (00:02:12): Groundbreaker really makes the process of raising money and managing investors easier by adding simplicity to the process, the process of raising capital and just managing your back office is pretty cumbersome, because the tools that we're given as real estate investment professionals are mainly limited to Microsoft office suite 365. When I started working as an analyst in a REIT, I was using Excel and pulling files from the internal server to be able to pack our deal folders and then forming them into PowerPoint presentations, emailing those out to investors and and answering phone calls. So in today's day, that's a very antiquated way of doing things.

Jake Marmulstein (00:03:02): There's software for so many of the areas of the process. But the problem is that no one really developed software specifically for real estate investment management. So you ended up having a cumbersome workflow, because if you're trying to use technology, the data doesn't flow, there's no way to really access all of your information in one place. And that's why we started Groundbreaker. Essentially it takes over having all of your data and workbooks in Excel, you put all your deals, all your investors, the contributions, distributions, any reports and documents that are related to servicing investors in the platform. And then your investors can go there to view their investments and access information. And you can have all of that data and information at your disposal to be able to collaborate across your team and just get work done more efficiently.

Chris Rising (00:04:00): You know what's interesting is, I have a business that's really set up to be, we're the general partner and we have LPs. And on the GP side, we often bring in friends and family who get to participate on the GP side. That could be a handful of people. And then on the LP side, you can sometimes have multiple, if not more than multiple investors. And I've always, when I started the business, this was a handwritten sheet and then it moved to an Excel spreadsheet. But what I've been amazed about is over the last couple of years, for the first time, we really have demand from those investors to say, can we do this somewhere, other than you sending me a PDF? Is there a way to do this other than you putting something in the mail?

Chris Rising (00:04:45): We've tried to be ahead of the curve in a lot of our technology, but quite honestly, we haven't been as good in this area. What are some of the unique things that your software does, that solves that, for lack of a better term, the printed out Excel spreadsheet that gets red checks marked off?

Jake Marmulstein (00:05:04): So this is going to sound pretty rudimentary and simple, but having all of the data in one place where it's structured is really effective for investors. And so that means being able to log into a portal that's branded in your company's name. So you guys look good. You're going to look bigger than you are, by having a system that makes them feel they're logging into a TD Ameritrade or Charles Schwab account to check their portfolio. And they're getting access to all the investments that they have, their ownership, every distribution they've been given, and any K-1s or reports that you send to them are all accessible in there. And it's password protected, secured behind another layer of redundancy, like you would expect nowadays, logging your bank to get a text message, to verify your account.

Jake Marmulstein (00:05:53): So there's that presentation layer, there's the security. And just the convenience of being able to have that investor portal to log into whenever you want and from any device. So it's responsive on mobile, as long as you have an internet connection, you can get in and see your investments. And this isn't something that investors are going to necessarily need to check all the time, but when they do want to find it, they can find it. And so they're not having to ask you.

Chris Rising (00:06:21): Well, that certainly makes an investor relations much easier. I know on my team, we often spend a lot of time making sure that everything's in the right place, so that we can get things to people. Did this idea for bringing all of this online, come out of frustrations in your career? I know you've you mentioned that you were an analyst at a REIT. I know you worked at Watermark and you've got a background in real estate from college, but what went, in your thinking from, I'm going to work at the principal side of a real estate company to, I'm going to create software to make it easier for the principals side?

Jake Marmulstein (00:07:00): I pretty much went on a roundabout way to get there. I started in the business and was frustrated and said, there's got to be a better way to do this. You know the classic story, you see an issue and you start with that issue and then it digs into a need. And then you creative enough to find a solution. But on my way to finding a solution, I ended up actually moving across to the other side of the world and living in Rio de Janeiro, and then getting embedded into the startup and tech scene that was blossoming around Rio, when the Christ the Redeemer statue was a rocket ship, moving up into the sky as it gained the seed as the fifth world's largest producer of GDP. And there were very optimistic projections on where Brazil was going to go.

Jake Marmulstein (00:07:57): So a lot of companies were interested in taking concepts that had been vetted in the United States and elsewhere in the Western world and tropicalizing them in Brazil. And so I was working with some of the preeminent startups that are now much larger companies that did things like legal Zoom in Latin Americ, and Skillshare and Latin America. And I was on the ground floor of all that. And so when I saw these companies come to life and learned about what it takes to be able to build a technology company, I had what I needed to connect the dots and come back to the United States and give it a shot for myself.

Chris Rising (00:08:40): Sounds pretty exciting. Was there something unique about this part of the software, where you saw this glaring opportunity? Was it your own frustration or was it just talking with real estate operators or real estate investors who were frustrated? What had you zeroing in on this problem to solve?

Jake Marmulstein (00:09:01): Well, in particular, it was my own experience working in the REIT, when I was putting together the PowerPoint presentations and I remember staying in the office, well, after midnight working on a PowerPoint that I needed to present to the investment committee, and I would print it out, look through it, mark any formatting errors. And it was very hard to be able to do that iterative process of getting the presentation right. And I just figured, there's got to be a better way to put this data into place and have it be in the form of a template. Why am I emailing it out? Attaching it to every single email, and why am I also copying and pasting folders within the internal server to move them?

