The Real Market With Chris Rising – Ep. 6 Nick Romito
The Real Market With Chris Rising – Ep. 6 Nick Romito
00:49 CR: Today I’m talking to Nick Romito, co-founder and CEO of VTS. And for those who aren’t aware, VTS is a fast growing software that is really coming to dominate the ownership and the brokerage world in terms of software. I’ve known Nick for… Since 2012, probably a little bit before when he was a broker, he was on the landlord side and had a vision for how space could be marketed better, and that idea has grown into a major technology company. I’m really excited to share with everybody how technology is changing our business, and I think you’ll learn a lot from how they use technology themselves using Slack and other platforms, but really how their platform, VTS, makes the broker’s life easier and allows reporting in a way that is simple and easy, and no longer requires an Excel spreadsheet. So I think you’ll enjoy the podcast, it was a great conversation.
01:56 CR: Welcome to the real market with Chris Rising. I’m pleased to have my friend Nick Romito, the co-founder and CEO of VTS. And for those who don’t know, VTS used to be View The Space, but has evolved into a major player in technology for real estate. It’s a tool that Rising Realty Partners uses for all of its property and requires the brokers that we work with to use VTS. So I’m really excited to have Nick on the podcast. This is our first discussion on The Real Market that goes not with a broker or an architect, but goes towards the technology. So Nick, thanks for being on the podcast.
02:37 Nick Romito: My pleasure Chris, thanks for having me.
02:38 CR: Well could you give… I gave probably a very poor description of what VTS is. Could you give a more of your pitch on what it is, to our audience who are not brokers or not investors who don’t understand it? Maybe tell us a little bit about it.
02:54 NR: Sure, so think about VTS as your central operating system if you’re an owner, or a broker. So it’s the one place where you can go and see every single deal your teams are working on, whether those are outside brokers negotiating those or internal folks. When I say deal, I mean leasing, but also understands the performance or health of all your assets. So from your rent roll, and how that’s performing versus market, to the health of your tenants through a tenant relationship management portal where you can actually update each tenant with… Or your team about your tenants as to how happy they are across the portfolio, what they’re paying you. So it’s really a one stop shop for a view into your portfolio that you’ve probably never had before.
03:40 CR: That’s terrific. I wrote a blog post recently about the technology we use, and one of the points I made was that our team just cannot live in an email world. An email world is a to-do list for somebody else. And there’s no accountability and there’s no tracking. What I love about VTS, and what we’ve now done with people we do business with, we have moved all of the discussion from the first tour to the… And how the tour went to the proposals, to the lease, to VTS. But your product didn’t start that way. It is a tremendous product for us, but maybe you could go back to when you were thinking about what you were gonna do that was entrepreneurial and different. How did VTS begin, where were you in your career, and maybe tell the audience a little bit about yourself that lead you into forming this company?
04:33 NR: Yeah, yeah absolutely. So I started out as a broker, a commercial real estate broker here in New York City, working for a firm called Murray Hill Properties. So we were an owner and we had a kinda brokerage arm. We owned about 8 million square feet at the time. So I got to work on the tenant rep side a little bit, and then also managed some of our own properties, but also raised money for our fund. So I get to get my feet wet in lots of areas, but I really enjoyed the brokerage part of the business. So managing assets, trying to find creative ways to bring tenant rep brokers, and tenants to the building, and realize that the only kinda platform that I had was CoStar. Which really from a… The way that we kind of think about VTS today, holistically is it’s really kind of your revenue funnel.
05:18 NR: Leasing, you can interchange the word leasing for revenue pretty easily and think about the components of revenue. You’ve got the top of the funnel, so VTS is here to help you attract tenant rep brokers and tenants. The middle of the funnel, which is convert, so how do we help you convert those into actual deals? And then the bottom of the funnel is retain, so how do we keep those tenants happy and hopefully grow them? And that’s how we break up our actual product and our product teams every day.
05:45 NR: The original idea for VTS was the very, very top of that funnel, which was attract. And at the time, so I was a broker for four years, been an asset manager for almost five, I realized that there was no interesting way whatsoever to get somebody excited to come to my building. If you went onto CoStar, or any other listing site, you were lucky to see a floor plan, let alone a decent picture or a video. And that drove me crazy. I would never go see an apartment without seeing a really good photo or more. But for some reason our market was okay with less than mediocrity.
06:21 NR: So we thought, what’s the best way to get a tenant rep broker, and subsequently their tenant, to a building where when they actually visited the property, they felt they were actually there for the second time? And we said, “Well, video’s gotta be the way to do it.” At that time, online video technology was kind of just really hitting it’s stride. It wasn’t super popular yet. Streaming video was becoming a thing, the technology was growing really rapidly. We weren’t concerned on that part of it. Part that was hard was finding a way to shoot office space that didn’t feel like it was The Blair Witch Project.
