The Innovators: Dealpath CEO Mike Sroka
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.
The coronavirus pandemic has been referred to as the great accelerator for the real estate industry, and one of the things it has propelled is the adoption of proptech.
Over the past decade, real estate has been slowly using more technology, but when in-person meetings and tours were rendered impossible during the lockdown, the industry flocked to the sector to keep deals moving. When "unprecedented" was the most commonly used word to describe the market, demand for reliable, centralized data was supercharged.
Dealpath, a 7-year-old cloud-based real estate investment management platform, got hit with a wave of demand almost immediately. The company increased its revenue by triple digits and doubled its team last year, founder and CEO Mike Sroka said.
Real estate investment companies can organize their deals and properties digitally with Dealpath. Last year, it developed Dealpath Connect in partnership with JLL, which integrates commercial real estate investment listings with Dealpath's portfolio management platform.
Even before the pandemic set in, Dealpath was attracting industry leaders' attention: In early 2020, Blackstone became a minority investor. This fall, Nasdaq followed suit, joining JLL among the big-name investors with equity in Dealpath.
Sroka, who had his start in real estate finance before working to develop venture-backed software development companies in San Francisco, founded and has led the company since 2014.
He began the platform to attempt to solve the issues his former real estate colleagues and friends told him they were having. His foresight in turn helped the industry operate when no one could collaborate in person, and for that, he is a Bisnow innovator.
This interview has been edited and condensed for clarity.
Bisnow: This month marks a year since much of the world first went remote to wait out the pandemic. What kind of conversations were you having with your company when the pandemic first hit a year ago? What was business for Dealpath like at that moment?
Sroka: Over the past seven years, there has been this investment and development in real estate software services and all of these new solutions have been coming to the market. I think in 2019, we might have crossed the first chasm from early adopters to early majority of the market utilizing these new solutions.
As we entered into 2020, the whole world was struck by this terrible pandemic. What we saw initially was a polarization in our go-to-market efforts, where accounts that we had forecast to close were moving out or closing out for reasons that you might expect — that management teams or real estate companies weren’t able to meet together and make decisions. Firms were anxious about making budget decisions with so much uncertainty, and they were triaging things that were immediate priorities.
However, on the other side, we were also seeing an influx of inbound opportunities with firms that were identifying the need for having collaboration tools in place. Every property owner and portfolio manager in the universe was frantically trying to understand the impact on their own portfolio, and facing potential repositions and considering opportunistic investments as well.
In terms of operating rhythm, real estate companies have benefited from being able to work together and the pandemic really put a spotlight on the need for having centralized data that is globally accessible and having standardized workflows that could power your teams to work effectively from wherever they might be working.
Bisnow: How soon after the pandemic hit did interest in your product start surging?
Sroka: Really it was the first week or two of March when it felt like it went from zero-to-100 very, very quickly.
For our clients, deal activity was quickly starting to freeze, but a lot of focus was being put on portfolio management and trying to understand underwriting valuation, operation at these companies. Those first couple of months — March, April, May — was kind of like the big unknown. Things that you planned and expected to happen in the pre-Covid world all of the sudden weren’t tracking the way that you anticipated and new things were happening.
In early summer and even into the fall, we were starting to see a lot more regular patterns in this new pandemic environment, and during that time period, Dealpath was having our largest sales period of all time. We were seeing sales cycles decreasing and the increase in activity all signaled to us that there was a better understanding of the need for our solution and trying to operationalize around that.
Bisnow: Were there bumps in the road, any unexpected hurdles this year? What were those key challenges and how did you rise to meet them?
Sroka: Boy, yeah, 2020 brought a lot of new stuff. We had major health and safety issues, there were social issues, there were political issues — things that we need to work through together, all during a time where we haven’t been able to really be together in the ways that we’re used to. I don’t know if Dealpath has any silver bullet or magic solution to that, but from our perspective, what we’ve done is made an effort to have conversations and deliver forums to discuss what is happening to be able to provide as much context and clarity as we can at a time where there are not always immediate answers.
Bisnow: Did you think you’d be where you are in 2021 or has the pandemic accelerated your growth strategy? How does it feel to kind of have anticipated this huge need that this year has brought about to be able to get deals done digitally?
Sroka: From our standpoint, the macro tailwinds have been there. In order for real estate firms to accomplish economies of scale, to operate with speed and precision, they must have tools to be able to do that well and it’s inevitable that these things must exist and be deployed. For seven years, we’ve been both building out our own solution.
Proptech as an industry has been trying to build the terminology that is generally understood. Changing processes is hard and you need to see a clear value for doing that. The pandemic has probably done more for creating clarity in those needs and value propositions and this education than all of the work that was done before it.
I don’t at all mean to trivialize all of the challenges and tough stuff that has come over the past year, but with it, the industry has taken a big step forward in understanding their needs and the value of these different solutions and taking the steps to address it. We’re proud and thrilled to be a part of that community and market.
We think that this is kind of a positive progress for the industry, where we’ve gone from those early adopters to the early majority and now early majority to mass-market adoption of these solutions, and that is the most important thing for the entire industry. Real estate is the largest asset class in the world, it is going through a belated and accelerated digital transformation.
Bisnow: Where is Dealpath’s place in the world after the pandemic? What is your vision for the future of the company?
Sroka: We do see light at the end of the tunnel here, which is so exciting. On behalf of Dealpath, we’re so excited to be able to get back together as a team, as a company, with our clients, with our industry and when it is safe to do so, we’ll look forward to getting back together.
What a phased return to office, work and normal operating patterns is — I don’t think we know exactly what that may be right now. That return will likely be a little bit different than when we came into this. I think there’s more understanding of how flexibility can potentially work. We believe that professionals need space to focus on professional work and to collaborate with clients and colleagues and that has not changed.
We also believe that there is more and more work that can be done effectively with some flexibility, and I think that we’re just trying to learn as much as we can and take this one step at a time and see what the next most important thing to solve might be.
Bisnow: Last year, you announced Dealpath Connect, which brings a lot of data from across the industry together. How has the rollout of that been? What has that been like?
Sroka: I think that is a great example of our kind of phased build-out towards the opportunity that we see, and we believe that the future of real estate investment management is more programmatic, but it is going to take a lot of work to get there.
The first steps are how do we organize and structure all of the data that all of the firms have and have access to and visualize it so they can be more data driven in their decision-making and start automating some of the steps along the way and that’s sort of what we’ve been working towards. Dealpath Connect is one of our initiatives this year to help remove the friction of getting data into these services and transmitting data between them.
Bisnow: Are there any new innovations on the horizon for Dealpath?
Sroka: This is a big growth for us as an organization, as a product and platform, so this year from a product development standpoint, we’re really excited to be broadening our platform to support more portfolio management use cases and to reduce the friction of getting information into platforms. So a lot happening from a product development standpoint, we’re doubling our team again after doubling it last year, and we're excited to have a lot more coverage across our global market. There is so much ahead of us, so continuing to see that incredible opportunity to create an industry-defining company and to help make a positive impact on how the built world transacts and how these can be part of our economy and way of life in the future.