Photo: iStock.com/tampatra
Having trouble vetting technology solutions? If so, you’re not alone. At least, not according to the panelists at a Realcomm session last month appropriately titled “Managing the Chaos—How to Effectively Vet and Assess the Multitude of Proptech Opportunities.”
Evaluating and assessing technology options is a problem for everyone, even the tech companies themselves, according to panelist Riggs Kubiak, CEO and co-founder of Honest Buildings. With (by one count) over 3,000 companies to evaluate, it would be impossible for any single company—let alone any one person—to thoroughly know and understand the potential of every CRE solution. With so many new proptech companies now in the market, said Kubiak, the task of vetting them has become especially challenging. Although it may sound obvious, one of the best things you can do is ask for references. “The three questions everyone is asking,” he said, “are: ‘Who else is using it? Who else is using it? And who else is using it?’”
Ben Grippi, associate director in MetLife Investment Management’s equity strategies group, agreed that it’s a challenge to know “which horse to back,” reiterating that “No one wants to be first. They want a proven success.” For him, this means proven companies that have maturity, capital and scale.
Also on the panel was Damien Wu, CIO of Link Asset Management Limited, currently Asia’s largest REIT, where he is responsible for the formulation and management of its information technology strategy and functions. Wu observed that in the real estate leasing category, technologies are much more mature, whereas in property management, there are not as many success stories. Creating efficiencies and smooth workflow processes have been the focus in the property management arena, said Wu, noting that these are less disruptive than other technology solutions. He lightheartedly suggested that what would be truly disruptive, and what property managers really would like, is a toilet-cleaning robot or a self-cleaning toilet.
The four panelists also agreed that every technology assessment should start with a clear identification of what problem the company is trying to solve; without this, there is no basis for determining whether the proposed solution makes sense. Wu said that he is seeing “lots of solutions looking for problems,” which, in his mind, is an indication that “these tech companies really don’t understand real estate.” This sentiment was echoed by panelist John Fitzpatrick, managing director of the innovations and infrastructure group at Blackstone, who noted that he sees “lots of shiny new objects” only to learn through the vetting process that they can’t be scaled.
When asked about assessment methodologies that CRE companies are adopting, Wu indicated that there is no standard approach or methodology, that every company does it differently. This also makes it difficult for the proptech companies that are trying to partner with the CRE companies. In talking about MetLife’s approach to technology decisions, Grippi noted that he now chairs the company’s newly formed real estate technology advisory committee which is taking a cross-functional approach to looking at technology solutions. As part of its vetting process, MetLife also does a pre-mortem as well as a post-mortem. The purpose of the pre-mortem, said Grippi, is to ask in advance: What happens if this doesn’t work? To date, MetLife has vetted about 100 solutions, he said, and has implemented only eight or nine of them. Among the areas the company is looking into are artificial intelligence (AI) and business analysis tools.
Fitzpatrick from Blackstone offered this advice to those struggling with vetting proptech solutions: First, be structured and focused. Second, the culture must be rooted in your company and its willingness to innovate through technology. Third, no matter what you do, there must be continuous training if you truly want to reap maximum benefit.
Some common themes came through when the panelists were asked to offer a final piece of advice. Grippi from MetLife pointed out that it’s important that the company culture embraces change and is willing to accept failure. It can’t expect everything to be successful. Wu piggybacked on this by observing that “people are afraid of failure in CRE,” and, as a result, they will “keep going with something, even when they shouldn’t.”
Kubiak, whose Honest Buildings represents the supplier side of proptech, directed his comments to clients, telling them not to expect any technology application to be perfect. In preparing an RFP, he said, identify those core items that are critical for your company, but don’t expect everything in an overly detailed RFP to be addressed and “don’t let perfection get in the way of getting started and seeing if it works.” This was supported by Fitzpatrick, who noted that at Blackstone, “We don’t do RFPs. Instead, we test it out.”
The panel was moderated by Alina Lloyd, managing director at Focus Transformation Corp. and, before that, vice president of programs, research, and digital innovation at QuadReal. She summarized the dialogue by noting that, to be successful today, real estate companies have to invest time and energy into vetting applications. “Just because it’s difficult,” she said, “doesn’t mean you can turn away from it.”
IREM is a Realcomm industry partner and sponsored a standing-room-only half-day pre-con Property Management and Technology Forum at Realcomm 2019.
About the Author
Nancye Kirk is chief strategy officer at IREM Headquarters in Chicago.