Jake Marmulstein (00:09:45): Isn't there a data room of some kind that I can put this information into. I was just surprised overall of the lack of technology in the investment space. And I thought that this was a big problem. And then in 2012, the JOBS Act passed. And so now you had this whole group of investors become eligible to, well, not eligible, but a new wave of investors interested in real estate, and real estate investing, because general solicitation was now permitted under the law, after they repealed the 1933 Securities Act that made it impossible to advertise. So that also gave rise to people finding out about real estate investing and it becoming less of something about getting into an investment, because it's someone who you know, and being in a country club to be able to invest in real estate, and then opening it up to many more people.

Jake Marmulstein (00:10:54): And then from that, it was, okay. So now there's this ability for accredited investors to invest, and you can generally solicit and crowdfunding is becoming a buzz word, but that only serves to educate the market about technology. And so now the market's becoming aware that there's these tools, that allow you to transparently show your investment offerings, and you can do so securely, and you can do so with a better ability to present. And it can be a one to many relationship, because the information can live online in the cloud and be protected behind a password. And now, because of that, and the efficiencies gained from that process, people are able to accept smaller investment sizes for more investors.

Jake Marmulstein (00:11:48): So you can fractionalize your investments across a larger base, and you can raise the same amount of capital that you would typically raise from fewer investors, but from more people, because now the tools are available, and the market has the appetite to invest using the internet, because financial technology is more secure and more tested.

Chris Rising (00:12:14): Well, that all makes a lot of sense. And in the past, on my podcast, we've had people like Ben Miller from Fundrise and a few others that have talked about this liberating piece of the 2012, JOBS Act. What I find amazing is, it's almost in the investor world, there's two languages being spoken. There's the baby boomer language, which is really, I want you to send this to me as a PDF. And then there's the gen X and millennial that is demanding that they have this online tool. And there's a few of them out there. So, what do you think? Full disclosure, we've used something called IMS, which I'm sure you're aware of, what makes Groundbreaker unique to whether it's just the Fundrise platform that is, obviously I know you don't do eREITs, but what is unique about the technology within Groundbreaker that you think is a real selling point?

Jake Marmulstein (00:13:14): I think a lot of companies that build software are focused on feature development and features are great, because it gives you the utility out of the application. But if you can't find the utility in the application, because it's too hard to locate within the software, since there's so many features, then you lose that functionality that you have. So Groundbreaker distills all of this complex functionality into a really simple application with a clean user interface and a guided user experience. It's also a very quick application. So the way that it's built on a very modern infrastructure means that you're not waiting for the screen to load, and you can click around and it's almost like it instantly responds to a click. So Groundbreaker's unique advantage over the incumbents in the market, is that, it is the most simple and easy to use platform available. And it's clean and professional looking, fast and responsive. And it's also affordable.

Chris Rising (00:14:20): I was going to ask you, is there a sweet spot of a company that you're perfect company?

Jake Marmulstein (00:14:25): Right now, we focus a lot on the small syndicator market and small fund managers. So anyone that's under a hundred, a million in assets under management is really a good customer for Groundbreaker. We do have some larger companies using us, that are more sophisticated, but their needs are not as, they're using our software within its bounds. So they're not pushing the usage of the application while we're building more complex and more robust features into it. In general, the kinds of user that we like to have, would get a lot of value just by being able to have all of these tools in one place, but not necessarily looking to run an entirely automated investor relations platform, with sophisticated institutional investors, as part of their investor base. It's more on the friends and family, high net worth individuals, or getting access to the platform and have simple reporting needs.

Chris Rising (00:15:42): Well, here we are in the fourth month of COVID-19, the world has definitely moved to a mobile workforce. It would seem that with the repricing of real estate assets, that you are very well positioned for growth as we come out of the pandemic. And then as we work our way out of a recession, but things don't always start that way. There was one point in your career, as you mentioned, you were down in Brazil, looking at being in this business, how did you go from being trained Cornell and then working at a REIT and Watermark, how did you go from being a real estate person to a tech person? What were some of the steps you had to go through?

Jake Marmulstein (00:16:28): I think it's really hard to even fathom doing it the way that I did it at the time, because I had no experience and no money, and I was just young and willing to take the risk and go into something and really not know anything about it and figure it out on the fly. I ended up finding people to join my team and help me realize the vision, who had technical talents and they helped to get the platform going. And I just knew that I was in a market that really needed what I was building, because the market was so responsive. So I think a lot of the things that I needed early on, to be able to be smart on the technical side, I substituted with other people. And then I learned over time where those gaps were on the technology to be able to speak proficiently to engineers and learn that side of the business.

hris Rising (00:17:26): Did you learn to code? Did you go through a process where you learned to code or anything like that?

