The Innovators: Placer.ai
In this series, Bisnow highlights people and companies pushing the commercial real estate industry forward in myriad ways. Click here to read Q&As with all the innovators Bisnow has interviewed so far.
Artificial intelligence is transforming commercial real estate, and Placer.ai, a startup founded in 2019 that secured $50M Series B funding in April, is part of that wave.
The company provides insights about consumer foot traffic for frequently visited places like retail stores by using anonymized mobility data harvested from aggregated cellphone signals, on devices many people carry when shopping or running errands.
Only two years old, Placer.ai's client roster includes Boston Properties, Tishman Speyer, Regency Centers, Planet Fitness and Macerich, and the company is providing a window into people’s movements in the built environment previously unseen before AI’s advancement.
“The idea is to be able to research anything you can draw a polygon around,” Placer.ai CEO and co-founder Noam Ben-Zvi said.
The tool employs a virtual perimeter, or a geofence, around a place of interest, such as a mall, grocery store or sports stadium, and generates insights about foot traffic alongside comparisons to competitors and changes over time.
A Placer.ai study on U.S. malls last year found that the number of visits to generally popular malls plummeted in spring 2020 but rebounded somewhat later in the year, as reported by CNBC in March.
Although concerns about privacy and security abound in the world of big data, Placer.ai Vice President of Marketing Ethan Chernofsky said that Placer.ai has the advantage of having launched after the backlash that resulted in the creation of the General Data Protection Regulation in 2018, a European Union regulation that requires companies to track data collection and storage activities.
One of Placer.ai’s goals is to capture the at-times rapidly changing ways that physical spaces are used. For example, the coronavirus pandemic accelerated the use of online ordering for in-store pickup and curbside pickup, which exploded during the pandemic.
“All of those offerings demand physical locations and so the growing expansive nature of what people are trying to do with physical locations means data becomes all the more valuable,” Chernofsky said.
This interview has been edited and condensed for clarity.
Bisnow: What will the $50M in Series B funding go toward?
Ben-Zvi: The idea is to double down on building our platform and marketplace. We're investing heavily in R&D efforts to bring more data products to the market. Currently we're selling to a few verticals including retail, commercial real estate, [consumer packaged goods], municipalities and hedge funds. All these companies, what they have in common, is that they're interested in what's going on in the physical or built world. They’re trying to get updated accurate information to drive decisions, whether it's to invest in a property or to buy a property or to lease a property.
Our platform is something that they can use to get instant data about any place. So we’re building out the platform, merging more datasets, adding more algorithms and AI to provide instant insights for places.
Bisnow: Tell the story about how after getting started in 2019, Placer.ai grew quickly to have a significant presence in the market.
Ben-Zvi: Going even further back, in 2016 we were a bunch of technology guys that basically lived in the digital world and didn't even know who CBRE or Cushman and all these companies were. We wanted to build a data company and were fascinated by mobility data and other data sets that help understand the physical world. We were lucky to meet a few early adopters including the VP of marketing of Santa Cruz Beach Boardwalk, Caesars Entertainment out of Las Vegas, Newmark Merrill out of California and also a lead broker in CBRE.
In 2017, we raised our first seed money and spent a year and a half in a dark room working with those early adopters in stealth mode iterating on the accuracy in building out the platform and the visualizations. And then in late 2018, we felt comfortable enough that we launched.
Since then, we’ve been growing fast. What we've found is that the commercial real estate market and the retail market is hungry for more up-to-date data and the old tools are just not good enough. So I think that we bumped into a real pain point and the adoption has been great.
Bisnow: You’re not the only AI startup. What do you attribute your early success to?
Ben-Zvi: It’s a few factors. We founders had also started a data company called Bluetail, which sold to Salesforce and so we had prior experience in building out big data technology systems with all the infrastructure and the ability to package it for decision-makers in a simple way. So on the technology side we had some prior experience, and then some of the other founders had experience in more B2B fast sales.
I think what we ultimately did well is we realized early on that we're not a data company. Our goal is not to go get some data, package it up and send to people. I think we realized early on that the product actually consists of data, really good software and a really good customer success team — the people who work with the customers to make sure that they understand the product and they understand the data and it's actually being implemented.
The combination of rolling out a service that includes these three components enabled our customers to gain value from the data early on and that turned into a flywheel where word-of-mouth accelerated the growth.
Bisnow: Anecdotally some users are finding Placer.ai is more useful than Census Bureau data. What's your reaction?
Ben-Zvi: Especially during Covid, but [really] always, people move around and there are certain neighborhoods that are emerging and growing and certain other areas that are shrinking. Census data is only done once every 10 years and only a certain portion of the population enters it. There are a lot of biases and skews in it. It's still the best thing the industry has and it’s a great thing. But with mobility data you get a real up-to-date picture of what's going on that could change in a blink of an eye and you'll know it.
Bisnow: Are there any weaknesses in your data and if so, what are you doing to address it?
Ben-Zvi: The weaknesses in the data are when it pertains to very small places that are lightly trafficked, like a laundromat, or when it's a very dense area, like if you're looking at a small pizzeria in Manhattan, when there are a bunch of stores around it. It’s hard to understand which traffic actually came to that venue versus the one across the wall. I think in this case, what's important here is the education of the customer. They can still learn what's coming to the block, and they can still learn what's coming to the neighborhood and there are still a lot of insights even if we're not able to pinpoint to a specific place. We’re getting really sophisticated in how we work around the limitations of the data.
Bisnow: How do you see your platform evolving?
Ben-Zvi: Already today the system is used by economic development groups and municipalities, hedge funds, consumer packaged goods and a lot of commercial real estate companies. Many of these customers do not own the physical place that they want to get data about. It gives them the ability to learn about a place which is not theirs. It's part of the function of this platform. Anyone can look into a Safeway and learn some things about its visitors that Safeway did not disclose to them.
We're here to answer questions that someone asks us like, “Should I acquire a shopping center?” We want to bring in all the datasets and so this would include mobility data but also credit card data, crime data, weather data, really any sort of dataset that can help shed light on that question in our platform, with the same sort of easy-to-use functionality and the stamp of accuracy.
The market is massive. For every retailer, there are dozens of other companies revolving around the retail space, whether it's the landowner, the vendors, CPG companies, hedge funds that invest in it, private equities. All these other entities want the data.
We also have users in hospitality, theme parks, zoos, aquariums, airports, family fun centers. So there are a lot of physical places, not just physical retail, that are frequented by people in the physical world.
Bisnow: What’s your pricing strategy?
Ben-Zvi: I would say that our pricing strategy is also being accepted really well in the market. The idea is that we tailor a package at a fixed price based on the company's goals, but once we land on the fixed price then we have a model where it's unlimited users, unlimited queries so users are not limited by the places that they’ve looked at or the amount of people that [are] at the organization. Our goal is for the CEO, the VP of leasing down to the analyst, everyone should have this tool for use at all times.
Bisnow: Why is this technology emerging now?
Ben-Zvi: Of course it's mobile phones and the ability to capture mobility data but also a lot of millennials have grown up and are landing managerial or VP level positions in a lot of companies. That generation is trained on data-driven decisions, don't make too many gut decisions and want things instantly. They’re copying things they see their friends do in the digital world.
When we started up with commercial real estate and we were told that it's an antiquated industry and our platform would be a hard sell. But we found the exact opposite. We found a very young crowd that's eager to accept new technology. So that, plus the combination of Covid accelerating change in the market, has made the industry very hungry for data.