When Real Estate Flows - Episode #1
The LoanBoss Team
July 28, 2022
Welcome to our first ever When Real Estate Flows Podcast Transcript. Click here to listen instead!
Rizwan: Hi, my name is Rizwan.
Sydney: And I'm Sydney.
Rizwan: This is the first episode of the When Real Estate Flows podcast. The idea for this podcast grew out of a series of conversations that Sydney and I have had since I've been onboarding here at LoanBoss. I'm the new head of marketing, and Sydney is on the product development side. She's been teaching me the process that the LoanBoss team goes through to take what commercial real estate practitioners do and turn it into workflows that can be automated. We realized that this isn't a conversation that should just live inside the office between the two of us, that it could be shared with the world. So, Sydney, do you want to tell me what you've been working on here at LoanBoss and how these workflows impact what we build?
Sydney: I am a Client Experience Manager here at LoanBoss. I sit on a bridge between what our clients need and what things we feel we can automate for them through the developers into the actual execution of that automation. So, a lot of what I do is identify things that could be automated and things that maybe shouldn't be automated, take it through the design and product process, and get our system in front of clients and get them using it.
Rizwan: So, what's the biggest challenge? It seems to be a job based on translation. Taking the words of a commercial real estate asset manager and translating it into an understandable set of steps for the LoanBoss developer team to go add to the software. How do you even begin to make that translation from commercial real estate to developer?
Sydney: It's quite the process. It begins with the client: understanding where they're coming from, their difficulties, and what they're looking to have alleviated in their roles and what they're not. Then, translating that into an actionable game plan and creating a product vision for us. Finally, it’s a process of solving through the LoanBoss gameplan, translating it into actual steps for developers to go code, and then translating that material into the software.
Rizwan: What got me hooked when we started talking was that it wasn't just a conversation about what the system is. The common questions of “What's the model?", "What are the workflows?”, “How do we automate it?” It was a conversation around what a commercial mortgage broker does in his day. What are the workflows that make up his day? What are the checklists? What should stay as a mental model, what can be automated and software, turned to just excel. Thinking through all of that, I realized that it wasn't just about what can we build, it was about what should be made and what shouldn't be. I don't think I've ever experienced that before. So, tell me, these are some things you've come across where it's a part of brokers workflow process that shouldn't be built?
Sydney: Sure. I think you hit the nail on the head with just excel, it's a language that brokers speak. We shouldn't try and replace that. Doing client interviews, or just general interviews with brokers, they feel more comfortable going to their spreadsheet to organize their next steps, you know, here's who I need to call next, here's a formula that I want to go lay out. There are parts of that, that we can help become better organized. So, there's some level of automation we can put there. But we're not going to replace someone's comfort with going to their language at the end of the day. That’s something we should stay out of.
Rizwan: As someone who has been on the other side of this, at times when I was looking at software as an asset manager to implement, I was always frustrated by the sales guy who was telling me how he was going to do Excel better. I kept having this conversation over and over again. Excel isn't a program. To me, it's how I'm visually and physically expressing the thoughts in my head. It’s the way I think through a problem. You can't replace that because you can't get in my head, you can't make whatever it is you're building so flexible, that it can be the programming language that Excel effectively is. So, what I need from you is to give me the inputs to my thoughts that are tough for me to model out in Excel.
Sydney: Yes, that's something we have been realizing more recently. Early on, I think we made the mistake of telling potential clients that LoanBoss could replicate and automate their Excel sheet, and we were wrong in that. I think we've been realizing that, especially now, I'll hear clients always say that they want to use LoanBoss, that they're paying to use LoanBoss. It helps them organize their information, gives them power over their information, but at the end of the day, they want to be able to export it and go explore it into their language. The mistake we made was saying the LoanBoss software is for replacing their language. Now, we focus more on letting them do the steps they want to and allowing us to take out the annoying parts of their day: like pulling loan docs and trying to read through 300 pages. Let us do that part. Then, we'll give you what you need, let you go export it and do like what you feel comfortable with, and then you take it to your language.
