Interview With Founders Of RealMassive.com Craig Hancock And Joshua McClure

--HOLD FOR PUBLISHING--

 

Tim: We're on today with Craig Hancock and Joshua McClure, the founders of a new commercial real-estate related website, realmassive.com. Thanks for being with us today, guys.

 

Joshua McClure: Happy to be here with you.

 

Tim: Now, realmassive.com, can you explain to me exactly what the site is, and what it's meant to achieve?

 

Joshua: Sure. So, realmasive.com is the product of commercial real estate listing, specifically leasing, exclusive listing agencies wanting to go direct. Demanding that they are brought up to speed within their industry, with modern marketing tools to be able to automate the process of updating their websites, of getting their listings and their availabilities out to the other commercial real estate professionals who want to see them in an accurate and timely way. In the course of doing that, we have developed what is turning into a database of records of availability information. We currently have about 4.7 billion square feet of coverage across the United States, with thirty-three active markets all major metropolitan locales.

 

Tim: Okay, so basically, this is sharing listings, sort of, of commercial real estate across a wider audience? Because I know most properties are only marketed locally.

 

Joshua: That's correct. Yeah, so we've added a lot of convenience to workflow automation, to allow brokers' assistants and marketing managers to be able to syndicate and publish their listings out to a national audience, and more specially to a local audience of business owners looking for space. So it's a very Zillow-like user experience on that front end. On the back end, we have an extremely data scalable infrastructure that allows us to do all kinds of machine learning and physical modeling on the availability data. This especially gives us a bid ask spread on the market that has leached to a certain data maturity level. So, we've got a couple of markets where that's happened, now.

 

Tim: Okay, now, where'd you guys come up with the idea for this? Because, I mean, it does sound a lot like Zillow for commercial real estate.

 

Joshua: That's right, yeah. So, basically, in my previous business, I had an iPhone development company that was an enterprise-class mobile application development firm. We were growing pretty fast. I had contracts with major retailers, major retailer servicing companies that dealt with inventory, etc. So, it was a growing firm, and we were growing pretty fast. I needed to find some office space, and realized there wasn't a Zillow for commercial real estate. There wasn't a Zillow for office spaces. It was very, very difficult for us to find space, and we were working with tenant reps that were moving very slowly, and when they explained the process that they had to go through to try to find the office space, I was just absolutely amazed, realized that there needed to be a Zillow and contracted my friend from the Air Force Academy, Craig Hancock, who was doing investment banking, and asked him to help me sell my iPhone development firm and raise money for this new company. In the process, he saw the investor reaction and the market uptake on what we were doing, and quit his job and joined me. He's now my partner and president, co-founder in the company.

 

Tim: This sounds like it'd be really useful for larger companies that have operations all over the United States. I mean, it would be, it would seem to me to be almost a go-to application at this point, it's going to cut a lot of steps out of the looking-for-office-space process.

 

Joshua: That's right. Yeah. I'm going to let Craig answer that question. It really has to do with the relationships we've made across the entire country. And so, Craig, do you want to talk about the relationships we've made across the country, national?

 

Craig Hancock: Tim, can you repeat the question? I missed the question.

 

Tim: Well, it's a comment as much as a question. It seems to me that larger companies in the US that have operations all over the country are going to find this, incredibly useful, because they can deal with one source instead of three hundred different brokers.

 

Craig: From a searching standpoint, Tim, I think you're right.  They're gonna be able to search, for the first time ever, and start to look at what is available on the market place. But, the interesting thing about commercial real estate is, it's an incredibly unique transaction when a lease goes down. Which means that, the tenant, the landlord, the market, the broker, the terms of the deal, are not something that are likely to be commoditized. And, having that local knowledge about the marketplace is always going to be paramount to getting a good, successful field run. So, that's going to require a local broker to help you get that deal consummated. But, the ability to search for space and see what your options might be for your company will now be available to those companies that are either just in their local market, or if they're looking to move across the country.

 

Tim: Gotcha. Now, you're thirty-three markets now in the United States. Have you been able to develop relationships with local commercial real estate brokers in those markets, so you've got the right listings on the site?

 

Joshua: Yes, in all those markets, we have. There's, most markets, the relationships that we have count for the top twenty to twenty five or thirty firms in that market, which, in most markets across the country, those firms control and manage the entire commercial real estate process in those markets. And so, it's a pretty important thing for those looking locally as well as nationally, so there's local firms and markets, that only live in a certain market, and then there's the national firms, like CBRE or JLL or Cushman or Davis and Young that are all over the country in multiple markets.

 

Tim: Okay. I guess, you're using a subscription-based model to sell this initially, correct?

 

Craig: That's correct.

 

Tim: Who do you see as being your target market? Who's going to sign up for this?

 

Joshua: Well, that's the interesting thing that we've found, is that, the consumer of commercial real estate availability data is not one single person in the industry. The consumer of that data is not only the perspective tenant, or their broker, but the consumer of that availability also extends on the asset manager side, who's trying to determine what other assets he or she is up against in the marketplace. It also extends into the world of finance, as well. Folks are doing due diligence on certain markets, and whether or not to decide to acquire or dispose, or move in or out of certain markets, knowing what's available in that marketplace, that basic question and the data around that question is applicable to all of those different types of folks.