Jake Marmulstein (00:17:34): I did code in classes and learned a little bit of Ruby on Rails actually. And I was able to build some rudimentary web applications, but I knew just enough to be dangerous. And it was more the intuition that I had to find the right people, who would be the right fit to come along with the mission, and then being able to just, cell division and sell what we were doing at the time, to get enough traction to build the business. And then as it came, it was just learning on the fly.

Chris Rising (00:18:09): I think that's so important. I do think that there is a common theme though. I think for people who weren't trained as computer scientists, is that at some point you were able to articulate the vision to a computer scientist, a coder, who can make it happen in front of your eyes. And it happens for some people that they just, they were roommates with the right person and that worked. But for your experience, when did it start to click that you had this vision and you could start to see it come to life as what you hoped it would be. Was there a person, or is there a program you went through? What was the big difference maker of making it one person with a laptop to a real idea that became a real company?

Jake Marmulstein (00:18:55): I think that happened over the course of time. It's hard to pinpoint exactly when, because we had some early success, I think maybe eight months after we started the company. I was running really low on capital. I was living in New York city and I was, basically completely depleted my bank account. And then we had this windfall of a month , where people were paying us large implementation fees to get the software going, and basically paying for the development and advance of a real product. And we knew that we had something, because people wanted to be those early adopters, those visionaries that saw what we were seeing, wanting to get on board. And that's, I think when it was really something, but that didn't give us what we really needed as a business, that just tied us over. And then when we got into this accelerator program in Puerto Rico, it really started to take shape.

Jake Marmulstein (00:19:57): We were vetted by out of 600 different companies, and we got accepted into a small cohort of startups and were given some grant funding to be able to grow the business on this beautiful Island. And we brought the team together and before then, we were all working remotely and we got to be in person working in an office and growing the business. I think that helped to put structure around the business, and in all senses of the way that you build the operations and improve and formalized processes. And so it wasn't just about the software getting built and customers onboarding. It was about tweaking and improving what we had going and formalizing it into a real operational machine.

Chris Rising (00:20:45): That's a great story. So tell us a little bit the program that you were in, in Puerto Rico. Was it something you found? Were you guided that way? Did you fill out an application? Because that's a pretty big step from, you got a little revenue coming in and you're in New York, to let's all move down to Puerto Rico.

Jake Marmulstein (00:21:07): It's funny, because everybody who you meet, you never know where they're going to go, where they're going to take you and what's going to happen. And I met this gentleman in Rio de Janeiro one time when I was out, hanging out with a friend and he wanted to go meet with this angel investor who was also somewhat of a VC, somewhat of a real estate guy. And we ended up becoming friends. And then I was on Facebook, which I'm rarely ever in, because I'm really low profile on social media if you can't tell. I'd get in, and he's posted about this program that he's a mentor of, the venture capitalist. So I applied to the program and asked him if he would put in a good word for me. And then I forgot about it. And a few months rolled by and I get an email telling me that I was accepted into this program in Puerto Rico. And I was like, I can't believe this. Should I go?

Jake Marmulstein (00:22:05): And I was afraid at the time because, not a lot of people think about Puerto Rico as a place to go to build a business either. It was the third cohort of the program. So they had been in one year of operations before I joined, and I had to go and move up to this Island, which I had never been to. And and one of my friend who, funny enough introduced me to this VC, I called him up and said, what should I do? And he just convinced me to fly in, check it out, see what it's like. And if I didn't like it, I could leave-

Chris Rising (00:22:39): So what year was this?

Jake Marmulstein (00:22:39): That was 2017.

Chris Rising (00:22:43): So it was after the hurricane?

Jake Marmulstein (00:22:48): We started the program in March of 2017, and I liked it so much that I wanted to stay and live on the Island for a while. And I waited just long enough to get hit by the first hurricane. And just as my power came on three days later in my apartment, the next hurricane rolled through and the power didn't come on for a long time after that.

Chris Rising (00:23:14): That's a lot of devastation. I had Elie Finegold on my podcast and Ellie was down there during that period and lost a dear friend to it. What you must have seen through all that and the life experience you gained, must have been pretty amazing.

Jake Marmulstein (00:23:34): For anyone listening and thinking about an accelerator, if the program has somewhat of a community, I think that's part of the most value that you can get from those kinds of programs, because I haven't had a better time in a professional setting or in a personal setting, since when I went to college. I was with a group of entrepreneurs from all around the world, building their businesses, that just wanted to get better and wanted to learn. And it was five months of such an incredible program in a beautiful place. I can't give them enough credit for the hard work they did.

Chris Rising (00:24:11): That's amazing. I have quite a few friends who moved down after the hurricane. A lot of the Bitcoin community really found Puerto Rico as a place to set up base. And I still continue to hear amazing stories about the tech community that has really been enshrined down there these days. Do you get back down there often, or are you spending most of your time in Chicago?

Jake Marmulstein (00:24:33): Most of the time I'm in Chicago, but I have actually been back quite a few times. I helped get one of my friend's companies into the program, where I helped some other startup companies from time to time and mentor them. I really like this program. So I maintain a good relationship with the people there, and I can see myself going back down to Puerto Rico, and maybe setting up base there while this whole situation sort of blows over here in the United States, honestly.

