As tech expands in commercial real estate, Hightower is on the forefront of that development.
THIS ARTICLE WAS PUBLISHED IN THE ‘Q’ – THE REGISTRY’S PRINT PUBLICATION – IN JANUARY 2016[dropcap]I[/dropcap]n 2013, Brandon Weber left his job as first vice president at CBRE to start Hightower. While he loved working in commercial real estate, he had become “beyond frustrated” with the industry’s inadequate tools. A former product manager on the Excel team at Microsoft and then Zillow, he knew the technologies he had helped build that revolutionized other industries could do the same for commercial real estate. So he teamed up with Donald DeSantis and Niall Smart and embarked on a mission to transform commercial real estate.
Since launching in a Seattle coffee shop in 2013, Hightower has raised almost $22 million in funding and now powers end-to-end leasing for thousands of commercial landlords and brokers around the world. The company is now headquartered in Manhattan with 70 employees and offices in 6 cities – including newly opened outposts in Los Angeles and San Francisco.
[contextly_sidebar id=”5K3Fr58OYBx4OonTOwhAc9LheAbrtTiY”]TR: 2015 was probably the breakout year for commercial real estate technology. What milestones did Hightower hit during 2015 of which you are especially proud?
WEBER: Absolutely, on every metric – venture funding, new customers, companies started – 2015 has been the biggest year for commercial real estate (CRE) technology. It’s been a breakout year for Hightower, as well. Our highlights from 2015 include:
– Tripling the team to 70 people
– Growing assets on the platform by over 500 percent, now powering leasing in over 480 cities across five countries
– Opening four new offices in the US and Canada
– Being named #37 on the Crain’s New York 100 best places to work
– Winning the Digie for the best new CRE technology at Realcomm
– Raising $13 million in Series B funding, bringing our total funding to $22 million
TR: Your company and the services you and others provide to the commercial real estate industry are coming into their own. What challenges remain to faster and broader adoption?
WEBER: The good news is that today major commercial owners and brokerages now recognize that they need to move quickly on new technology to gain a strategic edge. That was not the case 12 months ago, when we were still combating skepticism of the impact of technology on CRE.
Now that the urgency is there, the friction point has moved to education on how to actually roll out. For many of our largest clients, Hightower and others are their first ever experience with a cloud and mobile technology platform. CRE firms don’t have the best track record of deploying technology and as a result there’s a lot of organizational scar tissue. They’re used to 12-18 months to roll timelines that cost hundreds of thousands, if not millions, of dollars.
The good news is that modern technology like Hightower is dramatically easier to deploy (taking weeks not years). We’re now being asked for best practices on roll out and have built out a customer success team whose sole function is to provide thought leadership and support to new customers as they evaluate and implement Hightower.
TR: What are some of the biggest pushback issues that your clients/prospects bring up?
WEBER: Since the cloud computing is so new to CRE, one of the first questions we get is around data security and information rights. We’ve invested heavily in technology and 3rd party security testing to ensure that Hightower security is institutional grade. This is critical for our publicly traded REIT customers.
Also, since brokers are a key part of the Hightower ecosystem, we always get the question, “Will brokers use it?” The skepticism is understandable, given the poor track record of technology in CRE, but we’re proud of the fact that over 3,600 brokers use Hightower. My background in CRE was commercial brokerage, so I understand their world, and we’ve been laser focused on building a platform that saves brokers hours of reporting a week. They love it.
TR: How big are technology services as an industry in dollar terms, and how big will this be 10 years from now?
WEBER: CRE technology companies earn $2-3 billion in revenue a year in the US. What’s amazing though is that most of these companies are over 30 years old with antiquated technology that barely leverages mobility, cloud computing and big data. The next wave of CRE tech is changing all of this. As CRE becomes a software-powered industry, I expect the CRE tech market to grow by 10x. We’ve seen this happen in residential real estate technology and financial technology.
TR: Who are some of the firms in the industry that are adopting your services quickly and seem to be on the forefront of progressive thinking about technology adoption in commercial real estate?
WEBER: Vornado, Beacon Capital, Kilroy, Shorenstein, Durst, CBRE, Newmark and JLL are all showing a lot of thought leadership around the power of data and technology for CRE. We’re incredibly proud to have them as partners.
TR: Are you profitable? If not, when do you anticipate turning into a profitable enterprise?
WEBER: Not yet, and that’s completely by design. We’ve raised over $22 million in venture capital, and given the size of the opportunity in front of us, the return on re-investing our revenues back into the business is massive, so that’s what we’re doing.
TR: Are platforms like yours set up to help organizations across the globe? If so, what may be some of the challenges that you face as you scale globally that way?
WEBER: As CRE institutionalizes, it is increasingly becoming a global asset class, and Hightower intends to be a global technology company. We recently returned from a trip to Europe where we took 23 customer meetings across 2 countries in 64 hours – the demand for technology is strong.
The challenges with scaling internationally include hiring, supporting various units of measure/currencies and localizing the technology so that it feels like it was built for that market. When I was at Microsoft building Excel, I learned a lot about this as we localized for over 27 languages and 140 regions.
TR: Your firm is based in New York, and it seems most commercial real estate firms seem to have a home there. Can you explain the appeal of New York in this industry and why more companies are not based in the Bay Area?
WEBER: Hightower was founded in Seattle, which is a world-class city with great technology DNA. We moved to New York because, more than any other city in the world, it is the power center for commercial real estate. It has also quickly become one of the strongest technology hubs in the US, in fact it’s only second to Silicon Valley in venture capital invested. We could have moved to San Francisco but decided to be close to our customers, and it’s proven to be a fantastic decision. We’re very proud to be a New York headquartered company. At the same time, the growth of the commercial markets in Los Angeles and San Francisco is undeniable – we returned to the west coast with offices in both markets this year.
TR: Are you optimistic about 2016?
WEBER: I’m incredibly optimistic about 2016. 2015 was the year that this new wave of CRE tech was introduced to the broader market. 2016 will be the year of deployment, as global brokerage and ownership firms will roll out new waves of technology at broad scale. Additionally, we’re going to see entirely new scenarios unlocked through the combination of big data and product integrations enabled by open APIs. We’re kicking this movement into high gear in 2016.