 

Tim: It strikes me that a commercial real estate investor would find you valuable, too, because they could quickly compare cap rates, lease rates, in different markets across the country, and get a better target on where they wanted to invest.

 

Joshua: That's exactly why the largest asset managers in this country have taken particular interest in what our platform can do to help them in their processes. Having a rich marketplace of data, that enables them to make more data-driven decisions around their managing their portfolios, is exactly what they're interested in, and that's what the presence of our platform across these various markets is going to give them.

 

Tim: I would think every REIT and hedge fund, or alternative investment firm specializing in real estate, would be signing up for this, because it's, you can really focus on the different markets.

 

Joshua: Yes.

 

Tim: Okay. Next question. Okay, now, expansion plans. I assume you're not going to stop at thirty-three markets. What's next for RealMassive?

 

Craig: We've got, total, in this country, we've targeted, there's about 70 markets right now that we think are launchable. We'll likely finish most of those markets this year, in 2015. And, what we're doing is installing that national platform at the same time that we're making sure that our data in our more mature market becomes richer and deeper as well as broader.

 

Tim: Okay. And even in the existing markets, I assume that you're always looking to develop new relationships with firms in the town, both buyers and leasers?

 

Craig: Yes.

 

Tim: Okay. Now, you guys are a pretty new company. How's the funding going? Is that, has that been an issue so far, or does that look like that's going to be okay?

 

Craig: It's been exciting. It's been real exciting. We can't go into too much detail, we're going to be closing our series A in the next couple of weeks, so we're at the tail end of that. So, we don't want to talk too much about it, you know, but it's very exciting, and we're getting to deal with the blue bloods of Silicon Valley, and the some of the largest strategic investors in the world. So, it's been really fun.

 

Tim: Beautiful. Okay, now you've got all the leasing data. Is there any thoughts about adding for-sale commercial real estate listings in the future?

 

Craig: That's correct.

 

Tim: So, you will be adding property for sale in addition to just property for lease, as time goes by?

 

Joshua: Yes. The property for sale section will be different shades of exclusivity. So, we'll have an off-the-market product, very similar to real capital markets. We'll have a more public listing service for the smaller, more approachable assets. And, that's sort of the two extremes of those shades of exclusivity. It will be a premium product, it won't be a Zillow, for-sale commercial properties. It'll be more of a, we're going to try to keep it a little bit more exclusive, simply to keep the qualification level of the brokers, professional investors, at high levels, so you don't have to do a lot of due diligence on the purchaser of an asset if you're actually listed on that system. It's similar to the way real capital market ended up doing it.

 

Tim: Okay. Now, in the business model, do you guys make money just on the subscription side, or do you get a percentage of a transaction as well?

 

Craig: No, not just on the subscription side. We've got some other products that we're gonna sell, but- none of those products are tied, at all, to taking a percentage or fee for the transaction. It's been one of the more important decisions we've made as a company, from a business model perspective, as well as not allowing anybody at RealMassive to maintain an active broker's licence. We're in the business of serving this industry with data and technology. And, we cannot put ourselves in any form or fashion in a competitive position with the very industry we're trying to serve.

 

Tim: Okay. I think you would run into some very widespread licensing issues across the states as well. If you did that.

 

Joshua: That's correct. One of our first legal meetings brought that issue up, and we would need to be extremely clear that in no way are we monetized on a contingent basis, at all. So, it's purely subscription-based, everything that we do. So, we have the subscription to our more premium, exclusive products, and it is- they are very premium, the baseline subscription is $357 a month. The higher order subscription and fees get into $1200 a month, and then the other fees that we charge go up higher and higher and higher, depending on the skills of the product, for instance national visibility into the national real estate market, is an extremely high end premium product.

 

Tim: Okay. And, how are subscriptions running so far? Are you seeing pretty widespread acceptance to this idea?

 

Joshua: This is more like what you've read about in Silicon Valley plays. We have not monetized this platform at all. Our sole goal at this point is market share. So, we're spreading across the country as fast as possible. We've taken thirty-three markets in eighteen months. For roughly 12.7 billion square feet in eighteen months. We've been through seven offices in eighteen months. We've grown to about twenty-eight full-time employees here in Austin, Texas. So, we're extremely aggressively capitalized in order to reach a size of the company that this can be.

 

Tim: Okay. That makes sense. I should have done this at the top, but can you guys each take a minute and tell us a little bit about your background and how you came to be working here together on this project?

 

Craig: Sure. So, this is Craig Hancock, I'll start. I joined up with Josh shortly after he started working on this idea, wanted to help him just do some industry analysis on this and build the business model. My background, most recently, was on Wall Street as a market analyst, studying technology companies. So, I put that skill set to work here, and ended up seeing the opportunity at hand and joined him full time shortly after.