06:58 NR: Where it was like an experience where the C-suite of any big company, or any big potential owner, would feel okay, sending that to any prospect. So it took us about a year to figure it out, and we used equipment they use in Hollywood called Steadicam to do it. Which each one of them costs about $50,000 and you need someone who’s an expert in Steadicam to actually do it. It was a huge ordeal for us to figure that out. But we did and we figured out a way to actually scale it. And we were able to deliver a product where, whether you were a tenant in Russia touring a piece of space from your phone that was in New York City, or you were somewhere else in the US and just didn’t feel like leaving your desk ’cause it was snowing outside. You could actually see a piece of space and feel like you had a real grasp of would it work for you or not, without actually seeing it in person. And when you did go to see it, you were already a qualified lead to that landlord or broker.
07:52 NR: That was our really kinda top of the funnel product. And the goal was never to build a video platform. It was just if we wanna build a platform where this entire deal process happens in VTS, you’ve gotta start somewhere and we wanted to start from a place where it was considered kind of low tech. You didn’t need to be super technical to use the product, you just had to hit play, but we can prove without doubt to our customers, the landlords that we’re actually providing real value. Just by setting this thing out, I can show you very basic analytics as to how many folks actually watched it, and then came and saw your building. It was their first time really seeing a true ROI on any kind of marketing or technology spend, so it just kinda opened the door for us.
08:39 NR: And if you think about what we did after that, it was pretty easy. It was, okay, well great. You sent them that video. They came to see the building and tour. We would ask them, “Where did you track, who toured and when?” And they’d said, “We tracked that in this other spreadsheet called an activity report.” And clearly we knew that because we did it for a living. We said, “That’s crazy, why don’t you store that same information here?” And then a few months later we’d say, “Okay, well, so now they’ve sent you an offer. Where are you actually sending or where are you inputting the proposal they sent you?” They said, “Well, that goes in his other activity report.” “Well that’s crazy. Store, all that stuff here.” We could have just kept leading them to water until they realized that the most efficient thing to do was to have a living breathing platform that we all relied on, that was real time and up-to-date, to do our work. So it’s part of what…
09:24 CR: Now I assume that’s because… I assume that’s all evolved because you were a computer science major or some sort of engineer. Right? Or how do you go from, “Hey I wanna make great movies of space,” to a really living breathing technology company?
09:42 NR: Yeah, I’m lucky enough to have co-founders who are super technical. My original co-founder Ryan and I were both obviously real estate folks. He was at JLL for a long time, and I was on the ownership side. And then we found our third co-founder who is our CTO who had been building software for 20 years. He was able to take all the things in our head and make them a reality, and then hire an unbelievable team underneath him to help do more of that. And then obviously, I’m sure we’ll talk about this later, but we merged with one of our competitors who had just, again, a plethora of really strong technical background. And so you put all that stuff together and you’ve got a pretty unbelievable company.
10:20 CR: Yeah, I do wanna talk about that merger, before we get to it though at what point did you go, “Brokerage isn’t gonna be what I do for the rest of my life. I’ve gotta jump off the deep end.”? How old were you when you did that, and how scary or challenging? What was that thought as you jumped off that diving board?
10:42 NR: Yeah, I think I’ve always been pretty okay with risk. I think if you’re gonna go into brokerage… And I was one of those guys who never even had a draw as a broker, I just felt like I could make money. And so I was never afraid to take any risks. It was kind of a funny story. Ryan and I were actually at the time, our wives [11:02] ____ or our girlfriends, we were gonna take them on a vacation. And he called me and said, “Hey I have an idea,” and I said, “I have an idea for you too.” We’ve been best friends since we were nine years old, so the brain waves are pretty similar a lot of the times. And so ends up we both had a pretty similar idea that we wanted to build a technology company. At the time, I was 20 maybe eight. I’m 35 so when I first had the idea, 27… 28. And so we took our girlfriends to Europe, and more or less spent the entire time drawing in the sand, what our perfect technology platform would do. And so I gave it probably eight months of planning and trying to actually build a prototype. Maybe, it was like 10 or 11 months in, I had like a… I guess you’d call it a working prototype. It was really just a PowerPoint presentation that you could click on, [chuckle] and a friend of mine from CBRE was like, “Hey, you should really show the folks at SL Green this.” And they’re the largest owner in New York City.
12:03 NR: And I said, “I don’t know if we’re ready for someone like that, but I’m sure they’ll think it’s cool, but never wanna use it.” So I had lunch with them and that afternoon they said, “Hey, we wanna roll it out.” And it was kind of an ‘oh shit’ moment where you’re like, “Oh my God!” Well, one, the largest owner in New York City just said they wanna use this product. Two, it’s barely a real product. But three, it’s probably also the most exiting thing ’cause you just got the best market validator ever. Which is like, “Wow, this idea has a lot more than legs, so let’s go to work.”
