The 13 Most Influential Leaders in PropTech
Real Estate technology has historically been underfunded compared to other large sectors. The current landscape is powered by thousands of disparate systems, without an agreed to data standard, making any significant modernization of the industry extremely challenging. For as many years as I can remember, there has been constant talk about the inevitable disruption of the real estate industry, yet very little has changed over the past 20 years. However, the tide is finally turning and PropTech has become mainstream. According to the Center for Real Estate Technology & Innovation, investments in PropTech hit $32B in 2021.
As with any industry, meaningful change requires contributions and collaboration from many players, but there is a small group of individuals who have a disproportionate level of influence on the future of the PropTech industry. I decided to put together a list of the 13 most influential PropTech leaders. This list is purely my opinion. There was not a survey that I conducted, nor is there any science to my analysis. The individuals are not ranked in order, but I did group them by categories.
Many organizations publish their own annual list of the most influential leaders in Real Estate, and they almost always include the C-Suite of the largest residential brokerages (Realogy/Berkshire Hathaway Home Services). I have tremendous respect for the executives from both organizations, and they clearly yield a significant amount of influence over the industry, but both companies operate what I would consider to be traditional real estate brokerages. I anticipate that traditional brokerages will continue to dominate market share for the foreseeable future, and they provide a very important service to millions of customers per year. But, I do not see either company fundamentally changing the industry. Their models are tried and true, and although they will continue to adapt to changes, I don’t see them as pioneers. Change requires innovation and new ways of thinking, and each person on this list has demonstrated their ability to bring unique models to market.
Starting a real estate brand is no small feat, and most companies that are trying to make a name for themselves often go after the luxury market. If they open beautiful offices in prestigious zip codes, recruit top agents with large bonuses, and score some ultra-luxury listings, they can quickly (but expensively) build a brand around glossy marketing collateral. eXp took a different route. eXp, which initially launched in 2009, focused their growth strategy on agent count and virtual offices. They ended 2021 with over 70,000 agents, representing a 69% increase from the prior year. Glenn Sanford (Founder and CEO of eXp Realty) recently announced that they are looking to grow this number to 500,000 agents within the next 5 years. Agent count aside, their business model is based entirely around a virtual community. When you compare this strategy to traditional players with brick and mortar offices in every market that they serve (Realogy’s has approx. 670 company owned offices), there is significant cost savings that can be funneled down to agents and the company bottom line.
As I have written about in the past, I do not believe that the path towards disruption runs through commission discounting. Too many companies have tried and failed to build a sustainable business around reduced commissions. There is one exception to this rule: Redfin. Redfin is not a new player (they have been around since 2002), but they have continued to outpace the market with their unique model. Unlike most companies that believe that listings are king, Redfin originally dedicated all of their resources towards buyers. They built a very friendly UI, and absolutely dominated in SEO/SEM. According to Statista, Redfin.com was the most popular website for search in 2021 for any website that was owned and operated by a residential brokerage (18M Unique Monthly Visitors). During my time working at brokerages that competed with Redfin, it was common that our clients would tell us that they conducted their search on Redfin’s website. After building up market share across the country, they expanded into the listing business, offering a steep discount when clients buy and sell through them. Profitability (or lack thereof) has been a criticism that Redfin has faced, but I believe that they have laid the foundation for profitable growth in the years to come.
In the past, I have questioned Compass’s ability to ever be profitable. This concern remains for me. Compass, in my opinion, is a traditional brokerage (fancy offices, high agent splits, traditional fee structure) which is consistent with the Realogy and Berkshire Hathaway Homes Services of the world, but they built something truly special which is unlike anything I have seen before them. Over 8 years, Compass has recruited 20,000 agents (some came through M/A), opened up hundreds of offices, has gone public, and has become a household name. What really sets Compass apart from their peers is their culture. Every company has horror stories, and I am sure that Compass is no different, but from the outside looking in, the majority of their agents project a fierce loyalty like I have never seen in the brokerage world. If I were a sales associate entering the industry, Compass would be at the top of my list. The argument can be made that anyone with $1.15B in cash could accomplish this level of growth, but I disagree. Robert Reffkin (Co-Founder and CEO) has built a culture filled with company pride that is usually only found in the Googles and Apples of the world. On the flip side, I don’t believe that their current business model is sustainable in the long term, but I do have faith that they have what it takes to survive and thrive. Their success will be tied to their ability to create a true end-to-end operating system which can fundamentally change the industry. Unlike a traditional CRM, the winning operating system will need to demonstrate true efficiencies for both agent and client, while seamlessly integrating mortgage, title, and other services which are part of a typical transaction. The question remains whether they can continue to build market share at their current pace, while pivoting their model to be more sustainable in the long run. Going public provided the company with more cash, but it also signaled the end of a constant flow of fresh capital from VCs.
