The Beginner's Guide To CRE Tech: Buzzwords And Why Customers Are Confused
The commercial real estate tech scene has become quite sophisticated.
Once deemed slow in its tech adoption, the industry now uses a vast array of apps, drones and software solutions to serve its needs. But the rapid growth of the CRE tech landscape has led to confusion for some customers.
With the dozens of buzzwords casually used to describe tech offerings, end users are having difficulty understanding the solutions presented and which customers the technology will most benefit.
"Specifically, our market (CRE owners, investors and servicers) is challenged and frustrated trying to identify available solutions to their long-underserved needs,” Dealpath CEO Mike Sroka said. “It’s time we establish some commonly understood terminology and segmentation from the perspective of the customer.”
Sroka said buzzwords like big data, machine learning and cryptocurrency — though catchy — often hold little value for customers. More often than not these buzzwords do not clearly explain what the software does, who the product is targeting (CRE investors or property managers, for example) and how that solution is delivered.
“The biggest challenge with buzzwords is that not only are there a lot of them, but in some cases, the terms are misused. Rather, terms should be descriptive and clarifying to their end users. More focus on the functionality and use [is needed],” Sroka said.
VTS CEO Nick Romito said he too has received inquiries from clients who have heard about the latest CRE tech, like machine learning or bitcoin, for example, but remain unclear about its impact on the industry, especially when the words describing it are more hype than substance.
“We’ve got a very big market with a pretty short attention span," Romito said. "The No. 1 thing on their minds is how to generate revenue and how to close more deals. Hearing lots of jargon is confusing and complicates [their] focus."
To simplify matters, Romito said instead of advising clients to delve into the weeds to understand how complicated technology — which is often years away from impacting the industry in a significant way — works, he advises they stick to the basics. If a client is still using spreadsheets to manage 85% of their business, Romito advises them to start thinking about how to use tech to streamline their basic workload.
"Machine learning, AI, crytocurrency is not the basics and is not important in our space today," he said. "Most of this stuff will not impact business at all in the next five to 10 years."
A Convoluted Landscape
The commercial real estate landscape today is often set up through the lens of tech investors. Because of this, some of the terms used to categorize tech companies are ones venture capitalists and other investors are familiar with.
In addition to using industry jargon like artificial intelligence and electronic currency to describe these solutions, emerging startups are also often described as a Series A or Series F company or by their capitalization, Sroka said. Though this is beneficial for investors, it is counterproductive for customers evaluating the product to determine if it will meet their needs.
“It boils down to two things: First, there is a lot of jargon thrown around and customers need clarity on solutions available to them,” Sroka said. “Second, by understanding the customer’s needs we can expose inefficiencies and gaps in the available solutions. The end result is that the shared terms add clarity for how we can best drive the industry forward.”
Next week, find out three categories every commercial real estate tech company should fall into in Bisnow’s “The Beginner’s Guide To CRE Tech” series.