12:34 NR: So I quit my job full time, probably two months later. I had closed my last commission check, which was enough to buy my wife an engagement ring and give me probably a few short months of rent and food, which it ended up not being even nearly enough money so I did have to borrow some food and some money from Ryan and his wife. But that’s always a part of the story. And we just went to work. I spent a good year and a half going door to door, knocking on owner’s door saying, “I have this idea, you gotta see it, it’ll change your portfolio, and the way your team performs and vacancy downtime.” And enough people listened. And I’m really lucky enough to have the New York City office market. People are really receptive to new ideas and they try to push the pace and it’s such a competitive market where people know if I do things even a little bit different, it’s gonna really impact my performance. So they were pretty open to supporting me and the company really early on, which was awesome.
13:33 CR: So you all started a company, you went around saying, “Look, we can do some great videos, we’ll put it on the website. And this will really help you.” I would say that where you are today is such a big leap from that. How did it come to you that, “Well, I can go raise some money. And this idea has legs to it and we can raise some money.” And evolving to what it is today, ’cause I still… I remember meeting probably 2011 or 2012, I met… You had someone out here, and I was really engaged to the video side of things. And then I heard from you about a year or two later, I’m like, “Well, now this is a product.” The video was cool, but now they’re making my life easier. I can get off Excel spreadsheets and I can hold brokers accountable in a way. I can comment, “Oh, that tour didn’t sound like it went so well, and blah, blah.” So what was that transition?
14:31 NR: Yeah. So we thought about really bringing the deal process onto one platform. The most obvious thing to disrupt, and that was always the question from everyone, was like, “Who are you disrupting? Is the broker getting disrupted? Are you… ” We’re like, “No, that’s our core user. What’s getting disrupted are Excel spreadsheets.” Are these… You ask any broker, what is the worst… Even, and by the way any owner. So it’s kinda two-fold. For the brokers, the worst part about their job is spending five hours a week filling out spreadsheets that are out of date the minute they fill it in, because they’re trying to remember what happened on Monday and now it’s Friday. So that’s the worst part about their job. The worst part for an owner is having zero visibility into what’s happening in real time. You’re essentially outsourcing your revenue management, but you have no lens into how it’s being impacted.
15:25 NR: So it was kind of this problem that we felt if we can disrupt spreadsheets and make all this stuff happen in real time, so that the broker was, one, way more efficient. So we’re weaponizing him with information where, from his phone, he can be on a tour, alert ownership as to what just happened, their feedback. But also pull up the stacking plan on his phone and figure out, “Okay, well, maybe this floor doesn’t work for you, but I can make two deals upstairs happen in six months.” That didn’t exist before us. So we just felt like this obvious opportunity to start with one data set and then grow it to really weaponize the broker with just information that he has access to today that’s living in spreadsheets.
16:02 CR: And I think that makes a lot of sense.
16:03 NR: I think that it looked like a low tech use case that just, I think, helped everybody tremendously.
16:10 CR: I think it makes a lot of sense, and I would also say, now, you can very clearly say you’re disrupting email. Because when we interact with brokers, I’ll send one of our brokers, at JLL, send her everything that used to take email back and forth I can do within a few minutes within the whole app. And then there’s a log of it all. And so whether it’s discussion about ideas or instructions on to do something, it’s all living right there and everybody can see it. So I certainly see where this spreadsheet has been disruptive, but I also think you gotta take credit for making my inbox a lot lighter.
16:45 NR: Yeah. I love that.
16:47 CR: Well. So as you all grew, when did you go from, “Hey, this is gonna work really well in New York, but we gotta get out to the West Coast so we gotta get to Chicago.” How did the growth happen outside of New York?
17:01 NR: Yeah. So the minute we started to launch called phase two of the platform, which is really what we are today. Which is this full blown leasing and asset management platform. We noticed that a lot of the customers were signing up in New York, who were really our beta customers, had a pretty big footprint. And for them the asset level visibility was interesting, but they really wanted a portfolio management tool. It was, if I’m the CEO, I wanna be able to log into this thing, look at a region and not just see each individual building in that region, but how is that region as a whole performing, which made total sense to us. So it was really starting to work with more of the national and international owners in New York where we realized that, “Okay, this is not a local platform. The way that people run their businesses isn’t just one asset at a time.” It is for those specific asset managers, but his or her boss wants to see a much more holistic view and you’ve gotta give it to them. So for us, we wanted to put a flag on the West Coast pretty early so we went to both SF and LA, I think in like 2012 or ’13. I think 2012, myself and Ryan started just taking trips out there to get feedback and then either later in 2012, I think we put someone one the ground full time in LA.
