Gregory Charlop: Another interesting company like that is Peerspace. They help you rent out conference rooms and even entire restaurants for meetings and events. I used them to host my first real estate conference, the Real Estate Tech Expo.
Nav Athwal: Breather is another. It’s essentially an Airbnb for office space.
Gregory Charlop: What advice would you give to real estate professionals who are looking to improve their understanding of technology? Are there any particular books, conferences, podcasts or websites that you recommend?
Nav Athwal: MetaProp, FifthWall and NXR are three VC Funds that put out a lot of thought leadership on the proptech space, so I'd suggest following them. They may even have a newsletter for those interested in the real estate tech space. I also actively contribute to Forbes and Linkedin on the topics of real estate and tech. Here are links to my blogs on Forbes and LinkedIn.
Interview with Matt Murphy, venture capitalist and general partner with Montage Ventures
Gregory Charlop: You have an impressive background, Matt. Could you tell us a bit about yourself?
Matt Murphy: As I look at the choices I've made in my career, they’re all rooted in a personal passion for leveraging technology to evolve traditional industries. Whether that's financial services, education, healthcare, logistics, or real estate. My first role was with Etrade back in the early days. At first, it was via the telephone. Then it turned online once the internet came about. I had a blast running media advertising for Etrade for six years, creating this challenger brand concept to benefit the consumer.
Then, I was the chief marketing officer of Chegg. We thought textbooks were too expensive. A lot of students were unable to buy textbooks and had to go to the library or just not have a book at all. We innovated a textbook rental concept that cut prices by 70 to 80 percent. We were able to help students get the books that they needed to do well and stay in school. That was a micro-innovation that had a major impact on the educational landscape.
After that, I started Lemon Wallet with a group of amazing entrepreneurs which ended up becoming one of the early Bitcoin wallets. I headed up the U.S. operations at Renren venture capital, which included a large portfolio of health tech, logistics, and tech disruptive companies.
Gregory Charlop: Many of our readers are real estate professionals or executives. What is your connection to the real estate industry?
Matt Murphy: During my time at Renren, we invested in many financial technology companies which touched real estate. We realized the real estate agent was consistently the key customer influencer in mortgages, financing, and property management. We looked at how mortgage companies were able to target agents. Regulations like RESPA or CFPB made it very challenging.
We wanted to make some investments in the real estate/tech space. This was several years ago, so we were very early. We ended up incubating a company called Chime Technologies. They started as a CRM system built to help agents manage their time, manage their sales funnels, and create better relationships with their customers. Chime really helped get me deep into the real estate space, interact, and create friendships with a lot of real estate agents across the country.
Gregory Charlop: You mentioned that you were the chief marketing officer of Chime. Would you tell us what a CRM (contact management system) is and who should be using it? Is that something every real estate agent should use, or just the experienced ones, or just the new ones, or...everybody?
Matt Murphy: Every real estate agent uses some form of CRM today. Some use the address book on their cell phone, others use Microsoft Excel or Word. Some have invested in professional-grade CRMs. But at the heart of it, a CRM is really software that helps you organize and run your business. It's not just about keeping track of your contacts, it's more than that. A good CRM has workflow management systems, sales pipelines, and really helps you turn what you're doing into a business.
That's what a good CRM does, and I truly believe that every real estate agent should use a CRM because it will help them be more efficient with their time. There are a lot of CRMs in the marketplace, and CRMs can be complicated. A number of them are built on a mobile device, which makes them simpler. But at the end of the day, the best CRM on the market is the one you actually use.
Gregory Charlop: Are there some other technological tools that you feel real estate agents should be using regularly but, perhaps, aren't using to their full potential?
Matt Murphy: Lead generation is more than just running ads on Facebook. It's about the follow-up, follow-through, and the consistency of being in front of people, showing them why you're the best agent to represent them in their home purchase or home sale process. So, technology solutions that help with lead generation and lead follow-up are very important. You'll see a lot of advertising companies in that space. A lot of chatbots come in that space to be that first contact when you buy a lead on Zillow or on Facebook. If you're not getting back to them within one to two minutes, you're losing that lead, because someone else is following up with them. Or, more importantly, they're forgetting they actually clicked on your ad.
Immediacy is critical, so technologies that help create that immediate contact are important. CRMs help with relationship management, workflow management, things along those lines. I tell agents, when you’re picking technologies, make sure you invest your time into learning and using it.
We're living in a mobile-first environment. All good technology should have a mobile application and really be built on the mobile device first. That brings a lot of efficiency shortcuts, ease of follow-throughs, one-click actions—things along those lines. You'd be surprised how many of the "leading technologies" in real estate do not even have a mobile app. Since agents are out and about in the market at all times, having a mobile experience is critical.
