Pages Navigation Menu

The blog of DataDiggers

Categories Navigation Menu

The next frontier in real estate technology

Posted by on Mar 14, 2019 in affordable housing, Airbnb, Column, homeshare, loopnet, property, Real Estate, Trinity Ventures, Trulia, WeWork, Zillow | 0 comments

From entertainment to transportation, technology has upended nearly every major industry — with one notable exception: real estate. Instead of disrupting the sector, the last generation of real estate technology companies primarily improved efficiencies of existing processes. Industry leaders Zillow/Trulia and LoopNet* helped us search for homes and commercial real estate better and faster, but they didn’t significantly change what we buy or lease or from whom or how.

The next generation of real estate technology companies is taking a more expansive approach, dismantling existing systems and reimagining entirely new ones that address our growing demand for affordability, community and flexibility.

The increasing need for affordability

Home ownership has long been integral to the American dream, but for many young Americans today it’s an unattainable dream. A third of millennials live at home, and as a cohort, they spend a greater share of their income on rent than previous generations did — about 45 percent during their first decade of work. This leaves little money left over for savings, much less for home ownership, the largest financial expenditure of most people’s lifetimes.

The increasing need for affordable housing is driving some creative tech-enabled solutions. One segment of startups is focused on making existing homes more affordable, especially in high-cost markets like New York and the Bay Area. Divvy helps consumers, many of them with low credit scores, rent-to-own homes, which are assessed for viability by a combination of contractors and machine learningLandedfunded by the Chan Zuckerberg Initiative, helps educators afford homes in the communities in which they teach. Homeshare divides luxury apartments into multiple more-affordable units, and Bungalow takes a similar approach with houses. Both companies have built technology platforms to manage their tenant listings and to allocate tenant expenses and streamline payments.

Consumers aren’t just craving affordability, they’re also seeking company.

Another segment of startups is aiming to reduce the costs of building new homes, such as with modular, prefab housing to reduce construction costs. Katerra, which just raised $865 million, is aiming to create a seamless, one-stop shop for commercial and residential development, managing the entire building process from design and sourcing through the completion of construction. Taking a “full stack” approach to every step of the building process should enable them to find efficiencies and reduce costs.

If the economy weakens, the need for more affordable housing will only grow, making these startups not only recession-proof but even recession-strong. Collectively, they’re helping Americans right-size their dreams to something more broadly attainable.

In search of community

Consumers aren’t just craving affordability, they’re also seeking company. More than half of Americans feel lonely, and the youngest cohort in their late teens and early-to-mid-twenties are the loneliest of the bunch (followed closely by millennials). Millennials are the first generation to enter the workforce in the era of smartphones and laptops. While 24/7 connectivity enables us to work anywhere, anytime, it also creates expectations of working anywhere, anytime — and so many people do, bleeding the lines between work life and personal life. Longer work hours make community harder to build organically, so many millennials place value on employers and landlords who facilitate it for them.

Airbnb and WeWork were early to capitalize on the demand for community, with one changing how we travel and the other redefining the modern office space. Co-working companies like WeWork, as well more targeted providers like The Assembly*, The Wing and The Riveter, offer speaker series, classes and other free member events aimed at building connections. Airbnb, once focused only on lodging, has broadened its platform to include community-building shared experiences.

Shared living and hospitality startups are also investing in community to attract and retain customers. StarCity provides dorms for adults, Common and HubHaus rent homes intended to be shared by roommates and Ollie offers luxury micro apartments in a co-living environment. These companies are leveraging technology to foster in-person connections. For example, Common uses Slack channels to communicate with and connect members, and HubHaus uses roommate matching algorithms.

Within the hospitality sector, Selina offers a blended travel lodge, wellness and co-working platform geared toward creating community for travelers and remote workers, complete with high-tech beachside and jungle-side office spaces. Meanwhile, experience-driven lifestyle hotel company Life House* connects guests through onsite locally rooted food and beverage destinations and direct app-based social introductions to other travelers.

Modern life requires flexibility

Life can be unpredictable, especially for young people who tend to change jobs frequently. Short job tenures are especially common within the growing gig economy workforce. People who don’t know how long their jobs will last don’t want to be burdened with long-term lease commitments or furniture that’s nearly as expensive to move as it is to buy.

