The Real Market With Chris Rising – Ep. 19 Mike DeGiorgio
00:49 CR: Welcome to the podcast. I’m excited to have Mike DeGiorgio on the podcast today, he’s the founder and CEO of CREXi. For those of you who don’t know, CREXi is a platform for buying and selling real estate. Mike and I have a very interesting discussion about the impact of technology on the brokerage business today, what CREXi is doing to facilitate sales, transactions in a digital format, and we really go into some very deep conversation about the technology, the security, and where we think and where he thinks the platform is headed.
01:25 CR: So I hope you enjoy the conversation. It’s a very tech-focused conversation, but it’s all tech and real estate.
01:37 CR: Welcome to The Real Market with Chris Rising, excited to have Mike DeGiorgio here with me who’s the founder and CEO of CREXi. And for those who aren’t aware, CREXi is an online auction format that is doing things a little bit different than those of us in the real estate business have heard about in the past. So Mike, welcome to the podcast, excited to have you here and I’m excited to tell our listeners a little bit about what you’re doing, ’cause I think it’s a different take, but it’s got a lot of what we’ve heard about before. So welcome to the show.
02:09 Mike DeGiorgio: Thank you Chris, I’m excited to be on, and I appreciate you inviting me on here.
02:13 CR: Well, why don’t we jump right into what CREXi is? I think anybody who goes to the website, you get a quick burst of what it is, and it’s exciting. Actually, I really spent some time on it and I was excited about it. But tell our audience a little bit about what CREXi is.
02:28 MD: Yes, so CREXi is a true marketplace for buying and selling commercial real estate. We took an approach where we wanted to really break down the A to Z process of, both buying commercial real estate or being a broker, who is representing a seller and selling commercial real estate and take the pieces of that transaction that we felt got in the way of really getting deals done, and letting the professionals be professionals and in a much more efficient way, buy and sell. We actually as of yesterday also launched our CREXi Leasing Marketplace, so we now have separate from CREXi a marketplace for leasing space, renting space, so for tenants and landlord brokers and [03:12] ____ brokers.
03:12 CR: The large part of our audience, are leasing brokers and sales brokers. So how many of these people out there hate you, and think that you’re trying to steal their business and how many see you guys as a support?
03:27 MD: So when we first created the platform we were curious to see how we would be received by the brokerage community. One thing we wanted to be very mindful of and very attention to detail on was making sure this was a platform built for the brokers. We feel the brokers still dominate this market, they still control supply and they still control the buying and selling and leasing of commercial real estate.
03:51 MD: And so we really focused a lot of the functionality and the features and the tools that we built within the platform to save brokers time, enable them to do more deals more quickly, should put on a better show for their clients, and be able to do more with less. So we really embraced them, we had them by our office for really every week since we started the company and we’ve taken parts of their week that annoy them, frustrate them, take too much time out of their world of making money and getting deals done, and tried to create very easy-to-use, intuitive tools that speed up their week, and make them more efficient at what they do. So really with that in mind you have a bunch of brokers who I think to date have really embraced us. We learned a lot from our prior careers and tried to really be a broker first, broker-minded platform and because of that, they’ve really taken to CREXi, into the team and become an extension of what we’re building here.
04:45 CR: Well, I think when most people think of an online auction platform, people think of Auction.com. And I remember very well when it was coming out. And I know that you have a history. You used to work at Auction.com. Can you talk a little bit about how CREXi is different than what Auction.com was and is?
05:04 MD: Yes, I had a very interesting and exciting four year run at Auction.com. Really got an insight and an entry into the industry that was unique and allowed me to excel in a very quick manner in the space. And I think as I grew more familiar with how transactions are ran, and got more integrated into the transaction, worked with more buyers, worked with more sellers, worked with more brokers, you realize that there was a lot of friction between putting everybody in a box and forcing everybody to use the auction platform, one way versus the way a commercial real estate is sold traditionally. And what really that led to was us being limited in the amount of properties we could work on and which type of properties we could work on. And you hear constantly feedback on… “Well, why can’t I just do this? Or why can it just be like this?” And I think kind of growing frustration over the years of kind of wondering why that didn’t exist, why there wasn’t a platform that took things you saw or did on Amazon, on LinkedIn, on platforms through out other industries and add that into the commercial real estate process in a way that really let the brokers dictate how they wanna sell their properties, which tools and features they wanna use and not force their hand into using it any particular way.
06:23 MD: And I think that’s one thing we were very wise in doing early was letting brokers adapt and use this platform how they wanted to. Whether that be really running full transactions through it, whether that be forcing all buyers to make offers in one fashion or under a certain set of terms or whether that be a flexible more traditional transaction kind of run the way the broker typically does. And so we tried to create a very flexible platform that really gave the tool to the broker and we empowered them to use it as they wished to get the most out of it.
06:58 CR: I have full disclosure I’ve never either as a broker used Auction.com nor CREXi, and I haven’t bought anything from it, but I know when we’d have conversations with brokers there was a lot of cynicism about Auction.com. A lot of, “It’s all a ruse just to try to get a higher price but in the back end, the deals never happened. The moment they say, they closed that really they’re just trying to get to one or two people and then the brokers would negotiate.” I know that there was a lot of cynicism about, “How could an office building that had a bunch of different leases that you never really get to see all of or have broker interview a tenant interviews.” So I think there was a lot of things that people had grown up in the brokerage industry would say against an Auction.com or CREXi. What was your experience in that regard about how sales went and what did you learn at Auction.com that you changed here at CREXi?