Gregory Charlop: You've written extensively about blockchain. Can you tell us briefly what blockchain and Bitcoin are, and whether you think that they'll have a major impact on the real estate industry?
Matt Murphy: Blockchain is a public, distributed ledger that many different entities can write into and validate transactions in a public fashion that's distributed across many different devices around the world. It takes away the centralization of authority, the centralization of decision making and control, and provides a public interface to store and move data and information in a secure fashion.
Bitcoin is one of the innovations that's been on top of the blockchain, as is Ethereum, or Litecoin, or various different ICOs (initial coin offerings). Each one solves a different problem or is used for a different purpose. Bitcoin is probably the most well-known. Its goal is to become a global currency. So that no matter where you are in the world, you can transact, you can move money, exchange value between people, store value amongst yourselves. Its goal is to replace what a bank, payment processor, or a transaction system does.
Gregory Charlop: Do you think that will have any meaningful effect on the real estate
industry? And, if so, how could real estate agents or companies prepare for that or take advantage of it?
Matt Murphy: Real estate is a little slower to move into new technologies due to the size of the dollar amounts that exchange hands. For example, with all the wire fraud that we're seeing in the space, the industry is slow to enable new technologies because there is such financial risk in all of the transactions based on the size. But I do feel that there are aspects within the real estate industry, sub-sectors, that could benefit from blockchain and Bitcoin.
For example, when you go into a typical real estate brokerage office, there still are file cabinets. And in those file cabinets are purchase contracts that are being stored for three years to seven years. All of that could be digitized online. There are companies like DocuSign that are helping with digital signatures and digital file storage. But that can also happen on the blockchain. The title and the escrow space, title records, are currently stored on a local level, on a city-by-city basis. So bringing that online, digitizing that, stor
ing that in a public, secured ledger could unlock a lot of value in the data that's hidden within those documents and open up a lot of innovations within the real estate sector.
I'm also seeing innovations with smart contracts. Every real estate transaction starts and ends with the contract of selling or buying something. Those contracts can be done via smart contracts on the Ethereum network, stored on the network, secured on the network.
Gregory Charlop: You wrote a great article for VentureBeat about artificial intelligence, which is also a passion of mine. It's a big topic these days. Can you tell us how artificial intelligence (AI) impacts the real estate marketplace and how you think it might shape the future of the real estate industry?
Matt Murphy: At the core of artificial intelligence is big data. And big data is just the massive amount of data that's being created on a per-second basis—publicly and privately generated data, blog posts, video content—things along those lines. The challenge is that there's so much data out there. Interesting companies like HouseCanary or Cape Analytics are doing some really powerful things, leveraging AI to process that data and extract insights.
We have so much data, it's more than a human can feasibly make sense of. So you really need artificial intelligence to make sense of it, extract valuable insights and conclusions from it. That's where I see a lot of value from an AI perspective.
Another area in real estate is the life cycle of consumers. People are born, get educated, get their first job, usually they have kids, maybe they get married, maybe at some point they retire and pass away. And you have this kind of very generic pathway of what human life looks like.
But there are a lot of interesting insights available in social media, in public datasets, that can help you, as an agent, determine when someone is going to sell their home. What attributes have people made public that you can use to figure out if a family is going to sell their home this year? It's almost impossible for you to do that unless you have a relationship with those people. But, leveraging artificial intelligence and big data, you can actually determine the chances that they're going to sell their home this year.
From there, you can reach out to them. Or you can start running ads against them and be in front of them, creating that relationship before they even know they need it.
Gregory Charlop: Do you mean, for example, if people post on Facebook that their last kid has just graduated college, and they're happy to have an empty nest, that person is likely to put their home on the market?
Matt Murphy: Yeah, or they live in a small one-bedroom in San Francisco, and they just had their first baby. Most likely they're going to rent another place or buy a place because that's a little too small for a family of three.
Gregory Charlop: That's brilliant. Do you think that, ultimately, big data and artificial intelligence will eliminate or reduce the need for real estate agents? I mean, will computers be able to do most of what real estate agents do? Or do you still feel that we'll need a human touch for the system to work?
Matt Murphy: I truly believe that a home is the biggest thing that you purchase in your lifetime. The average person buys maybe two, three homes over the course of their life. By comparison, the next biggest thing is probably a college education, then a car. Because of that, you still want someone guiding you through the transaction of this largest asset.
Yes, there's a lot of data online where people can do their own research. But at the end of the day, that's not how homes are transacted yet. It still is two people representing a buyer and a seller, negotiating a transaction, writing up the paperwork, and handing over the keys.
But I do think that the next generation will see tech-enabled brokerages, like Compass or Reside, leverage technology to streamline their day-to-day operations. But humans are still involved in that process.
