What We Learned From This Year’s Spring Innovation Forum

Each year, Fifth Wall hosts an annual Spring Innovation Forum to bring together our largest corporate real estate Limited Partners to discuss trends in the Built World, share ideas and best practices, and meet with innovative early stage companies. This year’s conference was the largest yet, bringing together over 100 guests across a multitude of companies and countries.

We like to share a few ideas and key learnings that came from our 3-day gathering, which we’ve summarized below:

1. Jeff Housenbold, Managing Partner at Softbank Investment Advisers, on why large corporations should study disruption in their industry:
“My team and I spent 6 months mapping the entire ecosystem, understanding the players, reading every report, setting up meetings with every company across the value chain. The end-result was a 340-page strategy deck mapping out all of the incumbents and disruptors, which companies we found most interesting, and an operational plan for where we would deploy capital.”

Navigating change and disruption is hard, and guest speaker Jeff Housenbold made it clear there is no substitute for performing adequate due diligence. From mapping out the ecosystem within which your firm operates to meeting with all potential disruptors in the space, and devising a plan to deploy capital into technology. He recommends all companies perform this exercise — big or small.

Jeff has a unique perspective on corporate innovation, having built a company that disrupted the traditional photo printing business and making big best as a Managing Partner of Softbank, in disruptive PropTech companies, which include Compass, Katerra, OYO, Clutter, Wag, and Plenty. In his 1-hour keynote panel with Brad, he shared many interesting perspectives on Softbank’s investment strategy, what areas he’s most excited about, and the challenges corporates face with innovation and change.

Key takeaways
• Jeff looks for companies disintermediating established and large players using technology and data and who are turning that data into a comparative / competitive weapon
• What he looks for in the management teams is a combination of technology and real estate experience
• His advice for real estate corporates:
o There is no substitute for doing the hard strategy work and the research to understand your firm’s place in the value chain, potential areas of disruption, and plan to deploy capital in technology. Share the findings with your management team and debate it with your board.
o Spend time with disruptors and the technology innovation ecosystem. Plan trips to Silicon Valley to meet with disruptive startups. Take meeting with entrepreneurs; it is the easiest way to keep a pulse on disruption.

2. Max Simkoff, CEO of States Title, on corporates looking to do transformational partnerships with early stage companies: “It is rare to see a large corporate whose management have the wisdom and foresight to say: in 5 to 10 years, we could really lose our advantage here, so on a risk adjusted basis, this is a better decision to just go all-in.”

Max is an incredible entrepreneur and a close friend of Fifth Wall. His story of how States Title came to acquire North American Title Group from Lennar, one of Fifth Wall’s first Limited Partners in its first fund, demonstrates some of the best practices and pitfalls with engaging with early stage companies. In his 1-hour fireside chat with Brendan, he shared some interesting advice to real estate corporates:

Key takeaways
• Be open to dialogues with startup companies. Continually explore ways to partner, even if the risk seems really high. Lennar and States Title had over 20 ongoing conversations to continually explore ways of working together, until one model finally seemed to resonate.
• How do you know a partnership with a disruptor will succeed? You share a common vision of the future with your partner. Both sides should also be willing to walk away from the partnership at any point in time, resulting in a stronger and more tested partnership.

3. Antony Slumbers, antonyslumbers.com: “Are you a chicken or a pig? Are you involved or are you committed?”

If you haven’t read Antony’s article on Propmodo already, it is a fantastic read. Antony really crystallizes how space-as-a-service is a new reality that is here to stay and how it is a largely demand-driven phenomenon. The question he poses here relates to the idea that a real estate company can choose to engage with disruptors in two ways: be committed to disruption or watch carefully / follow-fast. Antony also discussed a series of valuable strategies for how real estate incumbents should capitalize on this opportunity, as well as the dangers for ignoring it.