18:17 CR: Yeah. My recollection is that growth happened pretty quickly. I mean, I think, in a place like Los Angeles people were very receptive to more of a movie television experience for looking at space. But at the same time you’re trying to get new people to come in and sign up for what was the video side. How did you start raising money around the technology? What I’m trying to get at is there was a pivot point for you all, in my opinion in watching you, where you went from a great idea about videos to, “Hey, we’re gonna be a big time technology company.” You said on the beach you were thinking about it as a technology but from the outside it felt like a great idea about videos and then I opened my eyes another day, I’m like, “Wow, this is a real tech company.” How did you start going out into the fundraising market to get people to back you as a founder of a tech company?
19:09 NR: Yes. So that was always the plan. We didn’t wanna divulge too much ’cause it’s really easy to scare a market about technology when they don’t really use any. So, we were always careful about how we talked about it. And when it was time to raise money, we knew that we had to raise money on the larger idea, most VCs… When you look at this market size, it’s a huge component of, “Do I wanna invest in this company?” And while the kind of… Just the straight marketing component of what we’re doing was really interesting. Becoming the industry’s kinda standardized, whether you wanna call it CRM or deal management platform, was definitely the more valuable or enterprise value that they saw. We went out with that story. We definitely didn’t go out with, “Hey, you should invest in this video platform.” It was, “Here’s what we’re doing today but this is where this thing goes now. Not next year but this year.”
20:08 NR: And so our first customer on that product, which is an interesting story, we mapped it all out and said, “Hey, this is what we’re doing.” We went up to Boston Properties, who’s just been an amazing customer for us for a very long time, and the leasing team there in Boston is probably one of the best I’ve seen in the country. And they said, “Listen. We believe in this thing so much. We will sign a contract now. Without it even being built. That’s how much we believe in the actual platform and the vision you guys have. And we’ll put dates in that contract, if you hit those dates, we’ll pay it and we’ll roll… We’ll be the first ones to roll it out.” We had that kind of support from the biggest REITs in the world. So, as an investor, you’re going, “Holy shit.” These “kids” started with a product that was super easy to use, got the market’s attention and now they’ve got the biggest players in the world signing contracts without a built contract. So, the kind of signals to them at that point are massive that, “Okay, they clearly know the space but in terms of product market fit it’s already there.” I think it was a… Not an easy sell, ’cause it never is but we got them comfortable pretty easily.
21:14 CR: So, was it just a vertical climb or did you have dips or did you have some times when you’re like going, “Oh my god, what did I do?”?
21:22 NR: No, no. I think it’s definitely a vertical climb. I think it’s just… There are a lot of nuances to what we do, right? And again, we’re now almost seven years into this and we’ve got $107 million into the product and we’re still not done. So, while I consider real estate a kind of meat and potatoes business, there’s so much nuance and complexity into like how you can structure a deal or a lease and how you wanna manage that process. And so we want our platform to be as flexible as possible. And so you can solve for 99% of those but we want it to be 100%. We’re still working through small iterations and additions to it. We’re never really done, but we felt pretty confident in where we were going.
22:09 CR: So, how did it evolve? You seem like you’re on a good path. What made you wanna consider a merger with a rival? What was going on at that time between you and, I think, HighTower had a couple of cities where they were more prominent than you were. How did that merger evolve?
22:26 NR: Yes. So, I think you asked a question earlier about our speed of growth. I think if you look at the data, we’re probably… I think we’re the fastest growing tech company in the history of commercial real estate. A big part of that is just our user personas. By signing up one broker, we get access to all their owners and vice versa. So, there’s this network effect that we felt was such an advantageous thing for us as a product company that our growth rate should be exponential, because you’re touching this kind of spider web that no one’s ever connected before with all this information and all this workflow. And we felt, if we took advantage of it, we’d grow really quickly. And while that’s great, when you have multiple products trying to saturate that market, it actually has the opposite effect because now you’ve got one broker and you’re trying to centralize all of her buildings into one platform to make her life much better and then you’ve got another one who signs up for another platform. So now she’s got to use two.
23:28 NR: It just created kind of this inverse effect of what both companies were trying to do, and there are others out there too, but it just felt like if we combine forces it would really be a one plus one is three for both the landlord and the broker. And the market wanted it to happen. I mean we had so many customers tell us… This decision is so hard because both teams are so strong, your products are so similar and there’s all these gaps that you fill across each other’s firms. Brandon, their CEO and I, spent some time getting know each other. We were in probably a 1,000 panels together, so I had a pretty good working relationship and just said, “Listen, I think in terms of what’s best for the market and our respective companies we should have a real conversation.” And so that’s kind of how it started.
24:14 CR: Once you started the talks, how did it go? ‘Cause combining cultures is always a very difficult thing.
