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Why were there so many residential real estate sites, but no commercial real estate sites? SquareFoot took off and over time was becoming a staple product for those looking for commercial real estate spaces.
Due to its success, Jonathan was in a great position, which allowed him to become an angel investor for real estate deals and different startups, passing on his knowledge and capital to other new businesses! Jonathan talks syndications, direct lenders for payday loans direct lenders for payday loans easy online loan funds, and investing as a whole. For any investor who wants to see their industry grow and advance forward, Jonathan is a great success story showing you have the power to change your industry for the better! Which is both that your balances start running a marathon. Recording:Welcome to a real world MBA from the school of hard knocks, where entrepreneurs reveal what it really takes to make it. Carol:Oh, doing so well, and thank you for always talking me up, I appreciate you more than you know. We are always looking for more entrepreneurs, business owners and founders with great pro tips. The person we have on is not a real estate investor, but he runs a real estate related business, and actually he is a real estate investor in a way, he invests in real estate businesses. Jonathan is a big fan of property related technology. In addition to running SquareFoot, which is a prop tech company, Jonathan also is an investor in other prop tech companies. On this episode, in addition to talking about the evolution of SquareFoot and what SquareFoot does, Jonathan also talks to us about being an angel investor and how that whole industry works. On this discussion, we talk about SquareFoot, we talk about angel investing, we talk about how to get into angel investing. We talk about if you just want to be a small angel investor. I do want to make a quick disclosure, Jonathan talks about his prop tech investing funds, i need money now his angel investing fund, Carol and I are investors in his fund. I am going to say one other thing, if you are sensitive to curse words, Jonathan does use the S word and the F word just a couple of times in this episode. Now, if you want to learn more about Jonathan, more about direct lenders for payday loans his company, SquareFoot, or any of the things he invests in, check out our show notes at biggerpockets. Carol:Jonathan, welcome to the BiggerPockets Business Podcast.
You come from a real estate background in a sense, you come from a business background, you also come from an investing background.
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This was 2007 to 2010 in a group called the International Capital Group.
This is 13 years ago and that group started a handful of years before I got there, because this is now 20 years ago, which is crazy. But at the time it was really novel idea to think that there would be foreign buyers of US real estate and US buyers of foreign real estate.
I was very fortunate when I started that job, this was, I guess, one of the benefits or silver linings of work not being so fast paced because the markets were slow. My boss let me shadow some other people around the organization. I got to spend a little time doing some leasing, not actually working transactions, but shadowing some of the senior people in a few different groups. Gave me at a very, very, very shallow level, a lot of experience into what it means to be in commercial real estate. So, leasing, development, our group was capital markets, within capital markets, there was both investment sales, which was buying and selling the buildings as well as real estate investment banking, which was helping put debt on these transactions, and actually a group called Corporate Capital Markets that did big sale lease backs for big corporate users. The plan was always to go back to business school, which I did, which is what brought me to New York, got my MBA at Columbia. But shortly after I got here, I got a call from a friend of mine who was looking for space for his last company.
He had gone online to try and do that, thought you could find office space online the same way you could find an apartment or house online. By the time we graduated, by the time I graduated in May of 2012, we were full-time on SquareFoot, and the rest is history. If you were going to use an analogy in the residential world, who are you like in the residential world, but on the commercial side? You started SquareFoot in 2011, you were still in business school. Was this something you were doing part-time, did you raise money? Were you self-funding, did you have a team around you? Jonathan:Early days is me and two guys I knew from home. We started by using a firm to build the initial prototype, and then after we did that, we were able to get some initial clients and customers.
Easy stuff is like a commercial real estate leasing platform, like SquareFoot, or on the residential side, Compass or Redfin, who do what we do, except for people buying and selling houses. It can also be like energy management solutions, either for a house or for a building.
Well, how do you find the self-storage unit that you use? By the way, how do those self-storage providers run their business? I worked at JLL, which has a 20,000, 30,000, 40,000, 50,000 global employees. I grew up in Houston, went to Atlanta for college, New York for business school. I really had no idea what I was getting myself into.
Now, when I sit on the other side of table, investing and advising companies, a lot of whom are prop tech, I do have that conversation with them.
By the way, the way that the airlines do pricing, completely different. When was the last time you walked into a bank branch? You might still do it, but with a lot less frequency than you used to. As far behind as we are in the US, other markets are even further behind. Can you talk to us a little bit about how SquareFoot has evolved over the last nine years? The goal has always been the same, which is growing companies, struggle, finding transact not prime real estate. The main problem that somebody feels is, I just want to see inventory. Again, getting back to that, when you go look for a house or an apartment, you go to Zillow, and then Zillow historically made money selling ad units to brokers, and whoever else wants to get in front of you when you are trying to buy a house.
If you want to buy a house, all of your friends have bought houses or rented houses, or your mom, your cousin, your sister, somebody that you know has gone through that process. Going back, I guess, a little more than two years ago, we bought a company called PivotDesk. PivotDesk, you could think of like Airbnb for office space. Middle of last year, or early last year, we launched a program called FLEX by SquareFoot, which is another service that we offer our clients that helps unlock shorter lease terms.
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Your customer demographic is probably smaller than a residential real estate prop tech company. The cycle for leasing office space tends to be longer than residential. In commercial, it could be two years, five years, 10 years, 30 years for a triple net, but you have a marketplace. Your company is a marketplace, and like any marketplace, you rely on network effects, direct lenders for payday loans basically this whole idea of you need a lot of buyers and you need a lot of sellers to come together for your company to gain enough traction, to actually start making a lot of money.
How do you reconcile this whole, we need network effects in this business, we need lots of buyers, need direct lenders for payday loans loans we need lots of people that are looking for leases, we need lots of sellers, people that have commercial space to lease.
With the fact that there are fewer buyers and sellers in this emergency cash now space, and the sales cycle, the lease cycle is longer. How did you focus on building those network effects and getting customers on both sides? Because taking two steps back, what is the customer journey for somebody looking for a space, commercial space? Everybody, for whatever they want picks up their phone or their laptop and Googles it. We built the business from the ground up, making sure that, that works. Then direct lenders for payday loans the really nice thing about the commercial real estate brokerage industry or landlords, they love doing deals, and they can only do a deal if they have a tenant.
I have to ask though, Jonathan, and I suspect a lot of listeners are wondering the same thing.
What were the differentiators that you built into the infrastructure of your company that have enabled you to keep going and keep growing?
Commercial real estate has been very impacted, to say the least.
I remember sitting here in the office, this was early March. This was literally the last week before we said, okay, nobody can come back to the office for now.
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