The next frontier in real estate technology is as boundless as it is exciting.

Companies like FeatherFernish and CasaOne rent furniture to people seeking flexibility in their living environments. Among consumers ready to buy their homes but looking for some extra help, Knock, created by Trulia founding team members and which recently raised a $400 million Series B, provides an end-to-end platform to enable home buyers to buy a new home before selling their old one. Also emphasizing flexibility, OpenDoorvalued at more than $2 billion, pioneered “instant offers” for homeowners looking to sell their homes quickly, leveraging algorithms to determine how much specific houses are worth.

It’s not just residents who seek flexible leases; many companies do as well, particularly those accommodating distributed employees or experiencing periods of uncertainty or rapid growth. To enable flexibility, several commercial real estate technology companies have developed platforms that balance pricing, capacity and demand.

Knotel, a “headquarters as a service” for companies with 100-300 employees, builds out and manages office spaces at lower risk and with more flexibility than is typically possible through commercial real estate leases, enabling tenants to quickly add or shrink office space as needed. WeWork allows members to pay only for the time periods when they come in to work. Taking flexibility to an even greater level, Breather lets workers rent rooms by the hour, day or month.

The next frontier in real estate technology is as boundless as it is exciting. A whole new generation of startups is designing innovative solutions from the ground up to address our growing demands for affordability, community and flexibility. In the process, they’re fundamentally reimagining how we live, work and play by transforming the modern workplace, leisure space and even our definition of home. We look forward to seeing — and experiencing — what lies ahead.

*Trinity Ventures portfolio company.


Source: The Tech Crunch

Read More

Tiger Global and Ant Financial lead $500M investment in China’s shared housing startup Danke

Posted by on Mar 1, 2019 in affordable housing, alibaba, Ant Financial, apartment, Asia, Baidu, Beijing, business intelligence, China, danke apartment, jack ma, LinkedIn, major, property, Real Estate, renting, Tiger Global Management, WeWork, Xi Jinping | 0 comments

A Chinese startup that’s taking a dorm-like approach to urban housing just raised $500 million as its valuation jumped over $2 billion. Danke Apartment, whose name means “eggshell” in Chinese, closed the Series C round led by returning investor Tiger Global Management and newcomer Ant Financial, Alibaba’s e-payment and financial affiliate controlled by Jack Ma.

Four years ago, Beijing-based Danke set out with a mission to provide more affordable housing for young Chinese working in large urban centers. It applies the coworking concept to housing by renting apartments that come renovated and fully furnished, a model not unlike that of WeWork’s WeLive. The idea is by slicing up a flat designed for a family of three to four — the more common type of urban housing in China — into smaller units, young professionals can afford to live in nicer neighborhoods as Danke takes care of hassles like housekeeping and maintenance. To date, the startup has set foot in ten major Chinese cities.

With the new funds, Danke plans to upgrade its data processing system that deals with rental transactions. Housing prices are set by AI-driven algorithms that take into account market forces such as locations rather than rely on the hunches of a real estate agent. The more data it gleans, the smarter the system becomes. That layout is the engine of the startup, which believes an internet platform play is a win-win for both homeowners and tenants because it provides greater transparency and efficiency while allowing the company to scale faster.

“We are focused on business intelligence from day one,” Danke’s angel investor and chairman Derek Shen told TechCrunch in an interview. Shen was the former president of LinkedIn China and was instrumental in helping the professional networking site enter the country. “By doing so we are eliminating the need to set up offline retail outlets and are able to speed up the decision-making process. What landlords normally care is who will be the first to rent out their property. The model is also copiable because it requires less manpower.”

“We’ve proven that the rental housing business can be decentralized and done online,” added Shen.

danke apartment

Photo: Danke Apartment via Weibo

Danke doesn’t just want to digitize the market it’s after. Half of the company’s core members have hailed from Nuomi, the local services startup that Shen founded and was sold to Baidu for $3.2 billion back in 2015. Having worked for a business of which mission was to let users explore and hire offline services from their connected devices, these executives developed a propensity to digitize all business aspects including Danke’s day-to-day operations, a scheme that will also take up some of the new funds. This will allow Danke to “boost operational efficiency and cut costs” as it “actively works with the government to stabilize rental prices in the housing market,” the company says.

