Does Your Proptech Vendor Understands the CRE Industry?

This may sound off topic, but it isn’t. A few years ago, a startup in Silicon Valley decided it would build and sell the ultimate, Wi-Fi enabled, self-directing toaster oven. And ridiculously expensive. As Fast Company headlined an article at the time, “This $1,500 Toaster Oven Is Everything That’s Wrong With Silicon Valley Design.” Following up with, “Automated yet distracting. Boastful yet mediocre. Confident yet wrong.”

Being smart is terrific. It also brings danger, particularly the fallacy that proven ability in one area grants keen insight into all others. This is true for people with many types of advanced expertise, whether as a college professor, lawyer, physician, business executive — or technologist considering a new market like CRE for a “disruptive” entry.

Sarah Klearman, a reporter for the San Francisco Business Times, recently wrote about this in the context of proptech companies expecting to revolutionize construction only to crash, wasting perhaps hundreds of millions of dollars raised.

“They may not fully grasp the scale of the problem they’ve set out to solve, said Cyrus Sanandaji, whose development firm Presidio Bay Ventures has been an early investor in a score of proptechs, including building management company Latch and failed co-living startup Starcity,” she wrote. “And because proptech founders look at their companies through a technology lens, they’re prone to reworking their product, said Andy Ball, president of Oakland developer oWow — sometimes jumping to the next iteration of their product before perfecting the last one.”

This isn’t restricted to construction, though perhaps, because of the physical nature and complications, it might be more obvious when things go wrong. But in any type of technology directed toward an industry, like CRE, it’s important to check the background of the people behind it. Especially for a startup and among top executives and product designers.

Getting an outside view of a problem can be helpful. Where it goes wrong is when the people with the view assume they grasp the extent of all complications in an endeavor. How long did it take you to really understand the part of CRE in which you work? Not just the basics, but the intricacies where proper addressing can make the difference between failure and success?

Again, this doesn’t mean an offering from people who know something about business processes in general and who can translate such observations into software or hardware that works have nothing to offer. Of course they do, but only when listening carefully to people who are experts in all the aspects of the industry in question. The tech experts might see a way to make things easier. However, they need to learn all the concerns that experts in, say, CRE almost take for granted as something everyone knows to address.