08:00 MD: I don’t wanna necessarily talk too much about how the auction process works. I mean, auctions in general are typically all cash transactions. You have auctioneers who really in every auction do have the ability to bid against the market in a reserve-based auction at least up and the reserve price. I think there’s a very good place for those in any world, especially in some commercial real estate transactions. But what we’ve learned was, as opposed to fighting against the industry and trying to force them into this new way of doing transactions, which had its benefits, had its pros, had its cons. I don’t wanna say too much bad there, I think that the company has done very well for a lot of reasons. We tried to build CREXi in a way that mimics how brokers want to sell properties whether that be… I wanna set a call-for-offers date, but I wanna pick the best buyer for this property, based on the best terms and not necessarily the best price. I wanna run a transaction for the next three months, and I don’t need to sell in three months if I don’t get the right buyer here. Maybe they wanna run a best and final and just invite two of their buyers who they deem to be qualified and not let the whole world bid on the property. It’s really up to the broker, how they wanna run a transaction.
09:17 MD: You’re not forcing brokers to set terms you… We’re building features, I think, that go beyond even just the pure transaction part, it’s even deeper. It’s how buyers manage properties they’re interested in. How they share notes with their investment partners, how they go to investment committee and talk about the deals that they’re interested in participating on or trying to win the listing on. It’s how brokers pursue deals. So before they even win the listing we have features and functionality built in that really allow brokers to manage that whole pursuit of a listing how they market their property. It really lets them be flexible in how they wanna transact. They don’t have to set a call for offers date. They don’t have to force people to bid, they can just run a pure call me kind of transaction through, CREXi. But we really took some of the more strenuous, parts of things that we deemed just got in the way of selling deals.
10:12 MD: Like how do I tell my 20 interested buyers that the price changed? Can I do that automatically, quickly? How do I report back all of the activity I’ve done to sell a deal to my client? Can I do that with the click of a mouse or do I need an analyst, writing up a big report on a Friday? How do I connect with 50 buyers who downloaded a confidentiality agreement, all at once? So we really just tried to speed up some of the nuances of selling commercial real estate and didn’t really force the brokers to completely shift how they sell real estate.
10:43 CR: Is there, in your experience, are there certain properties that this just really makes sense for and others, you’re like, there’s just no way that this process makes sense? Or do you feel like you’ve made enough changes to the system than it can handle any property type, in any amount of tendency or a dirty dirt around it? What would be your perfect deal for CREXi?
11:10 MD: I’m a little biased there obviously, but I really feel like we’ve built this for any type of deal. Maybe when we started the platform was more… Our first version of the platform was more built for the $1 to $5 million dollar, single tenant, triple net, resale property that’s just easier to transact but over time as brokers have wanted to bring more complex, more institutional quality properties to sale, and want to use some of the CREXi features, we’ve had to take that feedback and build ways for them to get the most out of it. So we have the ability to sell deals, in a private fashion, where you can exclusively market it just to a group of your own buyers and not have it publicly facing… Or facing to the public.
11:51 MD: We’ve built ways to run. I don’t wanna repeat myself too much, but you can run best and final. You can just wait until you get the right offer in, counter that offer, and then come to an agreement and sell the property to that buyer. So we really, I feel like, one, the 55,000 plus properties that are for sale on CREXi and I think we take now close to 500 properties to market, each day, it really is a very great representation of what the market is. The average deal size right now is about $4.5 million but we have thousands of properties listed over $30 million. We have some of the most institutional brokers who work on the very, very, high dollar bar, high dollar amount properties using our site at its fullest. I think we really have figured out multiple ways to transact, multiple ways to set up your properties on CREXi to fit exactly how you wanna sell your deal and I think if you look at our inventory and all of the new properties getting added for sale every day, it’s a good testament to that.
12:51 CR: And do you own your IP, so that it’s proprietary? So when you go to the top investment sales broker at a CBRE or an Estill or a Cushman or a Newmark, how do you present the CREXi process in a way that it’s not losing their identity? I would think that if your CB or this top 200 company, you’d go… Last thing I wanna do is have a tech company have the brand. I’d want the CB brand everywhere. Do you run up against that? How do you handle that process?
13:30 MD: Yeah, that’s a great question. So we’ve been very cognizant in being broker-branded, so that broker’s brand and the company that they’re with, be it CBRE, Collier’s, Cushman, HFF, Marcus and Millichap, they’re branded everywhere. So, if they use our marketing portal to market their property, it’s their brand, it responds… All things respond to them. If they use our client reporting it’s all broker branded, their brand, if they contact brokers, through or other buyers through our site, it’s all with their logo, their brand, we try to keep the CREXi brand kinda behind the scenes and hidden. It’s really to try to highlight them and make them more effective and to let them, enable them to showcase their properties in a perfect manner that really highlights who they are and what they represent. So we really put a lot of thought behind that. I think every little piece of CREXi, every little thing you do through CREXi really highlights that and we hear it all the time. You have some of the top people at CBRE that will search on our site, for CBRE properties and you’ll see the CBRE brand everywhere, and you’ll really feel like you’re interacting with CBRE when you’re looking at those properties and same all the way through to the small regional broker shop ’cause we know how important that is and we didn’t wanna lose sight of that.