The rest of the proceeds will go towards improving the quality of Danke’s apartment amenities and tenant experiences, a segment that Shen believes will see great revenue potential down the road, akin to how WeWork touts software services to enterprises. The money will also enable Danke, which currently zeroes in on office workers and recent college graduates, to explore the emerging housing market for blue-collar workers.

Other investors from the round include new backer Primavera Capital and existing investors CMC Capital, Gaorong Capital and Joy Capital.

China’s rental housing market has boomed in recent years as Beijing pledges to promote affordable apartments in a country where few have the money to buy property. As President Xi Jinping often stresses, “houses are for living in, not for speculation.” As such, investors and entrepreneurs have been piling into the rental flat market, but that fervor has also created unexpected risks.

One much-criticized byproduct is the development of so-called “rental loans.” It goes like this: Housing operators would obtain loans in tenants’ names from banks or other lending institutions allegedly by obscuring relevant details from contracts. So when a tenant signs an agreement that they think binds them to rents, they have in fact agreed to take on loans and their “rent” payments become monthly loan repayments.

Housing operators are keen to embrace such practices for the loans provide working capital for renovation and their pipeline of properties. On the other hand, the capital allows companies like Danke to lower deposits for cash-strapped young tenants. “There’s nothing wrong with the financial instrument itself,” suggested Shen. “The real issue is when the housing operator struggles to repay, so the key is to make sure the business is well-functioning.”

Danke alongside competitors Ziroom and 5I5J has drawn fire for not fully informing tenants when signing contracts. Shen said his company is actively working to increase transparency. “We will make it clear to customers that what they are signing are loans. As long as we give them enough notice, there should be little risk involved.”


Source: The Tech Crunch

Read More

Why you need a supercomputer to build a house

Posted by on Dec 8, 2018 in affordable housing, Artificial Intelligence, building, building codes, buildings, camino, concur, concur labs, Cove.Tool, cover, Cover Technologies, Developer, Enterprise, envelope, Government, GreenTech, housing, Logistics, machine learning, Policy, Real Estate, regulation, SaaS, Startups, TC, zoning | 0 comments

When the hell did building a house become so complicated?

Don’t let the folks on HGTV fool you. The process of building a home nowadays is incredibly painful. Just applying for the necessary permits can be a soul-crushing undertaking that’ll have you running around the city, filling out useless forms, and waiting in motionless lines under fluorescent lights at City Hall wondering whether you should have just moved back in with your parents.

Consider this an ongoing discussion about Urban Tech, its intersection with regulation, issues of public service, and other complexities that people have full PHDs on. I’m just a bitter, born-and-bred New Yorker trying to figure out why I’ve been stuck in between subway stops for the last 15 minutes, so please reach out with your take on any of these thoughts: @Arman.Tabatabai@techcrunch.com.

And to actually get approval for those permits, your future home will have to satisfy a set of conditions that is a factorial of complex and conflicting federal, state and city building codes, separate sets of fire and energy requirements, and quasi-legal construction standards set by various independent agencies.

It wasn’t always this hard – remember when you’d hear people say “my grandparents built this house with their bare hands?” These proliferating rules have been among the main causes of the rapidly rising cost of housing in America and other developed nations. The good news is that a new generation of startups is identifying and simplifying these thickets of rules, and the future of housing may be determined as much by machine learning as woodworking.

When directions become deterrents

Photo by Bill Oxford via Getty Images

Cities once solely created the building codes that dictate the requirements for almost every aspect of a building’s design, and they structured those guidelines based on local terrain, climates and risks. Over time, townships, states, federally-recognized organizations and independent groups that sprouted from the insurance industry further created their own “model” building codes.

The complexity starts here. The federal codes and independent agency standards are optional for states, who have their own codes which are optional for cities, who have their own codes that are often inconsistent with the state’s and are optional for individual townships. Thus, local building codes are these ever-changing and constantly-swelling mutant books made up of whichever aspects of these different codes local governments choose to mix together. For instance, New York City’s building code is made up of five sections, 76 chapters and 35 appendices, alongside a separate set of 67 updates (The 2014 edition is available as a book for $155, and it makes a great gift for someone you never want to talk to again).

In short: what a shit show.

