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We are excited to have Ryan Cox, Principal at Founders Grove Capital, a real estate investment and advisory firm dedicated to helping clients select and manage real estate investments that work for them. Ryan is responsible for helping clients select and manage real estate investments so they can build a more secure financial portfolio.

Ryan hosts The Real Estate Innovators Podcast and he is a real faculty for drawing out some of the inside baseball elements of the real estate tech world. When he is not hosting his podcast, he is the CEO of Founders Grove Capital!

Tune in as we talk about...

• Multifamily Real Estate Investor
• Real Estate Technology or PropTech
• Design in Commercial Real Estate
• Block Chain Platform
• and much more!

Learn more about Ryan Cox on The Real Estate Innovators Podcast and Founders Grove Capital

VO: You’re listening to Raising Your Antenna, with host Keith Zakheim.

Keith: Welcome to Raising Your Antenna. And I’m your host, Keith Zakheim. Today, we have a guest, Ryan Cox that wears many hats. Being that this is a podcast, and many of you, like me are podcast addicts, let me give you Ryan’s podcast bona fides first. Ryan hosts a real estate innovators podcast, in which he interviews some of the bigger founders and influencers in the real estate tech/proptech market. I guess Ryan, one of the things we can kinda talk about is what we call this industry because I’m hearing a lot of names for it: proptech, real estate tech, other things. But anyway, Ryan’s podcast is a great listen. And he’s a real faculty for drawing out some of the inside baseball elements of the real estate tech world. That I think is great gold or father for investors and professionals in the real estate and the real estate technology space. So anyway, definitely give a listen. But, when he’s not hosting his podcast, Ryan is a CEO of Founders Grove Capital, where he himself is a super successful investor and advisor to investors. So Ryan, before we get going and kinda get into the nitty gritty of our conversation today, maybe give my audience some of your background, professional background. And also specifically, you know, why you do the podcast. You know, is that kind of a personal passion. And also, how it helps your business from a marketing perspective. So anyway, welcome aboard and, yeah, it’s to you.

Ryan: Well, Keith. Thanks so much for having me on the show. Excited to talk about a little commercial real estate tech, a little about my business. So, my background is, you know, I really, primarily, my primary business is to focus on multi-family value-added opportunities. So, my core business is as real estate investor and working with investors to buy multi-family assets here in the state of Texas. The podcast, as you said, is developed, I guess, primarily, out of a passion and some curiosity. So, I found it to be, you know as an investor, a really great avenue on a weekly basis to really dig in to all of the, you know commercial real estate tech that is developing around us. And the podcast has given me an opportunity, you know, really, a calling card to knock on any door and talk to founders about their background and unique insight that they had in their background to lead them to found a commercial real estate tech company. And on the podcast, I’m really just able to, you know, dig in what their background is, what unique insight, talk about the solution, how it benefits and impacts their users. And then try to suss out, really, just their insights from their work, about how they see the overall real estate market and that changing, and the impact of commercial real estate tech. I think the big driver for before the podcast is, you know, number one is I’m an advocate for my investors. So, I feel like it’s a priority for me to really be able to have a broad view of all of the technology that is, really, just starting to make an impact. But, I believe in the next three to five years, would dramatically shift the way that a lot of business in real estate gets done. So, I wanna make sure that I’m not flat-footed and that I’m being an advocate for my investors and paying attention to all the real estate tech that is transforming how we do business. I think..

Keith: You know, I, you’ve, again, being a listener to I think your last two episodes. I think you do a great job of listening that kind of feedback, and getting really down to the founder’s course to both your entrepreneurial side as well as your passion. Specifically, of this CRE-tech space. So anyway, I enjoy and I encourage my listeners to download it, become a subscriber, and listen cause it’s really, it’s a great listen. So, let’s dive in and my first question Ryan is that you know, where in, when I say we, I mean you and me from the marketing side are in the super-exciting space of what we call CRE-tech/prop tech. But, there are tons of applications found in the market. So, if that big data applications and, or you know spaces service as a business, virtual marketplaces and leasing tenant focus platforms, private management, augmented reality, and others. Clearly, some are getting more ink than others in space as a service comes to mind. But, as an investor and an advisor, I’m curious in your perspective. What are the exciting areas, that maybe somewhat under the radar right now. So you know, trying to bring somebody into a no-tell where we work. Okay, no big deal. Lots of money’s going there. That’s just aping what everybody else is doing. But, what are the areas, you know, applications that you think have the potential for real disruption, will attract early adopters, and in the next few years, where should the savvy investor who really wants to be part of the space looking to allocate money?