24:23 NR: We knew it had to start with us, we felt like if the two of us were aligned from a vision perspective and just candidly got along, that would kind of run through to the rest of the team. So he and I spent a few months getting know each other before we brought in our co-founders, and we did a couple of dinners and some kind of off sites at a mutual location where we talked about our vision, our technology stacks, where we saw the market going and it was identical. I mean it was such an obvious thing for us that we said alright, let’s do this. And then at that point, we brought in our respective boards and started to have conversations around what a deal could look like. We did a good job at separating church and state. The actual, okay operationalizing these two cultures versus the negotiation of the deal that was important to us, and so I think from a private to private merger perspective, I don’t know that we could have done it any better.
25:20 CR: One of the things I find interesting about all software, and we’re a company that relies heavily on software. But one of the things I find very interesting about it is what it demands in terms of people’s willingness to change and change habits, and brokers have a legendary [chuckle] reputation for not wanting to change. And when I started in the brokerage business, you had a note… A box with a bunch of notes in it, and that was sacred. And you locked your office at night and you didn’t let anyone near it. We don’t seem to live in that world anymore, I don’t think, I think most brokerage firms are much more open, but explain to me, as you moved from putting videos up of space to a product that destroyed the need for Excel, how did you explain to brokers specifically, ’cause I think brokers are… What makes this system work is the broker. How did you get them to start opening their eyes to changing their habits and using the product?
26:22 NR: So it was kind of a two pronged approach. We really went, bottom up, working with the brokers to show them that this wasn’t gonna save you a little time, this was gonna save you a lot of time. And for them, they wanna be doing things that I would call that are revenue generating and reporting is not one of those things. So if we can remove that from their things to do, that gives them five hours a week to work on finding new prospects or closing deals. So we had to really prove that to them in many ways. And then from the top down approach, we were signing up owners, so those owners were telling those brokers, “This is what you use. You no longer send me a report. You log into VTS and you put it in.” We knew that the product had to work for the broker, and he had to be supportive, at the same time, the owners were saying… For us to really make this our system of record for leasing and tenant relationship management, everyone’s gotta be on it. So if you send me another report, don’t work for me on Monday.
27:20 NR: So it was a two pronged approach, which worked out really well.
27:24 CR: Yeah, I really… I’ll tell you, just so the audience knows this has been a game changer for us. We have a partnership with a group out of Houston known as Lionstone Group, who’s been a terrific partner and we really enjoy working with them. But part of the reason is we also… Lionstone and Rising share the same view on the use of technology, and what it’s allowed us to do in terms of creating reports for investors and how much easier that process is. The ability to literally answer questions from investors on the spot, because I’ve got every building we own, with every lease. It’s an amazing tool. But you were saying earlier… But I wanna add on to that, as you were saying earlier, these deals get complicated. How do you keep up? How does your technology team keep up with providing the platform to meet some of the complexity and… ‘Cause the reporting is great, but if we’re saying, “Okay, we’re gonna do free rent, but we’re gonna amortize it over three years here, but then we’re gonna give free rent in month 68.” That gets pretty complicated for a software. How do you guys stay on top of things as you grow?
28:30 NR: Yeah. I think one of the reasons why… How we’ve been able to grow so fast and at this scale is just the amount of industry or institutional knowledge we have on just really doing a deal across our team is, is significant. You’ve got probably 130 years of hardcore leasing and asset management experience on the team. These are folks who are working on our product teams with our product managers who’ve done 300 million square feet of actual leasing. So we’ve run any kind of deal you wanna talk about ourselves, we’re not an accounting firm trying to build technology for brokers and leasing folks or asset managers. Again, and to you point, these are really hard things to build and conceptually anyone can say, “Well I can build you a calculator to do that.” It’s always that kind of 10% nuance that makes these things really hard. You could build all this stuff and then figure out, “Okay, well what’s the base here?” “Okay, holy shit, that impacts the entire financial analysis.” So it’s been… Again, it’s taken us seven years to feel like we’re pretty much there. We consistently, or we do always… Someone always comes to the table with, “Well, I’ve got a deal you can’t do.” So it kind of never ends, but I think it’s just been, one, a lot of trials and tribulation and, two, our just actual real life experience in doing deals has allowed us to get to this point much faster than others have tried.
30:01 CR: It’s terrific. So you’re 35 years old, and you’re running a company that is… Co-running a company that is growing unbelievably quick. What are your routines like? What are your habits? How do you start a week? And really, how do you avoid the instant gratification of other people’s demands?
30:22 NR: Yeah, it’s really hard. I’m sure you know that too. When you run a business you’re pulled in a million directions and I find, or I know now more than ever, that the most powerful… The most powerful word in the English language is definitely, no. I say no, a lot. And focus is so important. For me I have a couple, I’ll call them, anchors, that kind of keep me sane. One is, I’ve got a three year old that I like to see in the morning. So whether I’m on the road or home, I’ll FaceTime from the road or I’ll… He’ll wake me up in bed. I’ve got to see him once a day, it’s my kind of rule. It’s hard for me to survive without that. And then I like to… Whether I’m on the road or home, I like to work out, so I need to get at least 40 minutes in the gym to stay sane. I think it can be pretty stressful running a company, so that helps me a lot. I like to surf on the weekends. That’s critical for me. So there’s no surprise I spend a lot of my time in LA seeing you. And I’ve got an amazing team. So I think if I’ve learned anything in running a company it’s that, having A plus players versus B plus players isn’t a 2x or 3x, it’s like 10x in terms of efficiency. I’ve worked really hard to find an amazing team and we continue to do so, and the result for us has been amazing. I’ve just seen it. I’ve got, people on my team have a lot more experience than I do, and that makes me sleep at night or helps me sleep at night.