Because of the hyper-localized and overlapping nature of building codes, a home in one location can be subject to a completely different set of requirements than one elsewhere. So it’s really freaking difficult to even understand what you’re allowed to build, the conditions you need to satisfy, and how to best meet those conditions.

There are certain levels of complexity in housing codes that are hard to avoid. The structural integrity of a home is dependent on everything from walls to erosion and wind-flow. There are countless types of material and technology used in buildings, all of which are constantly evolving.

Thus, each thousand-page codebook from the various federal, state, city, township and independent agencies – all dictating interconnecting, location and structure-dependent needs – lead to an incredibly expansive decision tree that requires an endless set of simulations to fully understand all the options you have to reach compliance, and their respective cost-effectiveness and efficiency.

So homebuilders are often forced to turn to costly consultants or settle on designs that satisfy code but aren’t cost-efficient. And if construction issues cause you to fall short of the outcomes you expected, you could face hefty fines, delays or gigantic cost overruns from redesigns and rebuilds. All these costs flow through the lifecycle of a building, ultimately impacting affordability and access for homeowners and renters.

Startups are helping people crack the code

Photo by Caiaimage/Rafal Rodzoch via Getty Images

Strap on your hard hat – there may be hope for your dream home after all.

The friction, inefficiencies, and pure agony caused by our increasingly convoluted building codes have given rise to a growing set of companies that are helping people make sense of the home-building process by incorporating regulations directly into their software.

Using machine learning, their platforms run advanced scenario-analysis around interweaving building codes and inter-dependent structural variables, allowing users to create compliant designs and regulatory-informed decisions without having to ever encounter the regulations themselves.

For example, the prefab housing startup Cover is helping people figure out what kind of backyard homes they can design and build on their properties based on local zoning and permitting regulations.

Some startups are trying to provide similar services to developers of larger scale buildings as well. Just this past week, I covered the seed round for a startup called Cove.Tool, which analyzes local building energy codes – based on location and project-level characteristics specified by the developer – and spits out the most cost-effective and energy-efficient resource mix that can be built to hit local energy requirements.

And startups aren’t just simplifying the regulatory pains of the housing process through building codes. Envelope is helping developers make sense of our equally tortuous zoning codes, while Cover and companies like Camino are helping steer home and business-owners through arduous and analog permitting processes.

Look, I’m not saying codes are bad. In fact, I think building codes are good and necessary – no one wants to live in a home that might cave in on itself the next time it snows. But I still can’t help but ask myself why the hell does it take AI to figure out how to build a house? Why do we have building codes that take a supercomputer to figure out?

Ultimately, it would probably help to have more standardized building codes that we actually clean-up from time-to-time. More regional standardization would greatly reduce the number of conditional branches that exist. And if there was one set of accepted overarching codes that could still set precise requirements for all components of a building, there would still only be one path of regulations to follow, greatly reducing the knowledge and analysis necessary to efficiently build a home.

But housing’s inherent ties to geography make standardization unlikely. Each region has different land conditions, climates, priorities and political motivations that cause governments to want their own set of rules.

Instead, governments seem to be fine with sidestepping the issues caused by hyper-regional building codes and leaving it up to startups to help people wade through the ridiculousness that paves the home-building process, in the same way Concur aids employee with infuriating corporate expensing policies.

For now, we can count on startups that are unlocking value and making housing more accessible, simpler and cheaper just by making the rules easier to understand. And maybe one day my grandkids can tell their friends how their grandpa built his house with his own supercomputer.

And lastly, some reading while in transit:


Source: The Tech Crunch

Read More

How Airbnb went from renting air beds for $10 to a $30 billion hospitality behemoth

Posted by on Aug 12, 2018 in affordable housing, Airbnb, brian chesky, Co-founder, Culture, Denver, DST Global, economy, General Catalyst, joe gebbia, Lyft, New York, New York City, paul graham, San Francisco, sharing economy, TC, Uber, vacation rental, Y Combinator, Yuri Milner | 0 comments

Happy 10th anniversary Airbnb.

When we first wrote about the company a decade ago, it was a spare website cobbled together by its founders for the low low price of $20,000.

In the years since, the marketplace Airbnb created has radically transformed the rental landscape in cities, created an entirely new hospitality market and surged to a valuation of roughly $31 billion.

