Property Tech: Understanding the Digital Transformation in Real Estate

Property Tech: Understanding the Digital Transformation in Real Estate

We sat down with Alvaro Erize, CEO of CINC and a former Serent Growth Team member, to understand his perspective on the trends in the property tech market.

November 3, 2021

There’s a digital revolution happening in the real estate sector. In 2020, the number of home buyers who found their home online reached an all time high at 51%.

So it’s no wonder the property tech market is booming. As of 2021, there are over 2,000 property technology startups – about 6 for every 1 million people.

We sat down with Alvaro Erize, CEO of CINC and a former Serent Growth Team member, to understand his perspective on the trends in the property tech market. CINC is a high-end solution providing full platform support to the best real estate teams in North America. Serent invested in CINC in 2015 and sold it to Fidelity National Financial. As part of our conversation, Alvaro shared four key lessons from his experience scaling CINC that all real estate startups can use to find success in 2021 and beyond.

Our discussion focused on four key lessons:

  • The importance of obsessive customer focus when building your product
  • Growing sales by doing the little things right
  • Doing M&A for the right reasons
  • Building a results-focused company culture

Building a Customer-Focused Product

 

A tech company depends on the health of its product. Without a healthy product, everything can go wrong. Alvaro shares, “Up until last year, I was still spending half of my time as CEO on product which worked for a time but wasn’t the right long-term answer given the importance of this function. Bringing on a brilliant head of product has enabled us to continue to innovate while allowing me to step back and focus on other areas.”

How do you build a successful product? “At CINC, we’ve found the answer is an obsessive focus on the end user. Our clients are often new entrepreneurs who suddenly find themselves running a business — and they depend on our software to keep things running smoothly. Every time we’re building something, we ask: Does our client absolutely need this to be more successful? Does it save them time or make them money in a palpable manner ?” states Alvaro. ”While that might sound obvious, too often companies in proptech pursue ‘shiny object’ features that reflect what clients think they want, and not really what they need. This wastes development time and clutters the platform.”

“Real estate has an irreplaceable human aspect. After all, a real estate transaction is very complex. It’s a very scary moment for most people. It’s a transaction they’ll do one or two times in their lives. It’s the biggest equity they’ll ever hold. And they’re not really equipped to do it on their own.”

“That’s why we don’t believe agents will be replaced by technology, and why we focus on building technology that empowers the best agents to serve more people rather than technology that seeks to replace them.”

Companies that are building the next generation of property technology products should keep in mind two key tenants of product development.

  • Know your customer to build a great product. “Technology does great at helping you do things you do all the time. But to solve one very complex problem that is going to happen one or two times in your life, technology is not the best,” explains Alvaro. By deeply understanding your customer, you can avoid costly pitfalls. “In our model, where agents used to serve maybe a dozen clients a year, now they can serve 60 or 90 because technology enables them to do that. With buyers taking over the home search process using platforms like CINC or even Realtor.com and Zillow, agents can focus on advising their clients well, taking care of their fiduciary duty, and delivering a seamless transaction — and do it for more clients.”
  • Stay focused on the value your product provides. Chasing after the next shiny feature can be tempting but can be detrimental in the long run. Alvaro reflects, “We think the best technology solutions give our customers, agents, the tools they need to do more.” He continues, “On the other end of the market, there are older companies that are trying to serve their customers, brokers, by trying to give technology that fits with every little thing that the broker thinks they want. Those technologies get used by only 10% or 100% of their agents. In the end, the knowledge provider is not obsessed with creating value for the end user and it’s more following the lead of what the high end executive of this big broker has said, which can make the technology replaceable.”

Driving More Sales

 

Many startups build exceptional products, but they don’t have a strong plan on the front end to attract more customers. “Tightening up sales processes is a relatively easy win,” says Alvaro. “At CINC, we increased sales by 50% right off the bat by focusing on basics like building processes to consistently follow up with leads, moving to a more sophisticated CRM, and focusing on marketing channels we could actually measure.” “Once you cover the basics you need to focus on channel expansion, establishing industry partnerships (coaching groups are key in real estate) and tackling SEM in a systematic and measurable manner”

Growing Through M&A

 

Mergers and acquisitions (M&A) are one way to accelerate the growth of a company and CINC has developed a thoughtful approach to determining if M&A is right for its growth goals. Alvaro shares, “When we think about acquisitions, we aren’t looking for pure market share capture. We look for a strategic fit, by finding opportunities where we can make each other better through an acquisition. At CINC, we look at M&A through the lens of one key question: Does it increase the success rate of getting a consumer connected to an agent and connected to a house? Ultimately, that’s what we want to achieve.”

The best strategic acquisitions complement the problems you’re already solving. Look for the problems that are peripheral to that will help you find companies that complement what you’re doing. “For example,” Alvaro continues, “Sky Slope, a transaction management company acquired by our parent company a little after we were, picks up where CINC leaves off by going deeper into the transaction. That’s what makes it such a powerful combination.”

Creating a Results-Focused Culture

 

CEOs have the unique perspective of leading through various stages and the opportunity to learn from them. Alvaro reflects on the changes he’s witnessed at CINC, “Over the years, we’ve learned two big lessons about building a productive work culture at CINC.”

  • Be fearless and do the work. “The biggest growth we’ve had came from rolling up our sleeves and saying, okay, let’s sit down and let’s think this problem through,” states Alvaro. “All problems in the end are just problems. If you think through them together, you’ll get to the other side. You do not need to have the answer upfront. That way of looking at things still helps me every day. None of us know what we’re doing. But if you fight hard enough with people that have your back, you can get through things and grow.”
  • Embrace change. Alvaro emphasizes, “We were a company built on innovation. But inside the company, we hated change. We stayed with antiquated internal systems and technology because we feared change and our team resisted it. We made the changes we needed to make through and determination. But we realized we needed to instill a culture of ‘Kaizen,’ of constant improvement of your internal processes, to really be able to jump from a 30 person start up to a 200 person industry name.”

 

The real estate industry is rife with opportunities for digital transformation. As Alvaro and CINC have demonstrated, founders can continue to innovate in the property technology space by developing customer-focused solutions that truly help users to be more successful. Here at Serent, we’ve invested in over five real estate technology companies since 2012 and helped them scale their products, teams, and customer base. Today, we’re working to equip property technology leaders with the strategies and resources to help users achieve success — and deliver real change in the real estate industry.

Serent Capital invests in growing businesses that have developed compelling solutions that address their customers' needs. As those businesses grow and evolve, the opportunities and challenges that they face change with them. Principals at Serent Capital have firsthand experience at capturing those opportunities and navigating these difficulties through their experiences as CEOs, strategic advisors, and board members to successful growing businesses. By bringing its expertise and capital to bear, Serent seeks to help growing businesses thrive. Learn more about our portfolio companies.

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