31:52 CR: That’s terrific. One of the questions I always like to ask the brokers and the developers is a question that’s basically, how has technology changed your business? For you I’d like, since you are a technology company, I’d like to ask you, how has technology changed your business? How are you operating, whether it’s other software programs or the threat of change in technology to your business? Can you talk a little bit about the effect of technology on your business.
32:21 NR: Yeah, we use I think it’s 35 platforms here across our company, so we use a lot of technology, and so it varies based on the team that you’re on. So whether you’re in marketing and you’re using Marketo to distribute campaigns to customers or prospects, or you’re an engineer using GitHub to push new code and get feedback. Literally, every single department has multiple technologies they use to run their business. But I think one that I’d like to talk about that I think is anyone could really use, any company probably should use. When you talk about getting off of email, Slack has been a really, I think, just helpful one for us. So it’s kind of a messenger that pulls in data from lots of systems. It’s the one place that our team can go and actually just real time communicate with each other. We create lots of channels that are specific to certain things.
33:17 NR: Whether it’s the sales team has a channel, the engineers have a channel, marketing has a channel, and it pulls in updates from everywhere. From Salesforce, from the databases that our actual engineers use to give them updates. All of our real time MPS updates that our customers say, come through a separate Slack channel, so you can see what’s there. So it’s been an awesome tool to bring everybody together and start to minimize your actual email inbox with just clutter. So that’s been a big one for us. And then from a product perspective, people don’t realize this, but there are multiple technologies that we use to build software, and we’re constantly upgrading those so that the user experience is faster and cleaner and more flexible. So we use technology all over the place, which is a lot of stuff under the hood you don’t ever really hear or see, but it’s always in the background.
34:09 CR: And how do you all office? How is your culture bred? How do you do it? Do you have one big office somewhere or are you spread across the country? Does technology allow you to take less office space? Or do you feel it’s important for your team to have more office space? How do you look at that?
34:29 NR: Yes, so we’ve got a pretty open office culture. We have 32,000 feet in New York. We’re in Bryant Park. We’re on two floors, which I don’t love. I’d love for us all to be on one floor. But we really wanted to be south of 42nd Street, and it’s hard to find a floor place that big, and that it’s where we are. But I would have loved to have been on one floor. That been said, it’s a super collaborative environment. No one has an office, myself included. We do have breakout rooms and conference rooms and scattered throughout the space are all these just open breakout areas where you’ll see four couches surrounding a white board and a picnic table. So we want you to be surrounded by your teams brainstorming, white boarding and creative just to get the energy up all the time. And that’s…
35:19 CR: Have you all started to use technologies like Skype for Business or Zoom or those video type interactions as opposed to just to conference calls?
35:31 NR: We do. We’re a huge Zoom user, so every single room here has a Zoom video. So for all of our… We do an all hands meeting every other week, where I’ll update the company on a bunch of initiatives. Different leaders from across the company will give updates and everybody is Zoomed in. So you kind of feel like you’re in the room and it keeps us all close. We’re always aligned, I believe, just kind of be open by default. So transparency’s pretty important to us, and all those technologies, I think, changed the game for companies who are spread out. So we do have satellite offices, we’ve got offices now in London, San Francisco, LA, Chicago, Boston. I might be forgetting one or two, and that’s because we know that while we are a global platform, real estate is a local business. So having people on the ground is helpful.
36:23 CR: I think it’s easy, when I’ve heard you talked about and seen you up on a panel, for a young person to go, “Oh boy, they have… Their life is easy, look at that created this company, it’s just gone through the roof.” But I think we all know that’s not how life works. Can you talk about some of the challenges that you’ve experienced over the last seven years that maybe humanize the experience for our listeners, the things you had to deal with that were really scary?
36:52 NR: So we’ve had no shortage of challenges. Let’s say starting from the top, we went into a market that hasn’t changed for probably 100 years, and the biggest change we talk about is people going from fax to email. And so we had to convince them like, “Get off of email and spreadsheets and do all your work in one platform.” So that was hard, but we felt like we were kind of showcasing real value, and we could do it. The other challenges were raising money. There had not been a lot of capital investing in commercial real estate tech, and so it was kind of a new frontier for us. Talking to VCs who invest billions of dollars in markets that they know the size of very easily to look at ours and say, “This is a super opaque market. We don’t even know how much square feet there is, let alone how many buildings. Why should we invest in you?” And so it took us a lot of time to put that story together but, for us telling the story with conviction was probably the most powerful thing.