Chris Rising (00:25:04): Well, I will start this statement with, I do have a conflict, because my company is heavily focused on office, but it would be hard to, given where we are today in July, of 2020, still with a resurgence of COVID here in Southern California and across the Southwest and the South. There's a real debate about what work from home versus mobile workforce, first time in the office. It seems just through our conversation here, that you are pretty comfortable not having a centralized HQ. But what do you think the future of office is?

Chris Rising (00:25:44): And how do you think remote work is going to work? I also throw one other thing out there at you. I had one of my people today say, they should rename work from home to live from work, because he thinks the work hours have expanded so much, because you're never leaving your house with wi-fi. I threw a lot at you there, but what's your take on the importance of office, how we're going to work as a mobile workforce. And what do you see over the next few years with the effects of COVID-19?

Jake Marmulstein (00:26:14): Well, the first thing is that, working remotely does have a shift in your life, because you're no longer leaving your physical residence to go somewhere to work. And when you separate those two things, it's cleaner in a sense, because you can leave that head space of being at home, go to work, where you work and when you come home, you're at home. And when you're not able to do that any longer, you have to create that separation, because it doesn't already exist. So it's really to stress to my team. And I think with other companies going through remote, to be able to take care of that and build in time for mental health, personal conditioning and getting away from work and being disconnected, so that you can live a normal life, because being on the computer all the time will lead to burnout and and dissatisfaction.

Jake Marmulstein (00:27:05): And so remote can be very good, if it's taken with the right steps. And we started out remote, for the first few years actually, especially when I was running the company and living in Brazil. I think that being in an office, communication it can be a lot better. And the relationships that you can create with people can grow faster and the creativity that you can get from the free association, and psychological safety you get from the relationships you build can be extremely beneficial for building a business. So my challenge in thinking about remote work, is just how do you manufacture that psychological safety and the connection that you get from being able to relate to people in person and take that into a remote setting. It's really hard to imagine that we're going to be able to create that level of connection just through virtual meetings.

Jake Marmulstein (00:28:06): And so I think that there's got to be an in between where companies can work remotely, but there's going to be some level of get together, and maybe we'll see some of the models of, I don't know, flexible office events happening for companies or organizations that work to facilitate those company get togethers, and off-sites on the rise. I'm all in favor of remote work, Chris. So I would love to see that happen and be able to fly in with my whole team to go to an offsite once a quarter or something like that. Especially when the company is still small, those costs are not going to be that high, but as the company gets bigger, maybe that becomes harder to achieve.

Chris Rising (00:29:08): There's probably a bunch of mothers and fathers out there who want me to ask, are you married? Do you have young kids? I find it's a whole different conversation, if you have a three and a five year old wandering around trying to do online school, at the same time you're trying to work remotely.

Jake Marmulstein (00:29:27): I hope that the whole online school thing, it's a bad situation for parents. I think having kids out of the house is preferred. I certainly don't have any children that I'm responsible for. And I don't have any children as well.

Chris Rising (00:29:55): I think some of the points you made beyond just the child part, which you have yet to experience, make a lot of sense. I will tell you just my company, even though we're still in this voluntary, if you want to come to the office stage and we really are a mobile workforce, we have already said, we're getting rid of things like formal work hours. Now, if you're a receptionist, obviously that's different. Or if you're a property manager and you need to be there, that's different, that's just part of your job description. But for other people, we just said, look, you need to work with your managers, it's all about communication, if you want to come in and use the office and the things we have at the office, I will tell you around transferring money and things like that.

Chris Rising (00:30:34): Through being a part of YPO, I've heard some of the worst horror stories of people being hacked on their home wi-fi, sitting and waiting until they hit the VPN button and then that hackers into your corporate computer. So we're a little nervous about that. So we want our accountants to come in, if they're going to transfer money in our protected office HQ. We are not even out of this and our company has already gotten rid of business hours. We're moving towards getting rid of paid time off. Basically having, always have the ability to take vacation and breaks. So we're really feeling it, I think, but we are feeling to, at this point though, is four months of Zoom meetings are starting to shred that tight culture we had, because you just don't have that bump in meeting and all. I think the age of presenteeism that you probably were young in your career, early in my career, it really mattered if he got to the office by 7:30 and left at 7:30 at night.

Chris Rising (00:31:34): I think that eight day is over. And I think products like yours are what's driving us towards the ability to just hold people more accountable for executing, and not confusing activity for achievement. And so I think it's really amazing. I would say that since one of the things that is part of your whole software is, it's a better way to syndicate. I've found that the only way you can syndicate deals, is if you do have face time with people. So I just don't see us going away from breakfast meetings and lunch meetings and conferences, and that puts a little structure to a day where it makes sense to go to a centralized office, so that you can have those meetings. How have you done your networking and built your business over the time when you were purely remote? Did you find that effected your ability to network, because you didn't have a centralized office?