14:51 MD: So you even have links back to their website. If you click on a broker’s logo, on one of our property pages, it takes you to their personalized page on their brokerage website, so you could see more about them. We’re doing a lot of cool things being built into CREXi now that are gonna come out in the next few months or maybe year, depending on what feature we’re talking about that’s gonna make that even stronger. Where they’re gonna have their own profile pages in CREXi that showcase their brand and showcase what they’ve done over time and how effective they are at what they do.
15:26 CR: I’m sitting here thinking that I’m just about to sound like the old man, as I’m about to ask you a couple of questions here, I apologize, in advance. I am a GenXr I’m not a millennial, but I’m old enough to remember when the books really first came out and when I was working at Cushman Realty and the pride that we as brokers, took in these investment sales books, and that we would send these and hand deliver them, fly to New York to hand deliver them to people, and there was this ritual to trying to sell a major office building that I think is long gone. I mean, I don’t… Everything that I have is sitting in our box files. All those OEMS we keep them all. But there was a process to a sale that it was a real defined process that brokers had worked with buyers and sellers. Do you find that by bringing all of this to an auction that’s digital and online and having data rooms where everything’s stored, do you think that that gets lost, where a buyer doesn’t feel like they know, especially the broker doesn’t feel like they know who they’re recommending to buy the property, or do you think it gets enhanced in the world we live in today?
16:39 MD: I mean I definitely think it gets enhanced. Every property listed for sale on CREXi or run through CREXi all has an offering memorandum, it’s a requirement that you have to be the exclusive listing broker, and you have to have at least a few page flyer or a full offering memorandum. I think our buyers expect to be able to click on that offering memorandum, and look through that material very carefully. We’ve built in features that force a buyer or perspective interested person that wants to make represent a buyer to sign a confidentiality agreement before they get access to that offering memorandum. We’ve built in functionality that allows you to lock certain items and forces the industry to request access to it, and then the broker can go on their dashboard and click on that buyer, see their full profile and then decide if they want to grant access to that buyer to allow them to view that material. So we’ve really kind of layered this in a way that lets the brokers run the most effective sale for them. Personally speaking, and I’m, again, probably a little biased. I think this material should be open and I think it should be a very transparent world, I think that’s better for everybody.
17:47 MD: It’ll allow more people to enter commercial real estate whereas before, I think it was a difficult space to enter. If you’re an investor, high net worth, you don’t know where to start, if you wanna go get into commercial real estate. So we’ve tried to create an environment where there’s full transparency on both sides, real-time reporting, real-time activity feeds. You know, the second something changes on a property you’re looking to buy, you know, the second someone’s interested in looking at a property you’re selling. We think that’ll make this space better for everybody. We really feel like that is the future, and I think you’re seeing it and I don’t wanna label each generation. I think you’re seeing it really across all generations. I’m amazed at how many of the Gen Xers or of the people that have really dominated commercial real estate for a long, long time embrace features on CREXi that I thought would take ten years for them to embrace. Really taking to it in full and not only that, but getting excited about it. Telling us feedback of how much the easier it’s made their life, how many more properties that they’ve been able to transact on because of us. So it’s exciting for us to get that feedback and I really think it does make the world a better place, at least in this space.
18:56 CR: That’s terrific. Let me ask you this. That you are putting out there are a lot of proprietary information, a lot of things that if someone’s not under a confidentiality agreement, I think most owners wouldn’t want out there. So how do you handle the securities of your website and of your process? I have to imagine that you are prone to being hacked. And so what are you doing to make the broker and the building owner feel comfortable that not everything’s gonna be taken out to the market because somebody hacked you?
19:31 MD: That’s a great question, too. I think it’s something that brokers using our site, are cognizant of and like to ask us about. There’s a bunch of stuff you can do from an engineering side, to ensure that we’re up to the highest standards possible. We’re built on the Cloud, we have done a proactive approach to doing pen tests or penetration tests. Where you can basically set up an environment where you allow world-class engineers to go hack away at your website for a month and see where you’re weak and where you can improve to make sure it’s not able to be penetrated. That’s one of many things we’re doing. I’d probably save that for our head of engineering and our world class engineers we have here working on CREXi every day to tell you some of the finer detail, but it’s something that you just constantly have to be top of mind on. And I will say when we did our last what we call pen tests to test how easy it is, or difficult it is to penetrate and take information from us. We passed with flying colors. And they were incredibly impressed by how CREXi’s been built so far.