Ryan: Well, first of all, I think that there are a ton of really interesting across, you know, like you said teantt project management. There’s a really, really quite a few interesting, you know spaces to play in CRE-tech. I think, as I think about the next two or three is we’re just so early. Especially regards to adoptions, it seems to me like the folks that are focused on data and that could be a cross-spaces as service, virtual marketplaces, leasing tenant project management and that stuff. The folks that are taken a data first enabled to monetize that early, enabled to give users actual data to make decision for that real estate investors, for lets space users, you know building owners. It seems to me like those folks are probably to the best start because there’s a value they can charge users afforded data. But, the collection of that data also gives them flexibility as they grow out, you know, the solutions that are provided to end-users.

Keith: Yeah, we see for example both in CRE and also this residential real estate is, you know, a lot of these companies are multi-generational families that abound, you know, especially in the big cities, right. So, they own a lot of the office space, they own a lot of residential real estate, and they’ve been making money in this space for a long time. And as a result, the little more buttoned-up conservative, unless, willing to be early adopters. And we found with our clients, is that the case to be made at least initially, is surely an economic play, right. So, this is how you gonna be more efficient and save money. But, you know, how, what do you see is being the most partner-compelling arguments to, you know, CRE-tech as CRE-owners in order to get them to kinda take that first leap of faith into some of these, you know, applications and areas. And it could be, you know, big data which is maybe, there is some would have, you know, an easier, a leap of faith from data, the argument for efficiency and economic savings probably easier than making, also, I realized much more quickly. But, how do you advise your clients, or what do you see your founders in terms of being able to, you know, circumvent or achieve some of those obstacles?

Ryan:Well, I think that from a founder’s perspective, you know, I think the venture community has great channels into, you know, big, you know, big brokerage. I would just definitely in avenue to get widespread adoption across a numbered users and geographies. I think that a lot of the bug development companies have their own adventure arm that you know, co-investing with the venture firms or looking to, you know, incubate and grow their own, you know, own kind of tech. So i do think that there are great opportunities with the right venture partner or being able to sit with the right investment or development company to help kinda scale the platform out. So.

Keith: So, how are you looking for money for for example. It's not just about the money, but the strategic value that these investors can bring in terms of opening up new channels and helping with initial adaption?

Rayna: Absolutely, the faster to market in adaption. I think is what you see in the re-work examples. They are just trying to raise the biggest, the best and have amass the monopoly. I think that the fastest routes to market, the more channels that you have to be able to deploy the product, the better your chances for success.

Keith: Yeah that’s a great segue to the next topic I want to discuss, which is basis of service. And companies like re-work, and notel raising money on previously unthinkable valuations. I have a 2-part question. So, clearly, there is some type of bubble forming, and this not the first tech-vertical or general investment vertical to experience a bubble and there’s a lot of money-chasing deals and we work in (notel) just based on evaluations are clearly benefiting from all that money that’s on the sidelines looking to invest in this space. So, it’s 2 questions. You know, it’s not new what we work in (notel) are dealing, right. So, we just been around for a long time. Yet, we are left behind in the dust. These newer companies are gobbling up market share and their valuations are significantly higher. So, what’s been the drivers of their growth versus what we’ve seen in the past? And the 2nd question, Ryan, which I know comes up everywhere. Which is, you know, we work in (notel) have experienced, any other companies by the way just keep referring to these two, but they’ve experienced this growth in a real estate environment in which the market is just fantastic and also experiencing above all, right. What’s that gonna look like when there is an inevitable downturn. That’s what real estate is historically, so it’s not gonna continue and values are not gonna continue to appreciate and as I understand their business model which is, you know, leasing up a lot of space and being able to upsell that to tenants. What happens when, you know, values go down and their existing tenants can go lock in space for much cheaper prices. So, 2-part question: drivers of growth versus the history of the space as well as what it’s all gonna look like during an inevitable downturn?