Jake Marmulstein (00:32:35): I think that the more information that you can produce, that would be available for people, the more that you're likely to create a warm experience when you're going into a cold relationship. And that's a little bit counter intuitive to me, because I think that I don't like to maintain a very high profile on the internet, personally speaking. But for business, now I'm doing this podcast with you. I have articles on the internet of work that I've produced and a pretty active profile on LinkedIn. So people get the feel for who I am through that. And I think that really helps when they're looking and finding out about who I am before a call is booked, or if I reached out cold, to try to introduce myself to them. Back in the day when I was in university, I had the chance to be an intern and work in a business in in Spain.

Jake Marmulstein (00:33:45): I applied for a grant through the university and was really lucky and got awarded this travel grant where I was able to work an unpaid internship and take the money and go and live in a foreign country and learn a language over the summer. I ended up using the phone in the alumni office that had international calling. And I would sit there looking at the alumni directory and cold call through everybody in Spain that I wanted to work for. And introduce myself. This was pre LinkedIn. No one knew anything about me. I was just giving them-

Chris Rising (00:34:22): How was your Spanish?

Jake Marmulstein (00:34:23): It was a lot worse than I thought it was, because when you get there, I was in the country, I couldn't understand a damn thing that people said to me.

Chris Rising (00:34:37): Were you able to switch over to Portuguese when you were in Brazil?

Jake Marmulstein (00:34:42): Portuguese by that time, when I got to Brazil, I had lived in Spain and did that summer internship. So my Spanish was fluent and it was a lot easier to switch into Portuguese.

Chris Rising (00:34:54): Well, you know what's interesting about the story you just told, is it does tell me that you truly do value the networking piece of doing business, because you were willing to break through all the cold sweats that we all get on cold calls when we're young, and you had absolutely no fear, it seems like, and traveling to Spain and traveling to Brazil. What do you think is unique about the way you were raised or your life experiences that made you so willing to take risks at such a young age?

Jake Marmulstein (00:35:23): It has a lot to do with, I think, DNA and just the environment in which you grew up. So both of my parents are pretty entrepreneurial. My dad started a restaurant in the Atlanta area with my uncle. And my mom traveled around the United States expanding territories and being a sales professional for many years, for a small company that ended up growing quite a bit while she was working there. So that fired, just, go out and do things and prove yourself. And not give up in the face of overwhelming odds, like running a restaurant and starting something from scratch with no track record was a really big challenge. And they were able to be successful. And I started working in the restaurant when I was eight years old, getting paid $2 an hour working in the back kitchen, doing prep.

Jake Marmulstein (00:36:21): And that my dad taught me the value of hard work and what it's to earn money. And I saved up all the money that I could, so that I could buy myself a computer. So I could, learn about the internet and play video games as a kid. I don't know, I grew up with the idea that you have to work hard to earn the things that you want in life, and nobody's going to do it for you, but yourself, and you have to believe in yourself and, don't let anybody tell you, you can't do something.

Chris Rising (00:36:47): I think it's great, what you just said. Really. I think that's powerful and it's things that I believe in. Can you maybe talk a little bit about some of the failures you might've had over the last few years, or the last 10 years, that really put that to test? It's easy for us all to say, you've got to work hard, you got to work hard, but boy, you get hit in the face a few times, it gets hard. There's nobody I know who started a business, who hasn't been hit in the face a few times. Can you talk a little bit about that? Anything you've come up against and you had to overcome and how you got through it?

Jake Marmulstein (00:37:24): Oh man. The whole story on Groundbreaker and getting it to where it is, was a very difficult journey. And when I started the company early on, I had some business partners that didn't have the same vision that I had and didn't want to be in the company as long as I did and wanted to quickly flip it and get out. And there was dead equity on the cap table for a long time. Essentially I had to run the company as a minority owner for many years, with control over the bank accounts, but none of the intellectual property. And I was hamstrung, I couldn't raise any capital because I had a messy cap table. There was too much hair on the deal, as I went out to investors. I had an investor who was one of the most prolific entrepreneurs in Cornell, and he was willing to invest half a million dollars in the business, but he wouldn't do it, on the condition that I needed to clean the cap table up.

Jake Marmulstein (00:38:20): And so I needed to come out, without knowing much about business, I had to do a buyout of the whole entire cap table to clean it up, so that investors would get interested. And I had no money. I was bootstrapped, going month to month with whatever, we had 10 employees at the time just off of revenue. And I wasn't sure that the company was going to make it. And I had all these other competitors that were moving ahead and announcing their huge funding rounds, and it was psychologically defeating. And then I was able to get the deal together, get an attorney to help me out. And again, another area that I just had to learn, but it severely delayed our ability to get into the market and enhance the solution.

Jake Marmulstein (00:39:12): So we ended up seeing other people, move ahead of us, is you're working with IMS, you mentioned, they've built a lot more features into their software that we have been able to do at this point. But I learned at the end of the day that I wanted to be able to continue doing this and there was a market for what I was doing, and people would tell me, you should give up, you're always going to be chasing the competition. It was just a lot of psychological barriers to getting to that next level, being able to have the conviction and then putting all of my savings on the line to be able to make this deal happen. And then six months later, I was able to raise outside funding and multiply by a very wide margin and the value of the company.

