“Tech is not for everyone” is a phrase many will balk at – and with good reason.
The property sector has been getting its head around the fact that the polar opposite is true; that tech is all-encompassing, unavoidable and relevant to everyone as we look ahead to a more digital future.
As a concept, this remains the case. As a career, it is not so clear cut.
Just under five years ago Ryan Masiello left his role as a senior vice president in JLL’s New York office to set up VTS, the cloud-based leasing platform that is now operating in 40 markets across the globe.
In May 2016 the company raised $55m (£39m) in a Series C funding round that put its valuation at around $200m, before a merger with fellow leasing platform Hightower later that year bumped the figure up to $300m.
In short, VTS is one of the richest and most successful start-ups operating in the property sector to date.
Honest advice
But such success is rare. And when it comes to how the VTS team – led by chief executive Nick Romito – succeeded, Masiello doesn’t waste time on unnecessary sugar-coating.
“It is a very, very difficult thing to grow a business when people are constantly telling you they don’t want to change and are saying ‘no’ to you,” he says. “I know that because I spent six years building a software company. It is an extraordinarily challenging industry. So is it for everyone? Definitely not.”
For anyone not already put off the increasingly popular path from property to tech, Masiello does have some advice, and it is honest and without so much of a hue of rose-tint.
First and foremost, personal sacrifice is the name of the game when it comes to starting off in tech.
“For me personally, and for some of my co-founders, we worked for years without salaries when we started VTS,” he says. “We invested a ton of our own money and it is not like any of us are from wealthy families.”
He adds that for many, the risks that so often need to be taken to give a new business a real shot are just one step too far. And here he draws a distinction between the UK and US mentalities.
“I wouldn’t say people here in the UK are less entrepreneurial. I would say there is more comfort in settling at a certain point, though. In the States, and particularly in New York and San Francisco, the visions people have for their companies is enormous. And I think they are willing to risk a lot more to make that happen.
“Now, I’m just speaking from the people I have met but a lot here in the UK seem to have a bit more of a limit on where they want to go with products. They tend to take salaries earlier and not raise as much equity as they want to keep as much of their equity as they can.
“I definitely feel like the vibe in the States is at a different level to that I’ve seen so far in the UK market.”
Challenging move
Masiello adds that it is not just setting up a business in the tech sector that is so challenging; moving from corporate real estate into a role at an existing tech company can also be tough.
But that is not to say there aren’t plenty who have done it successfully both in the States and here in the UK – VTS’s own local UK team is headed up by former JLL agent Charlie Wade and ex-Knight Frank tech sector surveyor Seb Abigail. But Masiello warns it is not for everyone.
“There is a reason the churn ratio in this industry is close to 80%,” he says. “You need a thick skin. You have to be OK with unreturned calls. You are probably going to have to be much more open-minded about the way you do your job.
“And I think ultimately the people who are going to be successful over the next five to 10 years will not wait in or on the companies they previously worked for to give them the tools they need to make the transition. Because that will probably never happen. So they will have to be very curious and someone who takes a lot of pride in self-learning.”
The mentality up until now has been very much sink or swim, which is not the best way to grow.”
If only the challenges stopped there. Alas, there is a second hurdle to consider.
You can be as primed as possible for a role in tech off the back of a career in real estate, but if the company you join is not set up to train and integrate new staff, the transition is unlikely to be a smooth one.
“So many organisations are not set up for success in this way,” says Masiello. “You have to know what it takes to onboard someone properly if they do make that move from commercial real estate. They have to be well prepared for the challenges ahead because this is a very different sector.
“It is an enormous investment and you need a well-oiled machine to take someone new on. The mentality up until now has been very much sink or swim, which is not the best way to grow.”
Important role
So that’s the bad news. But the good news is that things are changing.
The line between property and tech is becoming increasingly blurred and the sectors are more in line with one another, which will make any transition between the two smoother.
Masiello points to one role in particular to highlight just how far the property and tech sides of the equation have come.
“Chief technology officers [CTOs] were the people within real estate companies that we started being pointed towards when we approached businesses maybe eight to 12 months in. And for a while they were huge roadblocks for us,” he says.
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“We felt they didn’t understand what we were trying to achieve and they felt like we were encroaching on their processes. It almost became like a war between us and the CTO community. But fast-forward to today and that role is fascinating.
“If implemented correctly it can be the most highly leveraged role within an organisation to truly drive efficiency. They are there to implement technology systems that work. Rather than boiling the ocean they are focusing on small wins to drive change within an organisation.”
Team building
He adds that more property businesses not only need to get behind the idea of hiring a strong CTO, but giving that person the platform they need to be successful.
“You should be looking for a leader for this role. A leader without an ego who can show they have a really strong track record either on the technical side of the equation or the business side of the equation.
“I would say companies should think about hiring for this role in the exact same way they would hire any other executive.
“You don’t hire someone at this level to be a lone wolf. You want somebody who can come in with a lot of operating strength and you want someone who can build a team.”
As for his thoughts on predictions of an emerging trend where CTOs are second-in-command to the chief executive, Masiello adds: “I don’t think that is farfetched at all if you have a CTO like say, Bill Murphy of Blackstone who is so dynamic and understands so many parts of the business, for example.”
Less farfetched than making a successful move from property to tech? Maybe not. Despite his warnings over difficult transition processes, Masiello concedes the demand for a property background is there.
“When you look at our peer group in this space there are some people who have great companies and great products but no one on their teams who has commercial real estate experience. So there is definitely a need for people with that background.”
And a thick skin.
Masiello on…
UK vs USA
“There has been tremendous uptake of technology and software platforms in the US and definitely the UK over the last 24 months.
“I have been blown away by how fast the UK market has been to adopt technology in that time period. It has moved a lot faster than we would have expected.
“I genuinely believe that if we continue to execute the way we have been and if our customers continue to adopt the software in the way they have been, we could be looking at a scenario in 18 to 24 months where the UK is actually ahead of the States in the way they are leveraging our platform. Especially in London.”
Brexit
“With respect to the way people use the product, I really think a market that softens a bit is actually going to be something that sparks the need for more technology.
“I know people won’t want to hear me say that. If you look at vacancy rates, particularly in central London, they are mind-blowingly low.
“The market here has been such a healthy place, that’s when people feel like they don’t need to change. There is no real pain to be endured.
“So I think Brexit could be something that actually ends up benefiting us from a technology perspective in a big way. “
Digital transformation
“There is only so long you can ignore a group of peers adopting new technologies. And that group is getting bigger and bigger.
“So now, when we are calling people up, they often have no idea that Landsec is now leveraging our product on their entire portfolio. They don’t know we are working with the likes of Derwent and Aberdeen.
“Some of the names popping up are surprising people and they are definitely starting to feel like they need to get on board or risk getting left behind.”
To send feedback, e-mail emily.wright@egi.co.uk or tweet @EmilyW_9 or @estatesgazette