Ryan: Yeah, those are good questions. I don’t think anybody can accurately predict. But just some thoughts. I think, you know, running we were..

Keith: The beauty of being a podcast, of being a prognosticator, is that they only remember when you’re right and when you’re wrong, no one cares. So, that’s, you know, we can say whatever we want. Be Nostradamus, right?

Ryan: Right. Well, if we were on video, everybody would be able to see me in my wizard hat.

Keith: (Laughs). Exactly.

Ryan: My answer here. I mean, (Ryan), we were cause undertaking the company’s taken a name as an approach to spending, investing heavily on growth, in hopes that profits will follow. I think, in the most likely scenario, is that, the thing that’s been driving growth in valuations for these companies will ultimately will come to roost. You know, right now, we’re in a growth at all cost negative gross margins. I think that we workers gotten so big that we’re seeing a lot more access to their data and, you know, right now, their focused on growth in a winner take all mode similar to some other tech companies we’ve seen at Silicon Valley. You know something , the ultimate challenge, so that goal is that if you can grow to a large size and create a market monopoly. Then, over time, you’re able to, you know, raise prices because you’ve got some sort of walk-in with those customers. I think the challenge right now in the current environment is that there’s so much private capital out there and so many entrepreneurs willing to take on big dogs. It would be a re-work at this case but people with. I think you need value proposition in a co-working space. So, on a venture capital people chasing, I don’t see right now that there is a monopoly in place. And then those companies are public, so you know valuations that can be tricky. Just a tricky area when we talk about private money. So, the question will be if there is a downturn and we’re not in a profitable place and that money dries up. How do you sustain growth or shift on a dime with your users to a profitable model.

Keith: Yeah, for sure. I do, you know, so you mention Amazon and Amazon first of the 15-year run and they probably are the exception to the rule in terms of being able to early on stake-out they wouldn’t call a monopolistic position but certainly, 800-pound gorilla type of corporation. But, if you look at ride-sharing. So, a company like Uber tried to do that but the market was so large. The problems of executions are great and the amount of so much money on the sidelines willing to go into that space. Left has been able to significantly cut into their business over last few years with no one inside there. It seems to me also, the spaces service industry. The various entry are really just raising the capital. I mean, I don’t know there’s much secret sauce in doing that except for being able to sustain the losses initially and go gobble up property. So, it’ll be interesting to see how that shakes out and what it all looks like in a number of years but I know everybody in our industry is watching that closely and that will be interesting as we go forward.

Ryan: Yeah, totally great I think. I definitely think the spaces services creating a value for large enterprise and small businesses alike. It’ll be up to those organizations to find a profitable, sustainable, long-term business model, which is yet to be proven. So, I think that there will be some, I think that there’ll be winners, I think that there’ll be losers. I think that there’ll probable even a few that rise to the top and are able to sustain there long-term.

Keith: Alright. Moving on. Entrepreneurs and startups and certainly marketing agencies, we love the buzzwords. Alright, so, you can raise money and you can throw out terms like artificial intelligence or augmented reality or blockchain or cryptocurrency and figure out how to present your business plan and I think companies or startups are hoping that investors will follow that with investment. So, blockchain is a bit, is a buzzword that is being thrown around, our industry, the CRE-tech industry. We do a lot of work and energy and I thought blockchain is a fantastic application of blockchain platforms with application in the energy markets because energy in general’s becoming a lot more distributed and decentralized and blockchain is a fantastic application for industries that are going in that direction. We’ve seen a number of companies over the last 6 to 12 months that come to us and claim to have some type of blockchain application real estate whether that’s for raising money, whether that’s because it can cut out some of the soft-cost involved in transactions, whether it’s because of blockchain application will make shrink the timeline for these transactions. There’s a number of reasons why blockchain could be a good application in the real estate industry. Curious what your thoughts are as to what those applications are? Are you seeings things that right now are more substance and hype? Do you think at this point just more hype and people throwing around the word? What’s your take on all that?

