LeaseMatrix Sale Confirms Opportunity in CRE Tech Space
Q&A with Dominic Zabriskie
One of the reasons why the commercial real estate tech sector trails the residential sector in attracting investment is the lack of startup exits. There just haven’t been too many. And it totally makes sense. It’s a young sector, as the commercial real estate industry is just now embracing technology.
As someone who spends most of the day working and speaking with startups, I know how hard it is to scale a startup in the space. I also know this from my experience building my own sites (The News Funnel, CRE // Tech, The Content Funnel and Real Estate Tech News). For most startups, the road will be long, hard and full of ups and downs, as it is with every startup in the B2B space.
My Friend Dominic Zabriskie is a very successful startup entrepreneur and real estate professional. He has sold three sites already, the most recent being LeaseMatrix. He has an established career in the real estate investment and development sector, so he not only “gets” tech but the business side of the industry as well.
I wanted to get his perspective on building a successful startup so that other sites can learn from his experience. Here are the excerpts from our recent conversation...
Michael: What led you to start LeaseMatrix?
Dominic: When my technical cofounder, Jon Harper, and I created LeaseMatrix in 2012, it was extremely difficult to run any type of financial analysis outside of a Microsoft Excel spreadsheet. To analyze commercial leases, there were only a couple options. You either created your own proprietary Excel model, or bought ProCalc or LseMod, which were both Excel-based software packages.
As browsers improved, we knew that it was becoming easier to design a user interface which could be 100% web-based and accessible from any computer or tablet with an internet connection. We were one of the first CRE Tech companies to take advantage of the Bootstrap framework, which really allowed us to standardize the entire user experience, and focus more on features, instead of custom CSS and browser compatibility.
This allowed us to quickly integrate things like Google Maps, interactive charts and other visual elements into our reports, to allow us to standout from an analysis created in Excel.
M: What were the next couple of years like?
D: Around the same time we created LeaseMatrix, several other companies were also getting started. Companies like View The Space (now VTS), Hightower and TenEight.
Originally, our thought was to continue to develop complementary features that were useful to tenants and brokers, covering the entire lease transaction - from the first tour to lease execution and administration. VTS, Hightower, Ten Eight and LeaseMatrix all began doing something a little different, but soon quickly added overlapping features, such as lease analysis.
Jon and I had no desire to raise outside money to try to keep up with this group of competitors, so we continued to focus on servicing the needs of one-off brokers, rather than larger enterprise customers.
Since this time, the industry has seen some consolidation (VTS and Hightower merged, RealNex bought TenEight and REIWise). This consolidation allowed us to maintain a niche serving smaller brokers and accounts, as these now larger venture-backed companies were all chasing larger corporate subscribers, rather than our smaller segment of single user subscriptions.
M: Why did you decide to sell LeaseMatrix?
D: In 2014, Jon and I both had opportunities to get back into what we knew and loved most. For me, it was a real estate development. For Jon, it was leading the development of a brand new technology for a company called Discovery Sound Technology.
The largest reason we decided to sell was more guilt, than anything else. LeaseMatrix has an amazing group of loyal customers who were not getting the service they needed, or the product development and advancement they deserved. Most of them signed up for those two reasons when we first launched. But we literally haven't added a new product feature since 2014. It was good passive income for us, but it wasn't fair to our users.
M: Who is the new owner?
D: The new owner is a software development company based just outside of Boston, Massachusetts. We can’t wait to see what they are able to do by reintroducing more active support and development of the product.
M: This is the third CRE tech website you’ve sold in as many years, do you have plans for others?
D: I have tons of ideas, but no time to focus or execute on them! The one thing LeaseMatrix really taught me was that I needed to focus on what I know best and that is real estate, rather than technology. In order to excel at something, you’ve got to live and breathe it. There are still amazing opportunities in CRE tech, but the underlying business of real estate is what I know and love.
Dominic currently oversees Elmington Capital Group's development activities. Elmington’s has more than $500 million of assets under management, with its portfolio consisting of 1.5 million square feet of commercial space, and 4,500 apartment units. The company currently has another 1,400 affordable housing units under development.