20:35 MD: So I don’t want to get into the technical details of it all I think it’d be better left for our engineers to tell that story, but I know that we’re really, it’s top of mind for us and we take a very pro-active approach to every feature we build and every little thing happening on the site, every movement, every action taken on the site to make sure that we keep it as high and tight as possible. And then for those brokers that… Or buyers that are a little bit more sensitive about their information, there’s ways to use CREXi more privately or to prevent anybody from accessing information until you approve them. So I think it’s a combination of top-of-the-line engineers being on the… Making sure that it’s a big priority for us, and that we proactively stay on top of it and building features within that let the industry and the person responsible for selling that deal dictate who could see what.
21:25 CR: I see. I think that was a very full explanation. And I think that’s something that you have to get people comfortable with, especially in this day and age, where there are ulterior motives why people would want a rent roll that have nothing to do with the sale and you really gotta make people feel comfortable that that information is protected. I was gonna move this on to similar part of this conversation, but one of the things that I’ve been really pleased with… ’cause I really love technology, but it’s to see how an industry that was so slow to adopt technology. I mean painfully slow, that now with technology like CREXi and VTS would be another one, and there’s a lot of technology out there that people are gravitating towards. I am curious from where you sit, I mean there’s this view that one day we’re gonna be able to trade real estate, like you do a stock on E-TRADE. How far… I guess the first question is, how many of your auctions are really pure auctions, or reserved auctions where when somebody wins they’re expected to close on the deal right away and how many are much more, this is getting to where we are picking a buyer process.
22:46 MD: Yes, we’ve taken about a 150,000 properties to market through CREXi to date. And really only maybe a couple dozen or so have gone through what we may be even deem to be a quasi auction process. We have zero seller bidding. There is no true auction process. We do allow a broker to run, what kind of mimics an auction process and we’ve had a few run them very successfully, more on note sales, actually. So selling the debt behind the property and not the actual property itself, but that’s when they chose to do it, and they ran that transaction on their own and in fact, the best price didn’t always win on those transactions that took place. You did see 50 plus offers go and be made on some of those transactions and it was really exciting to watch, from the dashboard, but it’s the brokers that control that process. There’s no sellar bidding, there’s no counter bidding it’s really the industry just running a more… Maybe public-looking offer process. There’s only been a couple of dozen of the 150,000 on our site and I think that really is a testament to how well we’ve thought out building this.
23:54 MD: There’s way better ways for brokers to the mimic the perfect transaction for them, and to run that transaction on CREXi. And I think it will get online. I think a lot of this stuff will go online. I think there are ways to run transactions, through CREXi that will make you a better broker, that will result a better pricing, will result in a better experience for both the buyers, sellers, and for, especially the brokers. And I think it’s gonna take some time, and I can’t say how long exactly for people to embrace that and the industry to get there, but we have built CREXi to enable that and to be able to do that whenever the industry is ready. We just don’t feel the need to force their hand. I think anybody who tries to force them to do this before they’re ready and does it in a way that doesn’t allow it to be their idea and something that they think is right for them, is gonna hurt themselves. I think there’s a much better way to create the platform for commercial real estate without forcing brokers into doing something that’s out of their comfort zone, or buyers to do something that’s out of their comfort zone because frankly that doesn’t help the property and the property transacting that just hurts it and I think the goal of CREXi especially, is to help every transaction or every deal that goes through our site.
25:02 MD: Whether that be on the sales side, or now, as of yesterday on the leasing side.
25:07 CR: That was a good segue, I was gonna get back to the CREXi leasing platform. So why don’t you spend a few minutes and tell us all what that platform is?
25:18 MD: Yeah, it’s really similar to the sales side, just built for leasing. It’s a somewhat new world for me. As you mentioned, my background is more in the transacting of commercial real estate, but we have a lot of big brokered shops and offices that do both sale and leasing, and love our features and want to embrace CREXi more. But for them to really be able to do that, they needed a place to put their leases, the deals that they’re trying to lease and so we built a very similar kind of A to Z platform, but just leasing focused where you can show off floor plans and which suites are available on properties, and there’s activity feeds that tell you who’s opened your floor plan for which suites and who’s interested and how many times they’ve looked and who they are, and you can easily communicate back and forth with them. It’s a modern age, new age way of running your leases and for tenents to find space.
26:14 CR: Is this something that should be white labeled? So if I’ve got a building downtown, say the trust building and I wanna have a portal that allows interaction with brokers, is that something that could be white labeled is that kind of where it goes or is it more of a… You’re lost in a mix of all the leasing opportunities in one market.
26:37 MD: It could be both. We offer the ability on both the sale and the lease side, to white label our software and power up brokers website and give them this functionality built within their own unique domain or it will run on the open marketplace on CREXi so you can go and see everything available. So, we do offer white label features, but I think this is the opportunity for people to really move their business into one place now gives them not only the ability to sell their deals that they’re selling or looking to buy, but after they buy a property and need to lease it, it’s a place for them to be able to do that as well.
27:10 CR: So I was just tweeting yesterday with Brendan Wallace of Fifth Wall Ventures, the discussion back and forth was about mobile really dominating. In my view, I think keyboards and PCs are gonna go the way of the buggy whip over the next five or seven years, and that we’re living in a more mobile world. How does your platform work? Mobile verse PC-based.
