(2:00) – Innovation occurs not in a breakthrough moment, but in thousands of iterations. It happens with tons of failures over time.
(2:40) – Shadow Ventures is a venture capital firm that invests exclusively in seed-stage real estate technologies that the rest of the market hasn’t found yet. They had to figure out new ways to market to people, so they took a step back and considered the shifts in their business.
(4:50) – What they’d been excited about investing in before the pandemic changed, because life changed. Everyone was in their apartment day in and day out for months. That created a whole host of new things to solve for. That being said, there wasn’t as much uncertainty in multifamily as in other industries, because people will always need somewhere to live.
(6:50) – In the pandemic, most technologies were adopted mainly out of necessity. Other things already existed, but were seized upon in the shutdown, like Zoom. And there were already video chat options available – Zoom was just better. You can apply that logic to other startups.
(11:20) – Even if you invest in a technology that turns out to be second-most preferred in the market, that’s still a pretty good outcome. For instance, Coke and Pepsi are both successful. But if the potential solution you’re considering adopting is not going to improve your life or your company by “10x” then it isn’t worth the price and the challenge of switching over.
(14:20) – There are some biases around social proof – if other people like it, you assume you’ll like it.
(15:45) – Commercial real estate success correlates with macroeconomic trends.
(17:20) — If you aren’t getting returns at 20% or better, then you’ve lost money as an investor. If a technology can’t meet that rate and takes on a lot of risk, that needs to be evaluated and considered.
(19:30) – Multifamily has to worry about tings like rent delinquency due to loss of work in the pandemic, and urban flight thanks to more flexible work trends. Technology acts as a safe haven during uncertain periods, because it gives you leverage to curb inefficacies. It also lets you eliminate needless risk. And, of course, it lets you improve customer experience.
(24:50) – The hardest thing about adopting technology for real estate is that there are so many nuanced layers, because there are physical assets you have to integrate with. That might be why the industry has been so slow to adopt new tech. There are three layers: software, physical facilities, and human capital. If one of those layers is not incentivized to participate in what you’ve built, it creates problems with the other two.
(28:20) – At the end of the day, there’s a lot we don’t know. Don’t be afraid to ask for feedback from your community.
(29:15) – Consider a hierarchy of needs. Start with the base layer, building resident health. After that is to ensure brand loyalty and drive renewal by improving resident experience. Next in the priority tier is leasing and demand automation. The last piece is data science for site selection.
(33:30) – People are starting to question their gut instincts.
(35:20) – Rethink the way you do things. For instance, leases are all 12 months long. Why? Consider whether things should be altered, and who would benefit if they were. It’s the entrepreneur’s job to think about that.
(37:45) — Durham thinks about things from a top-down perspective. He uses the asset lifecycle as an example – think about how the different phases shift. Data science is huge in that.
(39:50) — Optimizing building management systems by using tech to put things like that on autopilot. One example is a system that notices when water usage is different from normal so you can detect leaks, even without wifi.
(43:20) — Multifamily technology companies have a lot of barriers to entry. It’s hard to sell to large management companies, for instance. Multifamily is battling for margins.
(46:00) – If you’re open-minded about embracing technology and thinking outside of the box, you’ll be better at improving the status quo and operations and the ROI. Evaluate your own hierarchy of needs. You’ll find the solution is almost always through technology.
(49:30) — If the market is telling you great things, that’s demonstrated by revenue and customer base. (50:00) – There have been lots of acquisitions in multifamily even through the pandemic. As metrics go, look for growth in venture investments. If a company is not doing things at scale, that’s not a startup, that’s a small business.
Connect with Nick and Shadow Ventures:
LinkedIn: https://www.linkedin.com/in/nick-durham-a3708724/
Instagram: https://www.instagram.com/shadow.ventures/
Website: https://shadow.vc/
Nick’s Report: https://shadow.vc/state-of-multifamily-tech/