37:53 NR: Having that kind of self belief that I know that this market is right for technology like ours. And I know that we’re the folks who can do it. It was kind of you have to have that like to will to win, I like to call it, that is that intangible, that I think people do see when you’re telling your story. And for any entrepreneur, it’s critical. I meet a lot of CEOs who tell me they don’t like to talk to customers or do all these things. And my response is, “That’s your job, you’re the CEO. You’re the Chief of everything.” You’re kinda the jack of all trades, master of none, but you should never… You should be able to do anything or everything at least decently well. I think you kinda have to have that expectation of yourself early on, because it is really hard. We went door to door for a long time and had to kinda work our way up the ranks at every single firm to get real face time. And people’s time
38:55 CR: One of the things I respect you all so much for is that in the leadership of institutional real estate investing, there’s a lot of cynicism. And some of it’s very justified because over the last 25 years, CEOs have been presented with major technological platforms that just totally failed. And so people are looking at this and going, “I gotta pay this much money. What if it doesn’t work?” And so you get a lot of nos. I know, ’cause I know where I came from originally on thinking about this. When you… Was there any… I call them scary nos, because you take no, and someone will tell you the reason you get, but when there’s a no that you think is supposed to be a yes, I call that kind of a scary no. Did you have any scary nos, that you were like, “Oh my God, maybe… ” At the beginning, “Here, this isn’t gonna work that way.”? I really wanna get that, ’cause… One of the things I want people to understand is that life really is a series of ups and downs, and it’s really how you respond to a scary no that’s gonna define you. But is there any good stories around that?
39:57 NR: I’m trying to think of a specific story. I think one rule that we had, especially early, was if someone had told me or one of my colleagues “no” my response was always, “You’re talking to the wrong person.” Because as someone who grew up in this space for a very long time and understands the problem that we’re solving, there is no scenario which someone should say, “This is not valuable.” There’s no scenario which someone should say, “I don’t wanna have my information be accurate and up to date in real time.” If they truly believe that, I’ve always felt they should not be in their job. And so, I said that with a lot of conviction and we still get nos, we don’t have every single customer in the world. We’ve got a big percentage of the market, but certainly not everybody. We still hear no and my response to this day is the same, it’s, “You’re talking to the wrong person.” Someone there understands the value of using technology and being a modern landlord. Let’s find that person and talk to them. I probably have a million stories. I’m trying to have a good one I can tell you without getting yelled at by a client.
41:05 CR: That’s alright. But I think you hit it on the head, is that you really just don’t take no for an answer, and you keep coming around for different angles. Because at the end of the day, your product is a product that helps people. It really helps landlords. It really helps brokers, and it’s getting past the cynicism or the people who just start with three nos, and that tenacity is what makes an entrepreneur successful. So if you were sitting here… If we had a group of 22 year olds, or 24 year olds here who are looking at you with great admiration about how you chose your life path, what would be the advice that you would give someone who wants to be in and around real estate perhaps, but, in a way that’s different than the traditional brokerage role or ownership role?
41:50 NR: I would say find your unique angle. It’s still very much an industry that has not changed a whole lot. When you think about different ways to do things that move the needle for someone, even a little bit, they’re gonna pay attention. And a lot of times there’s a really great business underneath that. I also think, always be a student. We’re learning every single day, and we’re so lucky to be able to work with the folks that we work with. People like you, people at Blackstone, people at Brookfield, Lion… Every single firm. People like you who are the C-suite, or the true leadership groups, spend real time with us, to tell us, “Here are the other problems that we’re trying to solve.” Our product teams can go to work in that and say, “Okay, does this solve that problem?” We really think about this market as a super collaborative one, and it’s a market where historically, a lot of the technology companies have had a super heavy hand. They don’t really partner with the customer. And so if that’s your mindset as an entrepreneur, you really wanna partner with the market, you’re gonna find yourself having a lot of really excited, energized, motivated folks to help you build a great business. That would be my two cents and it’s gotten us super, super far.
43:03 CR: Well, I tell you, and I think the pace of change… Someone who believes in the singularity, believes that technology’s role is exponentially growing, and I get into conversations with people that think I’m nuts, but I’m firmly of the belief that within two or three years, keyboards will be a thing of the past that the Alexa affect, the talking, the dictation software will be so, so good and that we’re gonna take out the need for a keyboard. That’s just a threat that I think people haven’t really focused on as much. What do you see as a threat to VTS? And how are you preparing for the pace of technology’s change and keeping VTS relevant?