27:39 MD: That’s a great question, so about 50 % of our activity on CREXi is through mobile, something that is growing since we’ve launched the platform. We took the approach candidly, that we wanted to make sure it looks and feels like an app, when you’re on your phone, or when you’re on your iPad, or whatever device you’re on, so you can get the full functionality of it, and it’s really easy to use. With that said, we don’t have stand-alone apps yet in the App Store. I believe that if it looks like an app, feels like an app, does everything you need it to do just by going to CREXi.com on your phone, that that gets us a really long way. I think there are certain parts of what CREXi offers that are just easier to use while you’re behind a big screen. I can open up that whole world and really dig in. So I think that’s gonna take a little time for the industry, really to get off of a computer and off of a big monitor. But I think we definitely always make sure that every feature we build has the way to replicate it onto your phone that just makes it seamless and intuitive and easy to use, and easy to navigate because it is a huge part of how people use our site right now.
28:48 CR: Well, that’s interesting. I still don’t think we’re there yet, but I think that’s where we’re headed. But we’ve just spent the last 25 minutes talking heavy on tech here. Your company’s based in Marina Del Rey, Venice area, so you’re right in the heart of Silicon Beach. We’ve had a long discussion about the ins and outs of the technology, so I think everybody, all of our listeners probably just assume we’re talking to someone who’s got a Computer Science degree from a major university. Let’s talk a little bit about you, what’s your background? Is it computer science-based or are you from Southern California? Tell us a little bit about yourself.
29:31 MD: Yeah. So I spent most of my life in Chicago. I’m a business major, a marketing major, of all things. Went to a great school, Northern Illinois University, which I like to say proudly. Maybe not the typical school you hear a commercial real estate person or someone in the tech space, say that they’re from, but Huskie pride, we like to say, it really teaches you, one it’s a fantastic business school. And they had a sales program there that I actually focused on through my marketing degree and it really was world class. And one thing I can say is that no matter what you do in business, you’re constantly selling whether that’s selling the software you build, selling a model you built on the finance team, selling to capital partners, or people that can come and invest so that we can grow our company or selling world class talent to come and join your team so that you can create the company that you wanna become and you wanna be. Everything you’re doing is selling, for the raise, or for your promotion. It constantly is, maybe something that hasn’t always been looked at the most positive light, but really something that you need to be good at and need to learn how to do.
30:40 MD: So, I am a very proud Huskie. Most of my life in Chicago, grew up kind of moving around quite a bit, which I think also teaches you some lessons about business and about life and about people and about culture which all become very important things as you decide to take on the world of an unknown and to try to start a company from scratch. So that’s a little bit about my background.
31:03 CR: Well, how did you get from Chicago to Southern California?
31:09 MD: Yeah, so my parents moved out to San Diego and I was taking the slow approach of going to school and kind of decided to grow up and focus on life and when I finally did get through school and graduated, I wanted to come out and join my parents here in California. Heard beautiful things, had been here a few times, but heard it’s a beautiful place to live, so moved out here, and was fortunate to be able to get the opportunity at Auction.com when they were still on their second, or third ever commercial option, and kind of took it off from there.
31:43 CR: And you were there for… At Auction.com for about four years. And what was the driver? I’m always interested having done a start-up myself. What was the driver to get you to say, let’s… We can do this better or, we can do this on our own. And how did you start out when you started your business?
32:05 MD: Yes, I started with kind of getting pushed by a mentor who I respect immensely. Fernando De Leon, who runs a massive commercial real estate private equity group in Dallas. I really respected him, and he was kind enough to say, “Mike I kind of wanna take a bet on you.” And we started talking about the world and to me it was seeing that experience at Auction.com and being able to live through that and see hundreds of transactions and be really involved in hundreds of transactions in this massive industry, that really felt like it was begging for a better way. You saw a lot of successful companies taking some kind of tech approach in trying to bring it into commercial real estate, but being from the millennial generation, even though I’ll say we at CREXi deem ourselves kind of the anti millennials millennials. If I could say that…
33:00 CR: You don’t wear a suit and tie do you?
33:03 MD: What’s that?
33:03 CR: You don’t wear a suit and tie to work do you?
33:05 MD: No.
33:05 MD: I’m in a hat, a t-shirt and jeans.
33:07 CR: Okay. So you’re still a little millennial?
33:09 MD: We’ll do that to go to our client’s office, we try to dress appropriate for that, but we just looked at all the stuff that we use, whether that’s social media or Amazon or Slack, we take inspiration from all these other platforms that we felt… Where there were components built within that you could easily move over and make similar features for a space that was in desperate need of it, and really it was the frustrating view of, “You have all these brilliant people in commercial real estate and great business minds of people that are so good at what they’re doing.
33:41 MD: And even though you have that on the buy side, the sell side, and a broker in the middle it was still so hard to get stuff done and we just thought… Man, there’s a better way to do this, and you looked at all the different platforms that we would use to underwrite the properties, we took to auction. Auction.com itself and then look at the space… A space as a whole… And we just really felt like no one was approaching it the right way, nobody was really listening to what the industry wanted and the industry was there and telling us what they wanted and why they wanted it and we wanted to listen, and we wanted to take a big swing. I think life events happen and things happen in your life, where you realize life is short and you… I always thought to myself, I’m gonna really regret this, if I don’t go take a swing at this myself. It would eat at me forever if I watched somebody else go do this when you had a good sense that there’s just this way, it should be done and a way you could do it better. So, believing in yourself and wanting to embrace that challenge.