Many companies have tried to disrupt the residential real estate brokerage industry. Most of them have either gone out of business or have pivoted to a traditional model. Most disruptors focus on commission reduction, and time and again that strategy fails. iBuying is the single largest change to the residential real estate brokerage industry in decades. Eric Wu is the Co-Founder and CEO of Opendoor. Opendoor introduced the concept of iBuying in 2014. They raised over $1B of venture capital before going public in December of 2020. Since that time, many other companies have entered the iBuyer business, but no other player has come close to their growth trajectory. Opendoor has continued to accelerate their growth and is by far the largest player in the space. While iBuyers still represents only 1% of all residential transactions, that number is poised to grow significantly as Opendoor (and some of their competitors) expand into new cities across the country.
Check out my prior article on iBuyers here
Starting a business is hard. Many companies with great ideas fail because they run out of money. Capital is critical for all businesses, but that is only half the battle. Equally, if not more important, is customer adoption. Imagine getting both from the same place. Strategic investors have the potential to nearly guarantee the success of a business (assuming that the solutions they invest in work), by providing capital along with a built-in customer base. There are 2 types of Strategic Investors that are included on this list. The first type are traditional VC firms that have raised capital from large real estate owners. The VC places bets on behalf of the owner, and the owner is then likely to deploy the solutions throughout their portfolio. The second type of companies are large Real Estate owners that have formed their own in-house venture arm.
Fifth Wall is a venture capital firm that focuses on investing in “Built World Technologies”. Besides having a keen eye for placing bets on winning companies, Fifth Wall is uniquely positioned to crown winners in emerging spaces in part due to who they have raised funds from. Their first fund was focused on the US, and they raised funds from Real Estate royalty including Equity Residential, Lennar, Prologis, CBRE, Hines, Host Hotels, Lowes, Macerich Properties, and Rudin Management Company. Their Fund II took that model internationally, and today the firm has approximately $3.0 billion in commitments and capital under management, from an even larger group of real estate owners which includes 90+ global strategic partners from more than 15 countries. In 2021, Fifth Wall raised $1.1B across their funds The capital and guidance that Fifth Wall provides to their portfolio companies represents only part of the value that they bring to the table. Because they are investing funds on behalf of the largest Real Estate owners of the world, there is a huge incentive for these companies to deploy relevant solutions from the portfolio companies throughout their vast real estate holdings.
Check out my prior interview with Fifth Wall here
There are thousands of VC firms in the US with many different investment theses, but MetaProp is solely focused on PropTech. They are the largest global seed fund and they own the early stage segment. MetaProp has made some big bets over the years, with investments in over 150 companies. Similar to Fifth Wall, MetaProp also raises some funds from strategic investors who own a total of 20B+ square feet across every real estate asset class. An investment from MetaProp can nearly guarantee adoption of a solution. Prior investments from MetaProp include HqO, Occupier, Spruce, Bowery, Side, and Dongnae.
While many real estate owners are investing in PropTech companies by placing bets through a traditional VC, some of the largest players have created their own venture arm and are investing in companies directly. Blackstone is a giant in the real estate space with a global portfolio valued at $448B. Blackstone’s holdings include just about every real estate asset class, so they have a huge sandbox to deploy many types of PropTech solutions. Some of the investments that they have made include DealPath, Zumper, iCapital Networks, and Aquicore. John Korngold is the Global Co-Head of Technology Investing, and John Fitzpatrick is the Senior Managing Director and Chief Technology Officer of Alternative Asset Management Technology at Blackstone. Both play a critical role in determining which companies Blackstone invests in, and therefore hold the keys to crowning winners.
