Our Pivot to PropTech. Media-Embedded-SaaS in Construction. The Weekly Speed Read. & more!
Edition #2 ... it's going down!
Welcome back Blossom-ers … edition 2’s live-in-action!
We’ve been awe-inspired by the attention and thoughtful feedback that we’ve received over the past week from our launch.
One common theme our readers suggested was to focus on a niche within tech and VC. There are a ton of macro-level newsletters within the tech-space that are crushing it given their size and popularity - e.g. the Moore twins from Accelerated, the reports from CBInsights, the long-form essays on startups and growth by Andrew Chen, to name a few, however, there’s a recent rise in niche-newsletters that are slowly propping up and getting traction - e.g. Justin Gage’s Technically, Ian Kar’s FinTech Today, Nikhil Krishnan’s Out-of-Pocket, etc.
As PropTech connoisseurs and current real estate investors, we, at Blossom, spend a lot of time thinking, debating, and tinkering with what the future of the real estate industry will look like, and how it will be impacted by technology in areas like the rental market, the construction industry, the purchasing process for home-buying, the disruption of the retail vertical, and so on.
So instead of burying your inbox with just another tech newsletter … we’re bringing you the new-and-improved Blossom - modern insights on the PropTech industry! And without further ado …
A large real estate SaaS platform owns a media business … wait, what? Why…?
First of all … what’s so special about SaaS?
Everyone knows how cool Uber, Twitter, Venmo, and other consumer apps are, but enterprise software is enduring massive amounts of innovation and is incredibly sexy given its recurring cash flow business model and B2B or B2B2C approach.
If SaaS is so easy to make money off of then what’s the problem?
Well … the issue comes down to customer acquisition and user engagement. The reality is, unlike consumer apps, SaaS is not a model that’s meant for everyone. There’s a lot of competition and it seems like everyone is literally selling the same product - e.g. “data-driven, personalized solutions for building relationships”.
So how does owning a media business help a real estate SaaS company like CoStar?
When you visit CoStar.com, instead of seeing a string of buzzwords or a “For help getting started, connect with us” screen, you’ll see headlines and content all over the site about relevant and trending news (see the image, below). This is a massive differentiation-strategy from most of the other real estate SaaS companies in terms of their messaging and their brand.
By building a content-driven community around its core business, they’re able to efficiently acquire new users and reduce their overall marketing costs, thus increasing their total ROI. Think about it … if you’re constantly visiting CoStar’s site to view their latest articles, you’ll be more inclined to sign up, and then tell all of your real estate colleagues, business partners, and investment LPs, about these services, and eventually register for one of their comprehensive commercial real estate data offerings … or at least that’s what companies like CoStar are betting on!
But wait … isn’t this a ridiculously expensive way to acquire new businesses?
Not really. It’s actually the easiest path to add value and build trust. While there are costs associated with investing in content creation, website management, editorial, SEO, among others, the lifetime value of users in comparison to the cost-to-acquire users is very high. Even after factoring out the amount generated from advertising income for the content, the SaaS subscription revenue that will be generated is still very high for the amount of input that’s required on the content-side.
While Costar has had success embedding media into its SaaS business, it’s not the only PropTech company that has done this before. Yardi, the property management SaaS company, acquired a media blog, MHNOnline, several years ago, and they convert it into the Yardi blog to acquire new landlords and property managers. The list goes on and on … but where’s the next opportunity for embedded media within PropTech?
We think the next opportunity is within construction. Many companies in the construction space are digitizing the payment process, collecting data more efficiently, and analyzing and producing smarter insights … all of which can be beneficial towards developers, project managers, architects, and so on. Let’s take Built Technologies for example. Built is a platform that’s simplifying the complex loan administration process by bridging the gap between developers, lenders, architects, and contractors. We think it could be interesting for a company like Built to acquire a media company like AC Business Media. Given AC’s ownership of several construction-related publications like Asphalt Contractor, Equipment Today, and Concrete Contractor, it could be a very smart and cost-efficient way for Built to acquire new construction businesses while being able to monetize through both a SaaS offering as well as through advertising.
📚Speed Read
Co-living has held up as well as or better than “Class A” apartments during the pandemic because they offer a better value for renters who don’t mind sharing common spaces and apartment amenities with roommates.
Alibaba is aggressively expanding its brick-and-mortar presence, owning and operating over 214 grocery stores in China, while also investing in brick-and-mortar giants like Suning, Sun Art, and EasyHome.
Market Intelligence app OfficeBlocks launched last week — providing an AI platform that allows property investors to take pictures of a building and receive rental estimates and values instantly. The platform is in partnership between JLL and Risk Integrated.
🤑 Funding
The pandemic has accelerated the mortgage industry’s digital transformation by many years. Digital closings are here to stay. Now with home sales surging, and interest rates near all-time lows, leading digital mortgage platform company Snapdocs announced $60 million in new funding.
Commercial building systems often require engineering teams with years of training. Even retrofitting old buildings with things like HVAC can be costly and time-consuming, not to mention error-prone. PassiveLogic, a startup developing a building controls platform, raised $16 million intending to bring autonomous controls to the over $1 trillion building construction market.
Propseller, a Singapore-based real estate agency that combines a tech platform with in-house agents to close transactions more quickly, announced it has raised $1.2 million in seed funding.
🤦♂️ The weekly “SMH”
The weekly SMH has turned into the “monthly smh” for Adam Neumann … lol. Last week we discussed how Neumann’s been back-in-action on the investing side, with his latest investment in Alfred. However, this week, the story of Nuemann’s rise-to-fall, has been told in the just-published Billion Dollar Loser.
Apparently, Neumann has had a friendly relationship with Jared Kushner which led to meeting Donald Trump back in 2018. As a result, Neumann started taking on some of Trump’s characteristics, adopting the term “fake news” and holding rally-like company meetings.
He apparently also met with former Starbucks CEO Howard Schultz. Schultz gave Neumann advice to start focusing on internal-company issues as opposed to growth for six months … Nuemann’s executive-staff suggested the same … Neumann however said “Fuck that” to everyone’s suggestions … he most recently lost his $185M consulting deal with WeWork.
That’s all for Edition #2 folks … stay tuned for next weeks … ✌️
What did we miss? Reach out to us @JoinBlossom