Rizwan: I'm jealous, I wish I had this kind of solution, or at least these types of service providers who would think the way I thought, and slow down and pay attention, I think that's the part of your job that I'm most jealous of. You get to go talk to clients, and just break down their days. Asking the questions, “just what do you do on a normal Monday if you're a broker?” “How do you spend your time?” “What are your five go-to pieces of software?” “Why did you choose them?” “What works? what doesn't?” So, being a part of and furthering that conversation is the purpose of this podcast. What I'm hoping we'll get to do here is hear what you're learning from clients, but more importantly, talk through these problems with other people who aren't necessarily already inside LoanBoss. Because these are just better ways of doing business. Why not have these conversations here, instead of keeping them inside the company?
Sydney: No, I agree. I'm happy to share. I sometimes sit in my little box with my headphones, just talking to tech folks. But the more we talk about it the more we can explore all the different perspectives you can take on it. And so I appreciate hearing your perspective, and sometimes I feel like I'm sharing, “Oh, yeah, we do this whole workflow, mental modeling process,” and yada, yada. And it's all to just execute this technology. And you're like, wait, that's interesting to talk about! And I'm like, wait, that's interesting to talk about! Let's talk about it.
Rizwan: My hope is also is to bring in some interesting people to help think and talk about specific topics and to just have maybe a little bit more in-depth conversations about the space in general and the intersection between technology and commercial real estate. I don't think that there's even a defined language around this yet. We talked about doing it on a future podcast, but I don't know, do you think we could do five minutes now?
Sydney: Yeah. Vocabulary, vernacular. Alright. Sounds good.
Rizwan: So I'm incredibly frustrated as a marketer because there isn't an agreed upon vocabulary to discuss any of this and the words that everyone's choosing are long. And that's a real problem in in my world. So, for instance, we're talking about, like I said, the intersection of technology and commercial real estate. Well, commercial real estate's a mouthful. It may or may not include multi-family real estate, sometimes it does, sometimes it doesn't. But to be complete now, am I saying multifamily and commercial real estate? Aside from that, when we talk about technology, we're definitely in the world of FinTech, right? But would you say that you work in FinTech? Or would you say you work in something more specific?
Sydney: I would say Fintech is the umbrella term. But there's a sub-category of that, right. It's like CRETech, maybe your PropTech, but it's not, well, there are two of them. Which one? Oh, it's probably more CRETech, well, what are they? What's PropTech to you? More property based? Like, I feel like PropTech is more like Yardi, to me.
Rizwan: Okay, so so from my perspective, after talking to as many people as I can, PropTech is technically around any piece of technology that helps you manage an individual property. Right? That could be either commercial or residential. But then it gets really broad and useless as a term. Instead, let's say PropTech is at the property level. So your property management systems, like Yardi, are PropTech for sure. But then LoanBoss, is one level above that, right. And so some people are calling that CRETech, but that hasn't caught on. It's kind of a mouthful. And we don't know if that includes multifamily. Again, one of my pet peeves.
Sydney: Yeah, otherwise, we're just gonna say, CRETech, which is not great.
Rizwan: I would like to go out to get a drink with friends and be able to tell them what I do and what my industry is. Because if I say hey, I work in real estate, they're going to be like, Oh, so you sell homes? No, not quite. Commercial real estate? But I don’t sell commercial buildings either. So FinTech? Well, yeah, kind of, but by then I'm just tired of the conversation. I'd like better words.
Sydney: And then we throw interest rates and risk management, and they're like, what?
Rizwan: Oh, well, if we talk about the the finance side of the business, where we're dealing with derivatives and all of that. Okay, well, that's financial services, but it's commercial real estate financial services. And I don't think that's the thing we do, actually. I mean, it is a thing, but also not a term that I could use on a website on explaining what I do to someone at a bar. So to me, it's not really a useful term.
