Guest Blog – The death of The Firm?
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By: Poonam Mathis, Founder of StealthForce
It’s important to be a geek about your business, and as an entrepreneur I take that responsibility seriously, which is how I know that in 1937, while Amelia Earhart was disappearing over the ocean and the Golden Gate Bridge was having its grand opening, a guy named Ronald Coase published “The Nature of The Firm”. Coase made the case that the only reason why firms need to exist is if there are economic benefits (lower organization costs, increased precision, lower supply costs) at scale. It was never about internal-knowledge-sharing or a company’s special sauce. Along those lines then, one can imagine the conditions that might lead to their demise. From where I sit, that time might be coming sooner than we think. Thinking about CREtech through the lens of how it will change specific functions in the business is a lot like thinking about blockchain solely through the lens of bitcoin. (Translation: There’s a much bigger picture you’d be missing.)
It’s not only the functional business practices of real estate which are being transformed by technology…we are in the midst of a movement comprised of small players with specific tools which, taken together, will forever change the nature of the business of ‘bricks and sticks.’ The real estate firm, as we know it…is facing days that are numbered.
Our company, in pioneering the gig economy for CRE, has made a small dent in the concept of the real estate investment firm. We’re essentially enabling the small guys to operate with the resources of the medium guys, and the medium guys to manage their margins while trying to grow into the big guys, and so on. Some of our counterparts in CREtech targeting brokers may be enabling small brokers to maintain connectivity to their prospective client list on-par with the major brokerages. Other firms may be enabling smaller investment funds to convey portfolio value to their LPs in a more real-time way than every before – therefore operating more like the big guys with entire investor relations teams dedicated to relationship management. The point is that there’s a groundswell emerging around us, chipping away at virtually every small function of the business of real estate. Taken as a set of tools, the CREtech movement is promising. Taken as a litany of microevolutions collectively aimed at making the industry better/faster/smarter than ever before…it looks a lot more like the dawning of a new era, not just for the businesses operating in commercial real estate, but in fact for the nature of the firm, period. And if the firm becomes less relevant to real estate over time, then individual actors become more important. So the question you should be asking yourself, if you plan to stick around in this industry for the long haul probably isn’t “Where is it headed?” but rather “What’s special about me that will keep them calling…even in the absence of the company name on my business card?”