Prologis, a real estate giant who owns almost 1B square of logistics real estate, formed a venture arm in 2016. Not only does their scale provide an enormous built-in customer base, but it also provides them with valuable insight about the pain points and technology needs of logistics companies. Prologis’s investment thesis is to invest in technologies that can benefit their company and their customer base by creating new revenue streams, increasing efficiencies, reducing costs, and making positive contributions to sustainability. As I covered in a prior article, William O’Donnell (Prologis Ventures’ Managing Partner) shared the following insight: “We are a very thesis driven investor. We understand where pain points are, and how we, as a company, can find opportunities to improve our operations. But we also spend a ton of time with our customers understanding really what's driving change within their organization and where they're experiencing friction. So with that insight, we go out and find solutions that match those opportunities.” Prologis has made 35 investments in logistics tech, property tech and sustainability. In addition to investing in third party companies, Prologis recently launched an EV charging infrastructure business and continues to invest heavily in growing their solar platform along with other sustainability-focused solutions for their customers. Some of Prologis’s prior investments include Flexport, Locus, Flexe and Platform Science.
Boston Properties is the largest publicly traded developer, owner, and manager of Class A office properties in the United States. Although Boston Properties does not have a venture arm, they are at the forefront of technology deployment. I first met Jim (Chief Information & Technology Officer of Boston Properties) in the summer of 2021. I was blown away by his thoughtful vision on the future of the PropTech industry. What really impressed me about Jim is how often his name has come up in conversations that I have had with PropTech executives. I spend a lot of my time meeting with Real Estate and PropTech leaders, and I have lost count of the amount of times that they have referenced his name to me in conversations. Not only do the industry players respect him, but many of them tell me that they look to him for guidance on where the industry is going. It would be hard to find someone more respected than Jim in the office sector.
When it comes to real estate data, analytics and online marketplaces there is one company who rules the industry: CoStar Group. I don’t believe that there is anyone in the real estate industry that doesn’t use CoStar or one of its’ online marketplaces in one way or another. CoStar’s data and analytics not only powers owners, investors, lenders and the brokerage industry, it also provides insight to thousands of vendors that sell to commercial tenants. After dominating commercial real estate for many years, CoStar Group recently made a huge leap into residential real estate with acquisitions including Homesnap and Homes.com. CoStar Group is trying to unseat the current leader in Residential Search: Zillow. Costar Group is also in the process of working with REBNY to go to battle with the current leader StreetEasy (StreetEasy is a Zillow company) in the ultra-competitive NYC residential industry.
Nick Romito (VTS)
VTS provides software which is used by almost every Commercial Real Estate owner and manager in the US. In 2021, VTS made several powerful moves to capitalize on their well respected name and huge customer base by expanding their product offering. First, they entered the space which is currently dominated by CoStar with the launch of their Marketplace, and rolled out a suite of tools including a full CMS, analytics portal, and distribution center for every space. Then, they acquired 2 of the largest Tenant Experience players: RiseBuildings and Lane. Their existing customer relationships have been opening doors for them just as many of the largest commercial owners are making portfolio wide decisions on which tenant apps they are going to deploy. VTS now has an arsenal of solutions to do everything from marketing spaces, to asset management, to powering smart buildings.
Few people have had as many successful ventures as Spencer Rascoff. A few of the companies that he founded include Hotwire, Zillow, and Pacaso. Under Spencer’s watch at Zillow, the company acquired 15 companies, went public, and dominated the real estate search industry. Spencer officially departed Zillow in April 2021. After Spencer left Zillow, the new leadership made a series of missteps with the company’s iBuyer business. Those decisions resulted in one of the biggest blunders in PropTech history, causing their stock price to drop by 52%. While Zillow’s new management team is still cleaning up the mess made by their bad decisions, Spencer has kept his hot streak alive by scaling other ventures that he has invested in. For example, Pacaso, which he co-founded in October 2020, was crowned a Unicorn faster than any company ever. Additional investments that Spencer has made in PropTech companies including Offerpad, Doma, Flyhomes, Ribbon, VTS, Side, EasyKnock, and Radius Agent.
Michael Beckerman (CREtech)
There are many trade groups, consulting firms, and other organizations that serve to keep the real estate industry informed and educated on real estate tech, but none are more influential than CREtech. Michael Beckerman is the CEO of CREtech which bills itself as the largest event, consulting, and content platform in the commercial real estate tech sector. Michael is one of the most well respected thought leaders in the PropTech industry. As most companies switched to virtual only conferences during the Pandemic, CREtech pushed forward with a series of live events in 2021. I attended their NYC conference in October, and was so impressed with their ability to pull together all of the Who’s Who of the industry into a single live event. I follow Michael and CREtech religiously, and I highly recommend them to anyone looking to expand their knowledge in PropTech. Learn more about CREtech here.
I’m interested in hearing your feedback. If you feel as though I missed anyone, please add your thoughts in the comments below.