Ryan: I think there’s a lot of hype, I mean, blockchain is really just a lot of copies of a gigantic cell spreadsheet. So, I think that there’s some interesting possibilities for blockchain. Clearly, to the number of hands that have touched a transaction to potentially cut out intermediaries. I think that there are some regulatory things that need to happen as those boundaries get pushed. I think that it’s a move in the right direction but whether it’s blockchain, artificial intelligence, a machine learning, there’s a lot of entrepreneurs that are tackling that technology and trying to integrate it into their business and or their philosophy. When you talk to the technologist about where we are with those technologies and what they’re capable of doing, there’s somewhat of a sentiment that, yeah, the baseline is there but today they don’t function as they’re being promised or advertised as. So, I think that is commercial real estate technology is playing catch up to a lot of technology innovations from, maybe the past 15-20 years and that started to really grow inside of commercial real estate maybe in the past 5-6 years. I think that this group of entrepreneurs is in the right place and on pace or the slightly behind fintech or other spaces where they’re trying to develop the technology to truly make an impact.

Keith: Yeah, we’ve spoken with a few companies recently who feel that blockchain and cryptocurrency solution will enable owners and CRE owners to have opportunities for liquidity and to bring in partners or investors in a way that they can’t with the current financial and legal infrastructure in real estate. So, that’s what, from what I understand from these companies, they think they can be deploying those solutions relatively quickly. It’s a proof in a pudding.

Ryan: Yeah, I mean. Title company, all kinds of things, potentially make an impact or just we’re not there today. I think, we’ve got smart entrepreneurs that are working on solutions and are really trying to develop that technology to make it viable. And, where we are today versus where we’ll be in 5 years, is one of the reasons I have a podcast or I’m on this show, talking to you about it because I’m very interested in watching those developments and understanding how people are leveraging the technology and using that technology to change the way we work, live, play..

Keith: Yeah, so let’s talk about play. Another great segue, is Ryan, you’re a great host. So, when you’re the guest, you can do my work for me. That’s perfect. I wanna talk about apps and platforms and features that companies now are offering to enhance the tenant experience. It seems like a very millennial thing. So, in my company, we’re always kind of our executive team is always discussing. Alright, so, how do we make millennials happy, keep them productive, make sure that we’re able to retain them? And, I started my business 15 years ago, I wasn’t really having that conversation. It was more around, let’s just create professional development opportunities, make sure paying them fairly, and treating them with respect. But now, they want things that are gonna enhance their social experience, logistical experience. Work is now just not about work but it’s responsibility of companies and now it seems like maybe a building owner’s as well to provide a home-like experience or social experience, cultural experiences within the 4 walls of the workplace. Companies like Comfy, I've seen HQO, Office App, Equium. Again, they’re going out there and trying to convince owners and landowners that their responsibilities transcend just a physically-built environment. What’s been your experience in speaking either with your clients or with founders about the receptivity towards this? Who’re gonna be the early adapters? Is this just kind of like a fad right now but, we’re gonna eventually go back into haywork is work? What do you think on that?

Ryan: I think that broader society is just moving towards more experiences whether that’s the bloomers who are moving out of houses then looking for less kind of ownership responsibilities to give them opportunities to travel, to go and do, to hop on an RV and go across America.

Keith: I’ve got a 19-year old so we’re having these discussions which give me a little me more grey hair than I had prior.

Ryan: (Laughs) And you know the 19-year olds in the same boat. How do I create more experiences, driven by a very different and very visual world with Instagram, Facebook, Social. It’s a ‘hey, what experiences are you having?’ And I think cause it’s less driven by the material. When I think about the specific applications that are going after a different experience in a work environment. I again think it comes back down to the channel. I think that the broad offering, well I guess, the appeal to many users will be more applicable if it serves out more as an amenity that people are able to choose from a la carte or a part of a package. Kinda like a TV dinner. Say ‘Hey, wanna be able to have access to all of these different applications to be able to create this experience in our work environment.’ I think that somebody’s applications are very niche. And so, if they’re not paying attention to the channel or how they’re partnering with other applications to create that experience could potentially be an uphill battle. But, yeah, I mean I think that experience-driven is what is driving re-work or notel or the other kind of space as a service. I think that when IBM is taking re-work space, it’s a very clear communication to the market that experience is valued and IBM’s one of all those technology companies out there so, it’s not just the startups, the millennials that are focused on creating that experience for their employees.