Gregory Charlop: One of my favorite topics is augmented and artificial reality. What are your thoughts? Are they ready for prime time? How should agents or real estate companies use these tools, if at all?
Matt Murphy: We saw Google Glasses come and go, Snapchat spectacles came and went. There still is hope to bring real-time information or augmented information into the visual eyesight, to transform the experience.
The coolest companies I've seen are Matterport. RoOomy actually lets you transform an empty space, furnishing it via augmented reality. Not in front of your eyes, but on a computer. What's cool about that is, while you're evaluating multiple apartments, you can overlay furniture in your style and design sense. You can really bring it to life and see if that is what your home should look like.
Matterport is doing a lot of really cool stuff with 3D modeling, rendering, and virtual reality tours that help bring a place to life. They also help people do more research online before actually going to see the house, because, typically, real estate photography is all about the angle. You can hide a lot of things in the angle. People show up in person to go view homes because that's where you can get the true picture.
With virtual reality, you can minimize some of that traveling. That will help buyer-agents because much of their time is spent taking buyers to countless homes. When I bought my first home here in California, my poor buyer-agent was with us every weekend for nine months. I felt horrible for her—and thank God she made a commission—but that's just the nature of the beast. I think virtual and augmented realities really can help streamline those processes. If you're moving to a new market, it also helps; if you're an international buyer or moving from one state to the next, it helps speed up that process.
Gregory Charlop: If the executive team from a major legacy real estate company asked you what they can do to make their firm more competitive, what advice would you give them?
Matt Murphy: It's a great question that I've actually been asked by some of the largest brokerage firms and franchises in the country. One of the things I told them was: really embrace technology, don't run from it. Because it's coming, and the faster you adapt to it, the faster you get ahead and the faster you meet the needs of your clients.
Secondarily, technology is not about replacing people; it's about making people more efficient. And the scarcest thing we have in this world isn't money, it is actually time. Every second that goes by is a second that's lost, that you can never get back. So, if you can leverage technology to be more efficient with your time, you're going to be far more productive, and you're going to be able to do more of what you want to do.
Technology delivers time-savings. But a lot of real estate brokerages have taken that advice to the extreme and try to build technology in-house. My response to them, and to every great entrepreneur is: be focused and know what you do well. And for things that you don't do well, outsource it or partner. In general, real estate companies at their core are not technology development firms. They are service-based real estate industries. Can they transform to it? Yes, there have been a few that have been able to, but there has also been a lot that hasn't been able to.
One successful example is Climb, a real estate brokerage based in San Francisco that was recently purchased by NRT. Climb has a very interesting approach. Mark Choey, one of the founders and the chief technology officer, fully embraces technology. He doesn't fully build it; he creates an ecosystem around his brokerage where he brings these technologies to his agents. Then he speaks at events and showcases the technologies on the agents’ behalf as an advocate. That's a phenomenal way of putting yourself at the center of innovation, as well as improving your brokerage.
Gregory Charlop: Climb is an interesting example of the exception to the rule. In my mind, one of the biggest problems these large legacy brokerages have is that they're decentralized and fragmented. Everybody is essentially an independent contractor rather than an employee. That makes it tough to bring technology throughout the entire organization for every agent to use.
Matt Murphy: It is. Compass is probably doing the best job at that, but Compass is starting from scratch with technology, and they're also hand-selecting the
ir agents and teams. So, those people are coming into the business knowing it's a tech-enabled brokerage, which is very different than someone who's worked for a traditional brokerage their whole career.
Many agents think they've done things their way and had a great career, so, “Why would I change when I only have five to seven years left before retirement?” And that's a very valid argument. But, if you're just starting your career, or you're midway through with another 20 years in front of you, you better jump on technology very quickly.
Gregory Charlop: Well, executives, you heard it here first. Matthew Murphy will turn you folks around. So, contact him with your technological questions! How?
I have one last question. You're highly experienced with startups. If a real estate professional came to you with an idea for their own startup, what advice would you give them to get off the ground?
Matt Murphy: It's a great question. My current role is a venture capitalist and general partner with Montage Ventures. We focus on investing in seed-stage and series-A companies in fintech, real estate tech, health care, and the future of retail. So, I meet with a lot of early-stage starters who really just have an idea. Maybe they have something built, but they don't really have much. We may put that first institutional check in with their business, giving them $500,000 to really kick start them to the next level.
I have met with a lot of real estate agents who see a problem firsthand and want to build a company around it. The advice I give them is: if this is keeping you up at night, and you can not live another day without focusing on this, then focus all of your energy on this problem. If you don't want to give up your day job, and you want to do this on the side to see if you can make a run at it, don't do that. You need to put in 100 percent, if not 150 percent, of yourself to really find success.
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