Sydney: Well, maybe one of the reasons is, it's just such a new space.
Rizwan: It's a new space for commercial real estate operators. Commercial real estate is the kind of business that still runs from the 1960s on back literal backs of envelopes, sometimes at dinner, their whole series of owners or owners Emeritus, who won't trust anything that they can't help themselves. And so that's just kind of what we're saddled with it. Anybody in the industry knows it's been difficult to automate and modernize. It's one of the last holdouts. That’s why so much money is now being thrown at PropTech. Just going with PropTech right now works, because it's one of those final FinTech areas that nobody's been able to solve. And maybe part of that is since they've been able to do it their way in, in analog, they haven't had to standardize words, the way words have been normalized to a fault in other industries.
Sydney: What do you do? Sorry, if this branches off, so reel me back in if this is out of left field, but I'm wondering, why do you think it is that it stays so, I don't want to say antiquated, but so hesitant to change?
Rizwan: I'll give you an anecdote. Okay. So there's a guy, he started from nothing, he ended up somehow getting some money that money partners in and buys his first apartment building, turns that into a second apartment building his third apartment building his first office building. Now he's got a shopping center. Right? He needs a really small team. This isn't one of those industries, where you need a 50 person 150 person team and to standardize vocabulary. It's him. It's his nephew, eventually his son, and probably a couple of friends through business who now work together, right? And they control $150 million in real estate in New York. And they're making plenty of money. And there are so few of them, and they've got their way. And they've got their models that they built in Excel. And they're fine. So when somebody comes in is like, hey, we have a better way, the usual answer is, “Why change? I'm doing just fine as it is. I don't need to scale. I'm good. Thanks.”
They're also incredibly skeptical people, owners and operators, general partners, because they are constantly bothered by service providers. Maintenance people, SaaS providers, all these people who are just trying to add expenses and mess up their IRR. So, my initial reaction to every ask is no. You have to prove to me that it's in my best interest to pay attention. But now, there is a new generation of owners who are coming up who are tech natives, who don't see that the same way. But that older generation is still there. And they still have to be convinced. And they're not.
The other thing is, most of these guys have spent the last 20 years getting burned by tech companies. Since 2000, there have been tech people coming in telling them they have better solutions. There are a lot of numbers, there are a lot of moving parts, there are a lot of people involved in putting together the financials, that all of this runs on to port over from one system to another can take 12 months. So if you get it wrong, the cost of it and what you're stuck with is so astronomical, that you'd rather just not. And it makes me wonder something like almost is easier coming in as a new category. We're not replacing anything. We're not coming in and replacing your property management system. We're a new solution that can just sit on top of what you're already doing and help you make better decisions. But at the same time, why bother if everything's working?
Which brings us to the last little bit here before we should probably wrap up the first episode. And the reason you should pay attention, at least for LoanBoss right now, is because of what's happening in the world with inflation and interest rates and how important that will be as part of your portfolio. You need to manage that better. Most of these people don't know how to manage it in a rising interest rate environment because unless you were doing this in 1979 or 1981 you have no experience with this market environment. And the more information you have, the quicker you can have it. The more informed you are, the more likely you are to make good decisions around your debt. So part of the reason I'm here is because I see that opportunity. But I don't know if we know how to manage those risks. Right? There aren't workflows for managing that right now.
Sydney: But what's interesting to me to what you're saying, the theme that we're going for is, I mean, once again, just realizing what you can automate, what you can't automate, what you can replace and what you can't. And our whole thing is we supplement not replace, just at a team level.
Rizwan: We make difficult things for you more accessible to do your job better. Oh, yeah.
Sydney: We make life easier. Can that be our tagline? LoanBoss. Live easy.
Rizwan: I like it. A lot. Thank you, everyone, for listening to the first episode of when real estate flows. Stay tuned for our next episode in a couple of weeks.