Chris Rising (00:40:02): That is such an awesome story. It's not unique. I've had the same issue with investors who said they were going to do things and they didn't, you've got to get them out. And how many times I've laid in bed, looked up, thinking, how unfair life was, and this person acted so wrong. I just love that you said, you just got to push through it, right. And, you get yourself, you get over one hurdle and then you get the next hurdle. And the next thing, you're in a position where you can really raise capital. You've really developed a heck of a product. Your product has a CRM feature to it. It's got the investor portal, the ability to communicate, to share K-1s, for people to get into a deal room. It's a very valuable product. And as you look at it, how's it going to evolve?

Jake Marmulstein (00:40:52): So really, what we want to be able to do is, focus on that user experience first and foremost, make enhancements in the existing product and make it easy to concentrate on, usage, ease of use, and then building enhancements and automations as we go. So, if there's customer feedback, which we're getting a lot of, we're prioritizing that and building that into the roadmap and then we're handling big new features, that are going to enhance the range of functionality that you have. So just continuing to, make it easy, make it simple, but expanding on the capability of the existing features first, and then eventually adding new features and expanding on what it actually does.

Jake Marmulstein (00:41:50): And then looking perhaps into the future, adding a services layer to it. So we're not just a software company, we also deeply understand the real estate investment space and where things are going. And we want to be able to give services to our clients that are going to help them to programmatically grow and scale their businesses beyond where they currently are, and add a network effect to their growth. I'm being a little vague there, but I can...

Chris Rising (00:42:22): Well, I would have to imagine, I just have to throw it out there, that data is really important to what you do, because you are a repository of every one of your clients deal structure, where the hurdles are, where the distributions are, and there's got to be a lot of value in that. How do you look at that with your product? Is that something that's minable in your thinking, or do you think now I've got to keep that? This is a debate I know I had with the VTS founders and how they've evolved. I'd be really interested to how you look at the deal information that you have so much of.

Jake Marmulstein (00:43:01): A lot of people ask me that question and in general, the Groundbreaker platform is valuable to people, because of the privacy and security that it offers them. They know that it's their intellectual property, that it's protected, that their investors aren't getting solicited and they're able to use this tool and sleep at night, knowing that it's their data, their information, and it's their brand. So we don't want to mess with any of that. But broadly speaking, if sponsors are growing and performing well on the platform, as we carve out our niche and look to add services, we may be in a position to help certain sponsors who want access to our services, to share data with us, so that we can offer them products and services beyond just the software.

Chris Rising (00:44:07): Another aspect of dealing with your clients, I always find it interesting, this debate between the web based platform versus a mobile platform and more and more, because of the success of the iPad and the iPhone, mobile-based apps are desired for, especially for investors who were passive investors. How do you look at the experience between a laptop web based experience versus a mobile app? And do you see this tension that I often see from real estate prop tech software apps?

Jake Marmulstein (00:44:47): I think that there's a lot of utility you can get in having a native application, but I don't think the market's there yet. I think that investors are getting younger and they're okay with the web browser based application, as long as it's easy, as long as you can navigate it. But there's maybe going to come a time where people want a native application that they can download. It remains to be seen though. Which software player in the space right now, is going to be so prolific that it warrants having that kind of an app, right? Because you've got portals, if you're an LP, you got a portal with one syndicator and another syndicator and another one, and they all use different systems. So having a native application, isn't really going to help you. That's going to be annoying, because if you're using different systems, then you've got maybe three native apps, right.

Jake Marmulstein (00:45:50): Or now you've got one native app and two web browser based apps, and you need to remember which one to go to. So there's probably got to be a better way of handling all the bifurcation of portal access. And I think that's a problem that's certainly unsolved and maybe somebody is already working on now.

Chris Rising (00:46:13): I would think probably one of the other issues that you must face on a daily, if not hourly basis, is security. Because you've got a lot of private information and there's a lot of bad actors around the world trying to hack into sites, just like yours. How do you look at security with what you do and what are you doing on a regular basis to stay a couple steps ahead of the bad actors?

Jake Marmulstein (00:46:38): Security is very important to us. We use all the security measures available in terms of encryption and SSL certificates and two factor authentication to make sure that the data is secure on the platform and that people have redundancy in place so that even if they lose their password through some social engineering, they're going to be able to have a second layer of protection in there. But then also we look at our internal processes, how does Groundbreaker store information, or what information does it store, who has access to certain information. And going off of the SOC two audit list and making sure that we're in compliance with all of that. So that as an organization, we're taking care of the right practices to keep our customers data secure.