Key takeaways
• Are you involved or are you committed? Determine your strategic agenda for how you want to interface with technology companies — as a early adopter, fast follower, or a careful constructor. There is no right answer — except not having an answer.
• The office as an iPhone: Building operations and interactions are becoming tech-enabled and digitized. The future of office will have many “apps” and services accessible to occupiers, building owners, and building managers.
• Job automation is coming to all work that is structured, repeatable, and predictable (49% of all tasks). Offices of the future must be designed to accommodate new work: creation, empathy, innovation, design, collaboration, and social intelligence. The days of rows of cubicles containing workers doing the same repeatable, predictable tasks is over.

4. Future of Retail w/ ModCloth, Foxtrot, and Macerich

We had a fantastic panel discussion on Retail moderated by our very own Kevin Campos with Antonio Nieves, CEO of ModCloth; Mike LaVitola, CEO of Foxtrot; and Jesse Franklin, VP of Innovation and Investments at Macerich. Some of the things they discussed: clarifying some misconceptions around the retail apocalypse, how rent is the new Customer Acquisition Cost (CAC), and how the future of retail is omnichannel.

Key takeaways
• Another Amazon-sized company is getting created in the form of DNVBs at a pace faster than Amazon. The Top 200 DNVBs are growing at 46% on average, much faster than Amazon.
• Rent is the new CAC. In just two years, the cost of digital advertising has gone up by 12%. Digitally native brands now crowd ad space, competing for consumers’ attention. That has made offline, brick & mortar channels and creating experiences for consumers more of a differentiator for today’s brands.

5. Future of the Workplace w/ Industrious, Eden, and Brella

Discussing the future of office and the workplace was a Rockstar panel featuring Anna Squires Levine, GM at Industrious, Darien Williams, CEO of Brella, a brand of on-demand child care centers, and Joe du Bey, CEO of Eden. Each of them had some strong advice for landlords of office space, that we can essentially translate into one overarching theme: your tenants’ needs are changing rapidly, and there is so much opportunity (and value at stake) to cater to these needs.

Key takeaways
• Office landlords should offer flex services and evolve their relationship with occupiers beyond traditional rent relationships. Corporate occupiers for example, are under pressure to provide more family benefits, but aren’t sure how to go about implementing such programs. Office landlords, in partnership with child care operators like Brella, can easily provide this as a service for their employees.
• Corporate occupiers face a new challenges in the digital age (e.g., talent, culture). For example, they face a war for talent: corporates are hiring rapidly for roles they did not need before, like product management, data science, and software developers. In terms of culture, corporates are trying to encourage their companies to be more nimble, agile, and encouraging of failure. Real estate companies can play a crucial role here in helping shape and foster company culture or quickly set up offices in new markets to acquire new talent.

6. Brainstorming session: Top ideas

Each year, our brainstorming session produces some pretty interesting business models and ideas in PropTech.

Some of the best ideas we heard
• Parking lot management: Create a next generation parking lot management and operating company that would manage parking lots on owners’ behalf, enabling all sorts of new use cases: autonomous vehicle charging, ghost kitchens, vertical farms, and farmers markets.
• Space utilization of stairwells and other non-core parts of a building for wellness programs: Employees are demanding better access to fitness and wellness activities, but there’s limited space in a building to do that. What if fitness programs and activities could be activated in spaces that are not currently productive — from parking lots, rooftops, to yes, stairwells (it’s the new Peloton).
• A retail store “carousel” that spins on an axis to allow 3 different storefronts to have frontage access during different parts of the day: Frontage access is valuable real estate, and the back of a building is often not valuable. But what if you had a building that could spin like a carousel to allow different parts of the building to receive frontage access at different parts of the day — a retail store during the day and a bar during the evening.
• Sensors-as-a-service: Real estate companies are looking to understand more about how occupiers use their space and how they can make the building responsive to their needs or how they can better design their floorplans to make occupiers more productive. A sensors-as-a-service company would retrofit an entire building and sell the insights and data back to landlords or occupiers as a subscription service.