I have been thinking for a while that the CRE tech space would really heat up when the big brokerage firms started an arms race with one another for tech supremacy. I think we may be witnessing the start of this trend. When you think of it, totally makes sense.
All it takes is for one of the giant firms to make the first move. We saw that recently with CBRE buying Floored. And before that we saw Avison Young investing in Liquid Space. And recently, JLL has gotten in the game with their own strategy to invest in VR (http://www.jll.com/vr).
Could these be one-off’s? I don’t think so.
The core challenge that I hear over and over again in the commercial real estate and tech sectors is that there is a huge disconnect between the two. The real estate sector is, and historically has been, functioning just fine without tech. Additionally, from their perspective, there are just too many startups out there. So much so, that it appears like a blur to them to discern who does what and who is good, etc…
And from the startup’s perspective, they are challenged every single day to reach the real estate professionals directly and therefore gain traction with their products and services.
I was talking with a friend the other day who is high up on the operations side of one of the top five brokerage firms. I asked him his thoughts on how we could solve this disconnect. We both agreed that the solution is to get the large brokerage firms to own their own technology and integrate it within their organization. Make it available for free to their employees. Invest in their own talent and platform, making it the best in the business.
In fact, if I were running a large brokerage firm, I would start my own incubator within the company to invest, build and grow the next generation of amazing tech products. And in doing so give my company the competitive edge in the marketplace.
Why hasn’t this happened yet? Will it happen? When will the brokerage firms themselves become the center of innovation?
Think about it. All of the innovation in the CRE space is coming from OUTSIDE the sector. It’s as if someone else created Watson and IBM’s employees just used it individually spending their own money. Innovation should be coming from WITHIN the sector!!!
If you look at other industries, they also had a dominant business model for years and years until someone from the tech sector came in and completely disrupted it! And as a result, there was huge pain to the traditional model. Remember flagging a cab in a city? What happened to that business model? Heard of Uber!?!
I have always believed that the best companies are the ones that drive their own innovation. The ones that try and put themselves out of business before someone else does. That's how they stay relevant and viable. For the long term!
So my question is, why are the brokerage firms potentially letting this happen?!?!?! Why aren't they more active in setting up their own incubators and labs? They should be hiring the best tech minds and founders to innovate for them on the INSIDE!
Innovate, or someone else will do it to you!
I wonder how this will all play out?