Jake Marmulstein (00:47:30): And then if there's a way to enhance those security measures, we're thinking about it and figuring out with new technology, how we can implement that into the app. So there's even ways to stay ahead of the vulnerabilities that have been discovered through two factor authentication and social engineering. And if somebody's email gets hacked, and they're able to find a way to trick the system. One of the crazy stories I heard of was, somebody getting access to the phone provider and have convincing the phone provider to change the number on the phone so that they could trigger the two factor authentication to a number that they controlled and then use that to get into a system.

Chris Rising (00:48:36): Oh, my God.

Jake Marmulstein (00:48:36): Then you talk about, okay, what about facial recognition, are we going to get a facial recognition step at some point? And we're thinking, always about how can we make the platform more secure as new technologies come out, how can we stay ahead? But even those new technologies as they come out, they have security vulnerabilities in them too, that you got to plan for.

Chris Rising (00:49:05): I was going to mention that, because a lot of people, like you said, you don't use Facebook much, nor do I, but think, I'll just sign in with my Facebook authentication. I go, just always slap my forehead when I hear people say that, or, Google or Apple, they all are doing it more and more, but it just opens up this level of insecurity, to me makes me very nervous. I really think with the last four months and the move that we have all done towards working from home with a home wi-fi or working mobily, on cellular, or God forbid some public wi-fi, this is going to continue, but those are negative things.

Chris Rising (00:49:42): Let's talk about a positive thing. The first thing I want to ask is, I do want to get your thoughts on where we're going to be headed over the next 10 years, but before I go there, I just have to ask, we've talked about some pretty wonderful places in the world. We've talked about Spain, Brazil and Puerto Rico, yet I'm talking to you from Chicago. It is summer, which is probably the best time when you can be out to be in Chicago, but what brought you to Chicago to run your business?

Jake Marmulstein (00:50:10): We were very lucky to meet our investors in Groundbreaker, and they are based in Chicago. These investors are very prolific in real estate. You can read about them on our website. They control a lot of real estate and they're very influential and create a ton of value for the company. So when I had the opportunity to work with them, I knew what I was getting into, believe me. My family, we started in Chicago, that's where I was born. I lived there up until I was six years old. So I remember walking to school or, waiting for the bus and being all the way up to my waist, and snow as a little kid. It's not the most desirable place to be year round. So we bit the bullet and moved to Chicago to be able to work with these phenomenal investors and grow the company there.

Chris Rising (00:51:13): That's a great story. I really do love Chicago at certain times of the year. And I hate it at other times of the year. I remember as a young person in a suit and tie, trying to get Michigan Avenue and the wind being so bad, I couldn't walk. So, when we're not in COVID and it's a time when you just feel the need to get out of Chicago, what are some things that you do that interests you? I got to imagine there's some travel, but tell the audience a little bit about things outside of Groundbreaker that make you, you.

Jake Marmulstein (00:51:48): Well, my connection to these other places in the world is really important. I believe in being present for experiences that are only going to happen once in a lifetime. So I've got friends all over the world, and last year I went and made a trip down to Brazil for my 30th birthday and had some friends come in. One of my friends came from India to see me and I had friends in Brazil. And we went on a hike, and to some waterfalls, being in nature, going to the beach, going to be able to just completely disconnect from technology for a little while. These are things that I really like. I'm the guy who will jump in a car and put a surf board on the roof and just go out and find something out there that, disconnected from whatever is going on.

Chris Rising (00:52:52): That's great. I think one of the things that constantly comes up on my podcast is, so many people who are on this are so connected to technology that the balance is really tricky. How do you balance having a bunch of emails with probably a Slack or a Microsoft teams and all this? How do you balance the constant shiver that comes at us, so that you can be effective? Do you have any rituals in place? What's your morning like, what's the end of your daylight like, so that you can be efficient and not burn out?

Jake Marmulstein (00:53:33): Well, generally I will keep a journal of tasks and goals and reflections that I take in the evening time. And then when I wake up, I'm waking up pretty early, around six o'clock in the morning, going to work out and just feeling good, getting muscles warm and activating the brain and endorphins in the body helps to set the day off right. That really does help. I mean, the exercise I think, is essential to avoid burnout. Physical exercise is really important. And then, when I'm with people that I care about, that I want to spend time with, first of all, making that time, at least taking one day off every week, I do work on the weekends too. So there's at least a day, usually Saturday where I'm completely disconnected and not looking at a computer or a phone and I'm with people.

Jake Marmulstein (00:54:39): And when I'm with people I'm not ever on my phone, I absolutely detest that. I think it's the worst disease that's happening. My generation of people is that they're connected to their phone and they can't separate it from personal interactions. So it's just putting the technology down. And just being present when you're with others.

Chris Rising (00:55:01): Now, do you run your company off of project management software, like in Asana or Bootcamp, or do you live in email? How do you deal with those digital interactions?