 

Joshua: My background is, I'm a serial entrepreneur. Before that, I was in the Air Force, I did Business Management for Intelligence Operations and Intelligence Programs in the Airforce. My most recent assignment was Air Intelligence Agency, I worked on the Information Workers and Battle Staff, at the headquarters of the Air Intelligence Agency for the US Airforce.

 

Tim: Okay. Both of you guys went to the Air Force Academy, correct?

 

Craig: That's correct. We actually graduated the same year, we were project partners, et cetera, in several of our classes, we were both business majors.

 

Tim: Okay. So, one of you played on the football team, which was that?

 

Joshua: That was Craig.

 

Tim: Yeah, okay. I grew up in Annapolis and had Navy season football tickets for years, so odds are I saw you play at some point during your career.

 

Joshua: No!

 

Tim: Okay. You guys view yourselves more as a tech company than a real estate company, I take it.

 

Craig: I say we've got one foot in each world. Although I have a few years of background in real estate marketing and commercial real estate, specifically in multi-family developments, so new developments, filling up multi-family condos, that sort of thing, I would say that we're both definitely outsiders to the industry, and we're taking an outsider's perspective on it. So, we hired insiders within the industry. Mark Daniel is on the phone, he's a twenty-seven year veteran of the commercial real estate, institutional side, asset manager side of the business. And, really, our job is to listen to our customers. It's really our customers who pull us into the problem, pull us into the solution that they envision for that problem. And, have envisioned for the last decade. They've been waiting for Silicon Valley to come to commercial real estate and we finally really get across what it is we're doing. There's a sigh of relief. They've been waiting for this.

 

Tim: Okay. Now, as you're expanding across these different markets across the United States, are you guys developing any sort of view of the conditions of the commercial real estate market right now? It's been a much slower recovery there than, say, residential real estate.

 

Joshua: Right now, right now we are not at that level in our markets, with the exception of Austin, which is our most mature market. The nature of what we're doing requires that data that we collect and curate in the market to mature. And, once that data matures, then we're gonna start to have some pretty interesting insights into the dynamics of that given market. And, we've been expanding across the country at a rate over the last nine to twelve months that, at this point in time, Austin is our only market that we're even close to achieving market-level intelligence or insight. The rest of them are going to require quite a few more months of maturity and development before we have the information of that vein.

 

Tim: Okay, because I think what you get there, I think there's a real market just for the data that you develop from the listings and everything. So, just a thought there.

 

Joshua: Yeah, no, one of the exciting things about the data, we built the business model with this in center of the plan, because we don't make any money selling the basic availability data in the marketplace, we have open ATIs to the entire data set of what we have on the platform across the country, which has been exciting for our conversations with our customers, with investors, with technology partners, with the smart folks that want to build apps for commercial, they develop for the access. So, that data, through a real-time ATI is what we currently have available.

 

Tim: Now, it really sounds to me, like, as you said, the market was waiting for you with this product. Why do you think it took so long for anybody to come up with this idea? I mean, the online residential stuff has been up there for years now.

 

Craig: Literally hundreds of people have had the idea. Bloomberg tried it and failed. Various different other companies tried it and failed. Luke.net tried it, you're probably familiar with Luke.net Rich Boyle was the CEO and chairman. We briefed him on what we're doing, and I think he's a fan. We had a really good conversation. But, they figured it out, and they were very successful, they had a successful exit to CoStar, on for about eight hundred million dollars. So, really, Craig and I have listened to customers, and we've also just really studied in-depth the background of the investment bankers studying in technology company models. We studied Luke.net in depth, and tried to take up where Luke.net left off. If Luke.net had not been bought by CoStar what would Luke.net do in 2015 with that data in the age of machine learning and artificial intelligence, and modernizing the market? What would happen? And, so, that's where we're headed right now. That's where we're at right now.

 

Tim: Okay. The readership of this is going to comprise of a lot of people who are potential users, and maybe even investors in the company, down the road. What final thoughts about RealMassive can you leave with them?

 

Craig: That's a good question. What are the- I don't think the- I guess the- what we leave it at is, there are not any real final thoughts to RealMassive. We've gotten over the major wall, we've created a gateway into what was a walled-off data set. And has been walled off for many, many, years. And now, we control the gateway to that data. And the gateway is pretty much wide open. We're allowing people in, like sales force, like other technology partners who want to consume the data and get a view on that data. We have people who want to contribute data to the pile, and thereby be resold out to the players, for instance, Core Logic, and other data providers who want to allow their data to be combined with our data. So, that means flat numbers, etc. And then there's other companies like option.com and Google, who are extremely interested in helping us with this situation. We informed a little bit of a center of gravity now in leasing availability data, and it's pulling partners to us, the same way it's pulling interested reporters and thought-leaders like Sam Chandan, yourself, and others.

 

Tim: Okay. Sounds like you guys have a potential game-changing product in the commercial real estate market, and I want to thank you for spending a little time with us today, and tell us about the future vision of your company. I think it's pretty exciting.

 

Craig: Thanks so much.