34:39 MD: You wanted to go see what you could do and having a lot of ambition is kind of what led to going to do it.
34:45 CR: And how big was the team that either left Auction.com or when you first really said, “Okay we’re CREXi now” or… How big was that team? Who was it?
34:56 MD: It was really just me and then a good friend of mine from college joined to help me kinda get started and became a co-founder of CREXi really out the gate. But it’s only just you for an hour and then you start thinking of all the different things you need to be able to make this happen. And that quickly turns into getting that first person to come join you on this mission and then who can you get second? And who could fill this role for us? And how can I meet someone that could fill this role for us? So it stays you for a very short time, and then it becomes two and then three and then 10 and now 70. And that happens very quickly and kind of as a ever-changing evolution and growth as you go. But yeah, it was me and a friend of mine who I’d known from college who was very entrepreneurial spirited when I had that former client Fernando kind of pushed me to go set out on my own. He was the first person I called, his name is Erek, he’s been an incredible partner in this, the whole way with me. And it really takes that. It takes gritty, hungry, smart people that are willing to learn, to grow to make this happen.
36:00 MD: And one thing, I’ve been very fortunate in is that I’ve been able to bring really high integrity, hard working people to come join me on this ride. And we were after something massive. And we have a long way to go still, we like to take the, we still call it aiming one. Amazon says every day is day one. We very much try to take that approach every day and try to get better every day, and we feel like if we do that we’ll end up in a really good spot.
36:26 CR: Well, one of the things I think is interesting just coming out of this discussion we’re having right now is that you are a tech company. Founded not by a computer scientist or computer or an engineer. So you came at it from a very business point of view, but your technology is really excellent. I encourage everybody to go to the website. So how did you bring in that piece where did you find the people who could take the vision that you had and turn that into the ones and zeros creating something that is really an easy platform for people to use that continues to improve on a daily basis?
37:04 MD: That’s a great question. So as Erek and I set out on this journey, the first obvious missing gap here was a true technologist someone with a really good background, building great software. And fortunately, I had a good friend of mine who was in the middle of selling a tech company that he had started here in LA who was really gung-ho about me going and trying to do this, who was kind enough to help us with early intros to VCs and also help us get introduced to someone who I respect a ton and who is now a dear friend and to help start the company who is a world class technologist, and had just sold his company to Apple and had a team of engineers who were hungry and looking for that next big win, and wanted to kind of assemble… Looking to put the team back together and the group back together he quickly was able to put that team back together for us and the first few conversations were interesting. Me, a marketing, sales, commercial real estate guy trying to relay that this massive need for this platform to some brilliant computer scientists who were used to building tools for software developers is what they did before.
38:17 MD: So those first few conversations were really interesting, but really got on the same page quickly. Everybody was willing to come and do this for massive discounts for what they would otherwise cost and really believe in the vision together. So yeah, one of our co-founders who is our CTO, Ben Widhelm, was a great partner in this. And I know we started assembling it piece by piece. I feel bad now that I’ve name dropped a couple of the people that helped us get here and I’m gonna miss a lot of people who we wouldn’t be here without. There’s only so much time to name them all but Ben was a very big part of this and assembled a world-class engineering team for us very, very quickly.
38:53 CR: I think that’s one of the keys just, the time I’ve spent on your website, is that it’s very natural from someone who thinks about how you do a sales process, how you buy real estate and that’s not always easy to do. There’s a funny saying I heard the other day that the optimist sees the glass half-full, the pessimist says it’s half empty and the engineer sits there and tries to figure out why they built the wrong-sized glass. And I think when you’re trying to bring engineers and computer scientists into an industry that is kind of slow moving, as I said earlier, as real estate, I think that what I see is a big difference in your product is its ease of use and getting an engineering team to be on the same page with things being easy to use, sometimes can be a challenge. So I high five you on being able to do that. What do you see as your team grows, how big is your team now?
39:49 MD: So right now it’s 70 people fully dedicated to CREXi. This is a team we feel really good about. We’re obviously adding pieces and there’s a lot of needs. You’re always trying to do more with less people and you’re trying to go compete with companies that have a lot more resources than you do, and a lot more years at the game than we do. So I see it as always mind full of bringing on talented, hungry people that want to come and join the mission of building this platform into what we want it to become. So steadily and slowly growing the team with really smart decisions on who we bring on, and a really careful process of how we go about finding them, and figuring out if they’re the right fit… And then bringing them on, and I definitely think there’s gonna be a ton a growth over the next few years, hard to say what the exact numbers will look like, but if we continue growing at the pace we are, from a revenue side, from a traction side, from how much the industry has taken to this and likes to use this perspective, the team is gonna definitely grow along with it.
40:57 MD: We don’t want to lose that start up mentality, I think, and we’re still very much this way, but there’s something special about the small team working on a project that’s really big and doing everything they can and working 15 hours a day. And even early on when we were working out of a house in Venice, I still remember nights, we all stayed the night there drinking beers late, working away trying to figure out how we can change the world and what we need to do to make this thing go and not losing that. Obviously, you can’t keep it the same exact way forever, but you really can’t lose that DNA. And so, team will definitely grow. It’s hard to say how big, but we’re excited about it, and we’re excited about the team we have here today.
