When I joined CompStak in 2012, we had only two full time employees: Michael Mandel, a commercial real estate broker turned CEO, and Vadim Belobrovka, a software engineer and CompStak’s CTO. Our office had one desk, shared by the co-founders, and our data only covered Manhattan. As I happily accepted a seat between Michael and Vadim, my brain was racing with ideas about growth. How can we put CompStak in the toolbox of every broker, appraiser, and researcher in the country?
Today, CompStak covers thirteen markets and has thousands of members, and this growth came by way of a grassroots approach. In every market, we first tried to win the junior brokers, researchers, and appraisers before moving up to the more senior tier. I’d like to share why we took this route, and why anyone looking to launch a technology product in the commercial real estate industry should also consider this method.
1. Grassroots movements are great for achieving the impossible
Breaking into CRE is like trying to achieve the impossible because the commercial real estate industry is resistant to change. Many of its influential participants have operated the same way for two or three decades, untouched by technology. The grassroots approach served CompStak well and helped us rally support from the bottom up, to transform the large, traditional power structures of the CRE brokerage industry.
2. The folks at the top are happy with the status quo
The top of the CRE industry is populated by powerful people who are very comfortable with the status quo, and have limited incentive to consider transformative ideas. We knew that until we were a proven company, the leaders of the largest real estate services firms would be reluctant to share data, so we turned to the individual professionals, who shared our vision of trading information. A product that catches the attention of the junior folks has the potential to spread virally and end up influencing those at the top.
3. There are more Innovators among the junior professionals
According to Rogers’ Diffusion of Innovations theory, new technology is adopted in stages. The first groups to try anything new are the Innovators and Early Adopters: opinion leaders who are willing to take the highest risks. The very last groups are the Late Majority and Laggards, who favor tradition and prefer to wait for the tipping point. To grow quickly in CRE, one should cater to the Innovators and Early Adopters – the thousands of brokers, researchers, and appraisers who have fewer than five years of experience. These professionals making their first strides in the industry have become CompStak’s greatest fans. That said, not all CRE industry leaders are Laggards. CompStak has many supporters high in rank, and those friends keep providing us with advice and help us open doors.
4. Junior CRE professionals are looking for resources to help them get started
Junior CRE professionals are taking risks and trying new products because they’re looking for every possible resource to gain an advantage and differentiate their work. They are also very likely to tell their peers about the best tools and platforms that provide the most value.
5. Junior CRE professionals favor free or low-cost resources
Younger CRE professionals often have limited financial resources and may be fed-up with the exorbitant prices charged by other data providers. Since technology products replace inefficient processes and offer high value at little or no cost, they are perfect for this group. This is why we came up with a business model that allowed them to use CompStak for free. It definitely helped our adoption rates.
6. Junior CRE professionals are more comfortable with technology
Having grown up in the Internet age, the junior CRE professionals understand tech platforms naturally, with very little hand holding. In contrast, the more senior group may reject valuable tech products because they may not understand the best way to use them. Our younger members are usually able to navigate the website effortlessly and find the data they need.
7. Industry leaders can’t really dictate which tools their brokers use
CRE brokers are independent contractors, who set their own meetings and select which prospects to target. As long as they generate commissions, everyone is happy. The national leaders can propose productivity tools, but cannot usually mandate their use; brokers fiercely protect their independence and will only follow the course that leads to closing more deals. Even if the leadership is convinced that the product is great, it does not ensure adoption by the brokers. In other words, it’s better to go with a grassroots campaign to win the brokers one by one.
8. The industry leaders can’t really prevent brokers from using specific tools
By the same token, it’s difficult for management to prevent brokers from using tools that brokers want and need – even if management thinks these tools are risking the status quo. The brokers will use the resources that help them close more deals, and if a service promotes this goal, it is likely to win widespread support.
At CompStak, we tried both the top-down and the bottom-up approach, and we learned that earning the wide support of the rank and file individuals really helped us get in front of the industry leaders. For example, CompStak Team, an extension of CompStak, allows a single avid CompStak member to bring her entire team on board, including the office principals. After a national brokerage has created several such teams, we offer them to roll CompStak on a national basis to the entire company.
A grassroots approach is not the only way to break into the commercial real estate industry, and the universe of new tech companies looking to make a home here have used various methods with varying degrees of success. Still, in our experience, those with an industry-transforming technology that is difficult for the industry leaders to stomach, may want to start with the rank and file folk, and build enough support until they tip the scale.
Danny Shachar is CompStak’s Director of Marketing. Danny loves talking to our users and particularly enjoys cataloging and tagging our community members into CRM sized bits. In his free time he tells the world about CompStak and finds creative ways to stretch our operations dollars. Danny has dabbled in real estate brokerage, development and construction, but being a part of the CompStak team is his favorite. He stumbled upon Michael and Vadim after a brief MBA stint at Carnegie Mellon and never looked back.
Photo Credit: “Small Tree” by amenic181 Source: freedigitalphotos.net