Being on the road a lot lately visiting with startups, attending conferences and also meeting with the large brokerage firms/developers and their top tech people, has convinced me of one thing for certain about CRE tech… only the strongest will survive! And to survive you need a company! Like a real company. Strong leadership at the top. Deep bench. On staff programmers and developers. Real deal flow. A seasoned Board Of Advisors. Growing revenue and cash in the bank!
It’s getting harder and more competitive than ever to gain market share in the commercial real estate tech sector. Competition is heating up and it’s coming from all parts of the industry. And while the amount of funding might be up, it’s contained in fewer deals… meaning the strong are getting stronger.
As a result of these trends, I think we are going to see many one-off sites struggle to survive. It’s simply too hard to gain traction and ultimately revenue if you have a single product strategy. While the technology may be amazing, the user base is too fragmented and slow to adopt tech and it will take a long, long time to really break through.
Companies on the other hand have the time, talent and resources to be patient, reinvest in getting better and devote enormous resources to sales and marketing.
Knowing this trend is probably going to only accelerate in the future, if I were a startup I would consider the following strategies:
1. Hire the best talent you can find NOW! Build the deepest bench you can and reinvest all in people. Your team will be your best advocate in the marketplace, while your product may take longer to fully bake in the marketplace.
2. Leverage other sites by creating synergistic alliances. By partnering with other sites you are not only pooling resources, but you are making it easier to gain users by creating a multiple product solution.
3. Sell. By selling to one of the larger “companies” in the space and joining their team, you are effectively leveraging their resources and taking your talents on to a bigger playing field.
I think over the next few years we are going to see the biggest companies get bigger. Hundreds of employees. Huge revenue growth. Big time valuations. And perhaps one or two going public.
Therefore, it’s going to get harder and harder for the smaller startups to compete unless they can adopt strategies that will give them the tools and talent to aggressively scale themselves.