43:46 NR: A big part of my job is thinking ahead. I’ve got an unbelievable team of folks to help me operate the day to day business, but I’m supposed to be the strategic one, who’s thinking two, three, four years out. There is a lot of stuff in the market right now. You hear things about autonomous vehicles are gonna completely change real estate forever, which I think, that will happen. I don’t know if that’s in five years, 10 years or 20 years, but there’s no doubt that’s coming. I think a lot about that. How do we potentially position our owners? Just start to think about these things in our platform as we’re thinking about buying assets, positioning their own assets, etcetera. I think to your point, the idea of the smart buildings, whether it’s some kind of voice activation software, etcetera, I think that’s where… And you don’t really hear the brokerage community talk about it, but self check-ins and tours and things like that. I think you’re gonna start to see ways of automation that bring the deal process forward, even faster.
44:53 NR: That may end up impacting the broker someway, somehow. We try to think about, “Okay, well, how can we help. Just get ahead of that on both sides, for the owners and the brokers, and make sure that the deal process still happens in our system.” Does that mean that we have to build, building specific software where we’re tied into those systems? Do we be the system? So a lot of the stuff is super out side the box and may never actually happen, but I think, thinking about it is never a bad thing, because, to your point, the speed of technology right now is insane. And our market’s having I think a pretty tough time reacting to it. You’re seeing lots of things go into the market, but not a whole lot that’s really being aggressively rolled out. And so, I think that’ll impact how change really happens over the next, call it, five to 10 years, is how fast our market can really react to what’s being built.
45:46 CR: Do you see a group like WeWork as a threat or a group that you will ultimately end up working alongside because they’ll have 20% of every building or something like that? Some sort of co-working thing? How do you look at WeWork in the context of what VTS is?
46:04 NR: I’m a huge WeWork fan, we’re customers of theirs. We are having six WeWork offices. I don’t consider them a technology company. I consider them a real estate company.
46:13 CR: Would you say that in front of Adam, if he was right there? [chuckle] He love’s to say he’s a technology company.
46:18 NR: Yeah, I’m sure he’d call me stupid and give me a crazy lecture. That’s okay. He’s got a big enough valuation he can say whatever he wants.
46:27 NR: But I see them… They’re a huge, huge catalyst for us. The kind of change they’re driving into the market, is an amazing thing for technology companies like us. Because a big part of what we do is help you manage your tenant experience. And they are completely redefining what a tenant experience means. We love disruptors like that. ‘Cause they just… What it does is it drives the need for owners to really understand that change and that the expectation of a tenant experience is very different from what it used to be. Because now, anyone who’s leased space in a WeWork and then outgrows it, their expectation is that, “When I go to your building, what you send me is a two page lease that I have to sign today. Not an 80 page lease that costs me $20,000 to negotiate.” I’m a huge WeWork fan for many reasons, but most of all, because I think they’re driving a shift in the market that is forcing owners and brokers to really rethink the way that they run their leasing process. And to do that, you need technology. So, we see ourselves as a big facilitator of that.
47:33 CR: I agree with a lot of what you just said. I think there’s a lot of focus on the arbitrage and the fact that, historically, Regis went [47:41] ____ twice. And because at some point the arbitrage flipped on them where they weren’t able to lease a space for more than they were leasing it. And I think while there’s some validity to all of that, I think what’s really been missed, and I think you’ve hit on it, is whether we like it or not, you’re a part of this generation, but there’s a millennial generation that is larger than the baby boomers, certainly larger than my Gen X. And then there’s a generation right behind your generation, and their expectations, because of the availability of information, they just… The idea that I have to sign a 15 year lease, and I have to spend thousands, if not millions, if you’re talking about global companies, of dollars negotiating leases. I think that’s going away, and for a lot… Certain extent it’s already gone away. I really agree with you. And I think there’s obviously some ways that VTS is gonna integrate in on, especially on the global and the national players platform. I think there’s a lot of growth ahead. Is there… As you guys budget and you look at the next year or two, is there anything that you’re wary of that maybe our audience would be interested in understanding your thoughts on?
48:56 NR: I think, we’re… Like everybody else, we’re watching the market. I think we’re in a pretty interesting place right now, just as a whole. We’re hearing from everybody that it’s certainly not a buyer’s market, so curious to see how that impacts just the top 12 cities across the US. And then eventually, leasing, right? There’s still a lot of supply coming online, so I’m curious to see what happens out there, to be candid.
49:25 CR: Terrific. Well, Nick, this has been a great conversation, I really appreciate you taking the time. We’re finding a very strong real estate audience out there, and it was really a nice opportunity to bring the technology piece that is dominating real estate today into it. So thanks for your time and your thoughts, and hopefully down the road we’ll get you back to see how VTS grows.
49:45 NR: I appreciate that. Thanks for having me, and we’ve got some pretty exciting products coming down the pipe. I’ll keep you up to speed and we can do an update in a few months, and we’ll make a big announcement with you.