Reflections on Real Estate Innovation
Jack Sibley - Head of Partnerships
In my career to date, I’ve been lucky enough to have experienced life on both sides of the table: leading innovation for a large real estate investor as well as heading up partnerships for a real estate tech start-up. Switching sides from large corporate to lean startup, from client to supplier, in the middle of a global pandemic, has been an exciting, challenging and enriching experience.
With 2021 now behind us, I thought it would be a good time to reflect on the experience of crossing over and some of my personal learnings.
What I’ve learnt
Push vs pull
The biggest difference on a day-to-day basis and the hardest piece to adapt to is the change from ‘pull to push’. Working in innovation on the client side at a large corporate, it is very easy to fill up days and weeks meeting start-ups and potential suppliers. Once you’re on the start-up side, it takes a lot more work to get time in speaking to the right people. This doesn’t just change how you spend your time day-to-day, it also impacts your ego and requires a different kind of motivation to do well.
Getting from rhetoric to reality with landlords
Many landlords genuinely have an interest in innovation and more and more know how to ‘talk innovation’. However, in practice, unless they have an immediate opportunity in their portfolio to implement your solution and create short-term quantifiable benefit, the adoption timeline is long and uncertain. This was always something I was very aware of when running innovation initiatives at a real estate firm, but it’s especially highlighted when you’re on the other side of the table.
Pace of change
In contrast to a large corporate, a start-up can accomplish a huge amount in an extremely short amount of time. A lot of this comes from streamlined decision making processes and having little/no legacy business lines to protect. Because you’re working in a small team, you also have a vastly more direct impact than in a larger organisation. This ability to personally create significant change quickly is what is addictive about working at a start-up.
Takeaways for real estate
Incentivise and Empower
Many landlords use operating structures that are designed for a time when real estate was all about ‘location, location, location’. In this traditional asset management approach, almost all decisions are made at the building level (or even the lease level). This makes it hard for asset managers to take on ‘innovation risk’ for the benefit of the broader business and portfolio. In my experience, more explicit incentives are needed to align the interests of those looking after asset-level performance with platform-level priorities when it comes to innovation.
The Rise of the ‘Innovation Leads’
Many real estate companies are creating innovation roles similar to my previous role at Nuveen. However, unless clearly defined, there is always a danger with these roles that they end up prioritizing ‘innovation theater’ (making the organisation appear in touch with innovation externally) rather than driving actual innovation adoption within portfolios. Ultimately, the people in platform-level innovation roles need to be empowered with their own budgets and more accountability for the value they are generating across the business.
Being Bi-focal
The first step in any innovation strategy is to set key priorities for the year. However, real estate is so diverse and there are so many different areas of innovation going on, that it is sometimes easy to let those priorities lead towards tunnel vision and exclude potential ‘quick wins’ that could create value in the business in parallel to the annual priorities. To fully embrace innovation, you have to reserve some bandwidth to look beyond your strategic priorities and be able to be opportunistic where it makes sense.
Takeaways for startups
Aligning with Return on Investment (ROI)
When speaking to landlords, it's critical to align your solution as closely as possible with ROI linked to one of fundraising, marketing/leasing, acquisitions/disposals, development/refurbishment. These are the big drivers of investment returns for landlords. Anything that is not directly linked to these activities is often seen as too fuzzy to prioritise.
Real estate priorities can change fast
Because of the slow cycle of real estate operates, there can be instances when there is interest from landlords but no immediate adoption opportunity within their portfolio. However, priorities can change very quickly and a low probability client can suddenly become high probability if they have a conversation with a tenant/agent/investor that creates an adoption opportunity. It’s always worth maintaining positive relationships and staying in touch.
Your competitors face the same challenges
Although it can be frustrating, all the barriers you have to push through to get the adoption flywheel turning also have to be faced by your competitors. The harder it is to drive adoption, the bigger moat you are creating.
Would I recommend it?
There is no doubt that I’ve benefitted from having experienced life in both a global real estate investor and a proptech startup – seeing both sides of the spectrum is key to having a holistic understanding of how innovation happens in an industry like real estate. Understanding how large real estate companies think about innovation has definitely helped me perform my role at Insurami, and I would definitely be better at corporate innovation having had my experience working at Insurami.
It’s not for the faint hearted, but if you’re looking to switch to the other side of the table - I’d recommend taking the plunge...