As it prepares for an initial public offering in 2019, it’s worth a look back on how far the company has come, and how its founders’ vision for a new type of way to monetize unused apartment space for budget travelers has become the engine driving a new kind of travel and new experiments in modern living (for better or worse).

When we wrote about the company in 2008, the pitch for Airbnb’s services had already been set.

AirBed and Breakfast will definitely appeal to younger travelers, and conventioneers who can’t find a regular hotel room. In overbooked Denver, where 20,000 people will be descending for the Democratic National Convention, hotels are already sold out. More than 600 people have found alternative accommodations through AirBed and Breakfast, and 50 to 100 new listings appear every day. Prices range from $20 a night for an airbed to $3,000 for an entire house.

Indeed, it’s likely that there would have been no Airbnb without the 2008 presidential campaign. The election created a serendipitous confluence of an incredibly unique historical moment where a groundswell of demand could be met by a new type of supply and Airbnb’s co-founders Brian Chesky and Joe Gebbia were there to capitalize on the opportunity.

It’s good to remember that in 2008, the co-founders were claiming that they could barely make rent. And they were certainly strapped for cash for the fledgling business. There, again, the 2008 election presented them with an opportunity.

“The world thought we were crazy,” Gebbia recalled in an interview.

But the RISD grads had that $20,000 in seed funding and politically themed cereal boxes to tide the business over. It was the cereal gimmick — selling Obama O’s and Captain McCains – for $40 a box that got them the hearing from Y Combinator co-founder Paul Graham and acceptance into the accelerator.

Three years later, the business was a rocket ship. It had pulled in a (whopping for the time) $112 million investment from Andreessen Horowitz, DST Global, and General Catalyst and was already on the path to bulldozing the old models of hospitality with a shared vision for visiting any city anywhere in the world.

“Airbnb, with its strong management team and engaged worldwide community is on a path to become a transformational company,” said Yuri Milner founder of DST Global, in a truly understated statement at the time.

So transformational, in fact, that the company would go on to raise billions more atop that hundred-million-plus Series B round.

But that success has not come without a certain cost.

For all of the ways in which Airbnb claims to be unlocking the local economy, it can’t avoid the accusations that it has locked out local renters in favor of financial speculators who are buying up apartments to lease to a traveling class rather than sustain a viable and vibrant neighborhood for the actual citizens that live there.

One study, published earlier this year (and funded by the AFL-CIO and the Hotel Trades Council), indicated that the company significantly impacted rental prices in New York.

… the study estimates that Airbnb has driven up long-term rental prices by 1.4 percent, or $384 per year, for the median New York City renter. The research suggests that both restricted availability in the long-term rental market and increased financial incentives in the short-term rental market account for this increase.

It’s those kinds of figures that have led to the sometimes aggressive pushback from local real estate advocates. Indeed, it was just about three years ago that San Francisco protestors from the Coalition on Homelessness took over Airbnbs headquarters to protest what they viewed as the company’s complicity in the surge in evictions and homelessness in the city.

In a 2015 letter to New York legislators, Airbnb’s public policy chief at the time, David Hantman, wrote, “The majority of hosts use the money they earn to pay their bills and stay in their homes.”

And in a separate blog post (now apparently lost in a site redesign) around the same time, Hantman took Airbnb’s argument further. “In fact, Airbnb makes cities more affordable,” Hantman was quoted as writing in Vice. “Sixty two percent of Airbnb hosts in New York said Airbnb helped them stay in their homes and the typical Airbnb host in New York earns $7,530 per year — a modest, but significant amount that can make a huge difference for families.”

The company’s kerfuffles with regulators (a sort of mirror image of the woes faced by fellow marketplace service Uber and its American competitor Lyft) have not effected the way investors are valuing the virtual room-for-rent-filled house that Chesky and Gebbia have built.

As we reported earlier this year, Airbnb raised nearly $4.4 billion in funding as a private company, to date, and reports say it is on track to make between $3.5 billion and $4 billion in revenues this year from its business connecting travelers with private homes and an array of other related services.

That’s a long, long way from matching would-be attendees to the 2008 Democratic National Convention with air mattresses or sofas in Denver.


Source: The Tech Crunch

Read More