Jake Marmulstein (00:55:15): We use Slack, and we use email and we're also leveraging JIRA. JIRA has been great because it's got a lot of project management tools inside of it. And so, we can [inaudible 00:55:28] different parts of the business through that. I could go on about all of the different tools we use. We use a ton of different software, but to talk to the earlier point about segmentation, also doing time blocking on your calendar and intentionally blocking out when you're not going to be available, or when you're not going to be able to switch tasks. I'm reading a book lately called, Deep Work, and I would recommend it to people who are listening and thinking about this topic of how to separate yourself from the distractions that you get, because I don't think in today's society where being able to have that deep focus time to sit down and have unfettered distraction on a task, so that we can really learn it and delve in. And it's all about being able to take out those distractions. So logging out to them, like-

Chris Rising (00:56:33): It's an amazing book. Cal Newport wrote it, right? That's the one by Cal Newport, I think.

Jake Marmulstein (00:56:37): Yeah, Cal Newport.

Chris Rising (00:56:39): It's a really important one. On our team meetings this morning, which were all virtual now. One of the things we talked about with some of my younger people, was you got to block in your day. You really have to say, these are the times I'm going to make my phone calls and just make your phone calls then. Keep the email close, because I am really seeing, and you've talked about it here. Just that, what was an eight hour day with some breaks and for lunch and all that, have become 12 and 13 hour days for people and people are burning out. And I think in April, people were a little bit thinking like, there's a finish line. We'll hit 4th of July and there'll be a finish line with his COVID, and we'll have some normalcy.

Chris Rising (00:57:21): And now I think that we've hit July and there's no end in sight. I think it's straining on people. So I think that book is a tremendous book and I'm a big believer in that one. And I'm also a get things done person. I freak out when I have too many emails and try to keep everything within Asana. These things it's good to hear that someone at 30 is recognizing these things, because if you don't make those habits now, they're hard to get back. Unfortunately it's usually a life event that forces it. So that's good to hear. Is there any other books that you want to share, before we wrap up here that have been really helpful to you and how you're running your business and how you're living your life or any other story about just how you keep yourself focused in a healthy way?

Jake Marmulstein (00:58:11): I like, How can I help? By Ram Dass. Very good on mindfulness, awareness is one of the key traits to be successful as an entrepreneur, because of the psychological battles you face. So being able to get outside of that first person perspective and take inventory on things from a third person's point of view, through awareness is extremely empowering and freeing. And you can get that by reading that book. Work the System by Samuel Carpenter, is an awesome book about process management, documentation, being able to scale out of the responsibilities that you handle, like creating clear documentation across teams, that people can own and then control and develop into organic documents, that grow with the organization and the different people involved. And then also Atomic Habits by James Clear, is a phenomenal book on how to-

Chris Rising (00:59:07): Yes it is.

Jake Marmulstein (00:59:09): I think just the psychological tricks that he goes over and how direct it is on how to create those habits and sustain them, is really a game changer as long as you apply it.

Chris Rising (00:59:20): Well, I love his Thursday emails, which I get. I'm big into the Stoics as well. So I follow the Stoics, get my daily Stoic email, but I think these are all things that are just unique in the world of 2020, and then a world, as we go through the pandemic and then as we come out of it. So it's really, really cool that you think deeply about these things. Before we finish up here, why don't you just give us a couple of things. I think, first of all, my people get nuts on me all the time, because my commitment to software platform sometimes can be rather short. So when I hear about all these great things Groundbreaker is doing, why don't you just give us just, where you think it's going to go in the next year or two, and why you think it's really the best platform for dealing with multiple investors, whether it's syndication or just a lot of different investors.

Jake Marmulstein (01:00:16): So the direction Groundbreaker is going, is that, we are going to, as we are today, going to be the easiest to use, most intuitive platform, to be able to manage your investors and manage your back office. And that means that you're going to be able to get in and get value from the software faster than other applications. Your investors are going to get value from it, and your team's going to be able to get value from it and collaborate across the platform. You're not going to need to spend a lot of time doing onboarding and training and learning. It's going to be very easy to see the value from the platform that Groundbreaker delivers, because of how clean and simple it is.

Jake Marmulstein (01:00:59): And that's what really is important when you get software, is being able to really use it. And we're going to double down on functionality, make it have more robustness, make it handle more areas of the workflow, as we improve on the existing functionality we have and the team as well. And the team that you get when you come on board with Groundbreaker. We're not just a small company, small startup trying to survive, we're a whole entire team, that's going to hold your hand, bring you on board, show you an incredible amount of service and get to know your business, and be able to grow with you. And where are we going into the future? We're building some really exciting things on the services aspect. So we hope to be able to help sponsors who are really good at their craft, get into that next level of growth by providing them services based on their performance.

Chris Rising (01:01:51): Jake, thank you so much. That was a great conversation. I really appreciate your honesty and your willingness to go deep on some of the issues we talked about. And some of those books suggestions were just fantastic. You can follow Jake and Groundbreaker on Twitter, @GroundbreakerCo and you can also find Jake on LinkedIn. So please don't forget to subscribe to the Real Market with Chris Rising. You can do it on any of the podcast platforms out there. You could do it on Apple or on Spotify, and follow me on Twitter @ChrisRising, or our company Rising Realty Partners, @RisingRP. Thanks so much.