Keith: Yeah, that’s a really good point. So, a lot of our listeners are themselves founders and entrepreneurs. I thought maybe, we’d just end, Ryan, with just your observations of the common denominators between the companies and founders that succeed, those that don’t. That really can be anything from leadership skills to how to manage money, to operations, to figuring out audience, marketing. Whatever the case, but I got a thought that your advice would be compelling to the people listening.

Ryan: Yeah, I think that those with a good product and user experience. I think about some fintech apps, like Robinhood. When Robinhood comes to mind, it’s like very easy to use, it’s very visually appealing. So, I think that applications that are focused on great user-experience. I think that have some sort of data or value that they’re able to charge customers from Day 1 increase sustainable profitability. And I think that just have really low overhead, low volume kinda revenue targets to keep them accountable to grow. I think that they’re gonna have, those that start with that business model will have early adapters that are potentially more forgiving of the product, that are able to receive feedback, to really shape the product, to listen to customers’ demands and pay attention to their roadmap in a unique way that keeps them from over-building or steering the roadmap in a direction that is actually not a demand or want on their customer base. Which is, back to my earlier talk, was those that are due to a really good job of aggregating and creating actionable data, will be able to build off that data in a meaningful way, and create a roadmap that is really impactful for their users.

Keith: That makes sense and I think for every founder and businessman and entrepreneur, what Churchill always said to his people, ‘Keep buggering on KBO.’ Just gotta stick with it, right? And, there’s gonna be lots of ups and downs and challenges. But, if you believe in your vision and you believe in your product and believe in your ability to execute, then you gotta keep going. Certainly, until the bank account says zero. So, with that Ryan, I think we’ll end there. Was there anything else that you wanted to add or tell our listeners?

Ryan: I guess the one thing I would add is I am co-hosting a commercial real estate tech event in Austin on October 25th. We’ve got a great panel of tech founders that includes Michael Mandel with ComStak, Arie with WiredScore, Ryan Turner with Refinery, and Doug Shenkman with Tenax. As well as a panel of venture capitalists from Fifth Wall, Navitas, and Metaprop. So, it would be a great event downtown Austin with food and drinks and some great founders and venture capitalists to give you much of the same conversation about the state of the world of CRE Tech and the state of the market, and what’s coming up.

Keith: And I will be there. So, if that’s, if you wanna scream that from the rooftops as well, enables you to add one more person to the event, feel free. Maybe, if you tell enough people, my mom will come as well, if I’m gonna be there. But,

Ryan: We’d love to have your mom.

Keith: It’s an exciting event, I will be there. I’m gonna be travelling from New York to Austin for it. And, goodluck with that. I guess, I’ll see you there, Ryan. So, thank you for being our guest today. And just again, for our listeners, Raising Your Antenna is a podcast dedicated to bringing on venture capitalists and founders who are transforming B2B technology spaces including today’s CRE (Commercial Real Estate) technology. Antenna Group which is the primary sponsor of Raising Your Antenna, is a digital marketing and public relations firm which services companies from startups all the way to Fortune 100 companies that are in the B2B technology space. So Ryan, thanks again and look forward to seeing you in Austin.

Ryan: We all look forward to it. Thanks, Keith!

Keith: And another episode of Raising Your Antenna is in the books. I hope you enjoyed today’s episode and look forward to connecting again next week. Raising Your Antenna is a weekly podcast hosted by yours truly, Keith Zakheim, that features the movers and shakers, and key influencers of the B2B technology industry. Our guests are leading revolutions and disruptions in the mobility, clean energy, healthcare, and real estate technology industries. Raising Your Antenna’s brought to you by Antenna Group, a full-service digital marketing and public relations agency that focuses on the B2B technology industry. Please be in touch with me on Twitter (@czakheim) with any feedback about this podcast. And check out Antenna Group at www.antennagroup.com if your organization is looking for really smart and good-looking marketing and public relations partner.