41:41 CR: Is everybody on site, or do you do some of your engineering and programming off-shore?
41:48 MD: Yeah. So 20 of those 70 are off shore, I wanna say 18 of them have been with us for a couple years now, we still have four of them from very, very early days, and they were part of that same group who I just mentioned a little bit ago that was part of the company that sold to Apple So they had all worked with our onshore team. And it kinda keeps us going in these 24 hour death cycles. They come visit us from off-shore here and stay with us for a few weeks and they’re very much part of the team. But 20 of those 70 are offshore.
42:23 CR: Are they in Israel, or are they in Eastern Europe?
42:28 MD: Eastern Europe.
42:28 CR: Interesting. So how do you maintain communication? Do you use… You mentioned Slack, I don’t know if you’re big Slack users. Do you use any project management software? Are you more email-based? What do you do to have an efficient communication structure for your company?
42:45 MD: Yes, that’s a great question… We use Slack to communicate with the off-shore team with the team here. We use JIRA to manage all of our sprints and our new product releases every two weeks and all the tickets and new stuff we’re working on. And then from a tracking side from our data team that uses our data to make better decisions with what we build and how we adjust features, we use mixpanel and we use Google Analytics and we use Geckoboard that we have all across the office that shows all the main KPIs and things that we want to see grow every day, and where those stand day-by-day. I’m missing a ton. But then we HubSpot to manage a lot of the marketing process, obviously, Salesforce to make the sales team more efficient and make them constantly get better and better at what they do. We use a mixture of a ton of different technology. OptimizeLead to test features, and to see which feature gets the best response from our users. We really do use a full suite, full stack of different platforms out there to make sure we’re constantly building the right stuff at the right time, and being the most effective team we can be.
43:56 CR: Yeah.
43:57 MD: I think that’s part of how you could be a team of 10 or now 50-70 that can go quickly compete with teams of 1,000 2,000 people is you gotta, not only work harder, but work smarter.
44:10 CR: And just kind of an aside, on the Slack, I talk about it on this podcast with a lot of different people. Do you find that that content stream that Slack produces to be difficult to keep up with or do you feel like you’d rather just if there are notifications happening in three or four different mediums you’d rather just know about them through Slack?
44:31 MD: That’s a great question. So, candidly speaking, I’m a little bit of an old soul, even though I run a Tech company and I work in the world of tech. So for me a lot of our investors and a lot of the industry obviously is still on email, so it was tough to get me fully embraced and over to Slack. But I’ve found that it’s been an incredible tool for us as a company to stay on top of every facet of the business, even as far down as performance management. It links into our performance management systems that we use here internally to make the team constantly better with how they’re performing. So Slack has been an incredible tool. One, we draw a lot of inspiration from and use parts of stuff we like and even Slack to build into CREXi. But it’s one of many… And obviously it’s a little bit tough especially in my seat, give that my world lives in a few different places, but for internal communication and for getting different groups working together on little research and development projects or side projects that we’re working on, it really is a great place for that world to be able to communicate, to be able to share information, share documents, share thoughts and for people to chime in when needed.
45:48 MD: But I’ve learned to embrace all these and it’s made us a better company, and I hope that happens with CREXi as we make a bigger impact on the industry that slowly, we get the industry to embrace it more and more and that that’ll allow for a more efficient industry and a better industry.
46:03 CR: Well, that’s true. How do you… You know you’re married, you have a young baby girl, how do you get that setting on Slack off so you can take some time off and live a life while you’re growing to this company.
46:17 MD: I’ve probably got to do better at that, candidly speaking, something that my coaches that I work with try to make me more aware of… And thankfully, I have a very understanding better half in life and our little girl’s three months old and so we’re having fun there too. But the world is like you said, pretty mobile. So I’m 24/7, able to be gotten ahold of. And I’m making a more conscience effort to try to check out for little blocks or periods here and there. Make sure we get away. And I think as more people have gotten in place and as the company’s grown, sometimes that’s easier to do, and sometimes that’s actually harder to do, but it’s just something I gotta constantly remind myself of how important it is and I really find that when I do that, when I get back, I’m that much more effective of a leader, as a teammate and colleague. And everything in my life that I’m trying to balance so it’s just something you really gotta make sure you don’t lose sight of and don’t forget about.
47:15 CR: I agree with you and it’s a constant challenge. So as we’re getting near the end here. There’s something that seems kind of obvious to me that I haven’t raised up yet to you, but I wanna ask it in this way. You’re building a system that really believes in transparency, really believes that having information available and easily available makes for a better sales process and a higher price for sellers, more efficient process for brokers. Where does the Blockchain, which seems to me like it would be a natural fit into what you’re doing, where does that play into your strategy going forward?
