LIVE from Nashville Entrepreneur Center: What We Can Learn from Nashville Startups
Commercial real estate (CRE) is a behemoth industry. According to the NAIOP Economic Impacts of Commercial Real Estate 2018 Edition, CRE contributed $935.1 billion to the U.S. gross domestic product (GDP) last year. For tech entrepreneurs like Keith Kleinmaier, there’s a staggering opportunity here. However, it’s not in the way many people likely see it.
Kleinmaier knew two things from his more than 20-year career in CRE. He had been an investor, full-time broker, and developer for his family’s boutique CRE company, Retail Realty. (He even put in time as a property manager.)
First, he knew that the faster a commercial construction project finishes, the faster businesses can move in and generate revenue.
Second, he knew his industry had been slow to adapt and leverage new technologies. He personally had felt the pain of delays caused by the out-of-date ways many CRE companies manage their information.
“Before Tenant Tracker, I developed a small building on the south side of Indianapolis, and I was doing it literally in spreadsheets—almost exactly like our sales pitch,” Kleinmaier says.
“I had big-name clients like Goodwill and Verizon, and just working with them as an individual, I realized how behind I was,” he continues. “Instead of hitting our mark and getting our tenants open for business early … which if that happens, that means they’re ringing the register earlier, and it means we get rent sooner because everything starts a little sooner … instead we deliver late. And if you deliver late, there’s major costs involved.”
Kleinmaier was hardly alone in this. Many CRE companies still seek and secure commercial tenants the old fashioned way, using spreadsheets and notebooks. He knew there was a smarter way to manage the process, from signing letters of intent to finalizing opening days.
Armed with his insights, Keith Kleinmaier hunted for an opportunity to combine his acumen in real estate and technology. It came in 2015 when he became CEO of Tenant Tracker. It was a joint venture with Mike Kelly, founder of Tenant Tracker and managing director of DeveloperTown, an Indianapolis-based consulting firm that builds and launches SaaS products.
Tenant Tracker simplifies the management of multiple commercial real estate locations. It automates many of the most common commercial real estate processes through its comprehensive, cloud-based platform with a variety of features, such as:
“I could not do my work proficiently without Tenant Tracker,” says Karen Wilkes, principal at Development Management Associates LLC in Chicago. “It has the capability to track everything I need in order to satisfy our clients’ needs.”
This automation and simplification of the many pain points involved in tenant coordination have attracted a number of major clients to the tech startup. Starwood Retail Partners, for example, relies on Tenant Tracker to help with its 30 malls and lifestyle centers across the U.S.
“It is a little foreshadowing for me in my career that one day I would get to steer this software to the same people,” Kleinmaier says. “It helps move tenants in sooner and reduces penalties. That means extra days of rent.”
As Kleinmaier leads Tenant Tracker, he understands that he has to resist the urge “to be everything to everyone.” After all, the real estate space is gargantuan—and investors have noticed. According to Deloitte’s Commercial Real Estate Outlook 2018, growth in real estate (RE) tech startups (often called PropTech) has soared:
“Globally, the number of RE tech startups rose from 176 in 2008 to 1,274 by 2017. In the same period, cumulative investments in these startups soared from $2.4 billion to $33.7 billion.”
CRE Tech Talks also recognizes the potential RE tech startups, such as Tenant Tracker, have in improving business and the community at large:
“There is still a lot of potential for the technology and real estate communities to help each other solve some of the toughest problems that affect CRE teams and their tenants today. These solutions will have a broad, but direct impact on the built environment ranging from the move-efficient use of urban land … to healthier work environments and smarter financial risk-taking.”
Another factor affecting market opportunity? Foreign investment, which has only made the U.S. real estate hotter. In an article for Forbes, Money360 founder and CEO Evan Gentry pointed out that “international investors have purchased more than $365 billion in U.S. CRE since 2010.”
Kleinmaier joined Tenant Tracker knowing all the risks related to a startup. He also knows that a strong company culture is a necessity for facing those risks.
To create that startup culture, Kleinmaier fosters a strong sense of ownership and teamwork. Successes are called out so everyone can celebrate. Likewise, hiccups and failures are highlighted so everyone can use them to constantly improve processes.
Kleinmaier emphasized the importance of this open communication in “12 Challenges Startup Culture Must Overcome In Order To Thrive in 2017:”
“Land a big account or solve a major coding roadblock? Make sure your team knows! Stumble and fail in a big investor pitch? Share that, too,” Kleinmaier said. “Share critical information up and down and sideways—good or bad—to ensure your team members are informed and on the right track. As you grow your organization, open communication will help build your trust in each other.”