47:56 MD: Another great question. So it’s something we talk about from time to time here, and really, when we think about something like Blockchain or a major new feature that takes on a new piece of the transaction or a new piece of the puzzle that we wanna go explore, we’re very mindful of doing it in a very MVP fashion. So, maybe putting a person or two responsible for it, working as a little start-up within CREXi and going and exploring it and then figuring out how we want to implement it. My response to that, and we could be listening to this podcast or I could reflect back on it in a year and be made to look like a pretty big idiot on this one. But I still feel like the industry is so behind with some of the obvious technology that it puts Blockchain just a few more years even behind that.
48:42 MD: So I believe it is gonna be something that is incorporated into what we’re doing some time within the next three years. It’s absolutely on our road map, we have one of our other co-founders who runs product and has done a phenomenal job getting us this far, Luke Morris exploring that part of the business for us right now. And he’s done a lot of research and talking to some experts in the field and I do believe that there is a place for Blockchain down the road. But just like the industry is 20 years behind, Blockchain hasn’t quite fully caught on yet in a lot of other arenas and I think just like everything else, commercial real estate will be a few years behind everybody else. So I feel like it’s something that we always need to be mindful of what’s ahead, but not lose sight on where we are now. What’s most important and relevant for us now.
49:27 CR: Well, I think that’s a great way to think about it. I often talk about there’s just some fundamental steps that have to happen before we can get to a Blockchain underlying base to what we do. But I’ll also tell you, I see new technology every day, and what’s happening in terms of Smart Contracts and how we’re digitizing… Everybody, I think, thinks of the world as a Microsoft Word document and thinks well that’s never gonna change. And lately I’ve been seeing some technology that tells me we’re not that far away from having true digital Smart Contracts that would enhance the ability to use Blockchain. But I also say that I think you’ll see real estate at the back of the line in making that transition. It’s gonna be other industries that lead. I just think that’s just the nature of the terra firma of the real estate, of the physicality of the real estate that as much as we would like it to trade, like a stock on E-TRADE it isn’t, and it’s a place and so people wanna have a physical connection to what they’re selling and what they’re buying. So well, this has been a wonderful conversation. I do wanna leave you with one question and see if you can kind of point us where you… Where do you see CREXi heading over the next 12 to 24 months as a company, but really, as a company within the real estate industry, what are your plans?
50:57 MD: Obviously, we have a lot of work to do in scaling our leasing platform. I like to laugh about this, but we launched CREXi, the sales side of it with four properties for sale and about 50 users. So we just launched CREXi Leasing yesterday with about 13,000 spaces available and about 3,000 users, which took us a year to hit those numbers on the sales side. So, I want to become the dominant place for not only buying and selling commercial real estate, but for renting office space, a little retail space, industrial space and for getting your leasing out there to the industry or to the world, potential tenants. So I really wanna scale that I’d like to be the marketplace for both buying and selling and for leasing. We have some really interesting ways to start sharing some of our data on properties and on markets and on comps back to the industry in a very fair way. So we’re working on something pretty special there. I think that will be a very big move for us. I think the industry is asking for it, and our users are asking for it. And we get to see into these transactions and into this process a little bit uniquely versus all the other platforms out there, so I think it’s gonna be some data that the industry will really be excited about and that we’ll be able to do a good job getting back into their hands.
52:18 MD: And then in a few years out, I really want this to be the place people think of first. Whether that’s to go buy a property, to go see what their property’s worth, to go research a market, to go find a space when they’re looking to expand their business, to go make an investment or to be the best broker in the world. The first place they think of, the first place they go to with really easy to use, intuitive tools that make whatever they’re looking to do, maybe [52:42] ____ lending on a property or crowd funding components. I really wanna incorporate it all in a place that doesn’t feel like it’s for all, it’s just for you. And I think we’re headed that direction, and we got a lot of work to go. Always keeping that winning day one attitude about ourselves, and checking our egos at the door and really listening to the industry, and making this something for them. But I wanna be that go-to place. I wanna be the leading commercial real estate tech, platform in the world. I wanna really make a difference and make this just a better experience for everybody.
53:13 MD: So big goals, but we’re excited about that.
53:15 CR: Well, that’s terrific. I’m excited to watch as it happens over the next few years. Mike, one thing, why don’t you tell our audience, are you on Twitter, is CREXi on Twitter, what’s your Twitter handle or any other social media?
53:29 MD: Yeah, so @CREXi is our Twitter handle. We are starting to integrate into Instagram and Facebook and building more of a presence on both. Big on LinkedIn. Check us out on all of the above. And we are gonna make sure we have a lot of good content for you more and more as we go.
53:49 CR: That’s terrific. Well, I’m excited to get the transcript put up with this podcast, ’cause I think we covered so much. I wanna be going through and highlighting it and thinking about a lot of the things we talked about, but Mike, thanks for doing the podcast, I really appreciate it. I’ll be keeping up with you, so we can watch CREXi as it grows. Thanks so much.
54:08 S21: Thank you so much Chris.
54:09 CR: Alright thanks.
54:10 CR: Thanks Mike, that was a wonderful conversation. I appreciate your candor about it and being honest about the platform. Well, for all our listeners, I’d appreciate it if you went and subscribed to the podcast, you can do that on iTunes or you can go to the other podcasting platforms, or you can go to our website, chrisrising.com and subscribe and please don’t forget to follow me on Twitter, @ChrisRising. Thanks so much.
