Why does this matter?
1) CRE Tech as VC Darling: Floored is the latest tech venture to receive investor attention for tackling commercial real estate. Nearly every recent incubator, accelerator and competitive tech investment contest has tapped at least one real estate application as a rising star. A capital intensive, traditionally off-line and opaque industry + Talent + Momentum: Keep an eye on the space, there is unquestionably more to come.
2) Single Transactions => Data Warehouse: Like some of the most successful real estate tech ventures to-date (see post on CompStak and View The Space, plus 42 Floors and Honest Buildings), Floored has designed a powerful dual business model. At first look, Floored helps individual tenants, landlords, and designers with specific lease or build-out transactions. But behind the scenes, the firm is amassing proprietary 3D data, as well as information about how users interact with it. With time, Floored will accumulate a wealth of information never before available in one place - enabling valuable analytics and business-intelligence, with applications well beyond the real estate industry.
3) Mobile: Like real estate sites Lovely and PadMapper, Floored understands that people don't think about real estate at their desks. The platform is designed for mobile and fully customizeable from the iPad. Smart.
4) 3D: Beyond the initial thrill of new whiz-bang, legitimate questions have been raised re: whether 3D adds material value for real estate decision-making. Google, Apple, Amazon (via its acquisition of UpNext), and Microsoft (via Nokia City Light and the promising, newly-launched GeoFlow) are racing to build competencies in 3D, but proportionally, haven't done much with it from a B2C perspective. Floored seems to have carved out a fruitful niche, serving real customers.
5) Harder Problems: Floored took on difficult engineering problems and, if its team can continue to solve them, stands to maintain its position because it will be so hard for other teams to catch up. View The Space (VTS), another rapidly-growing real estate tech company, is in the vicinity - offering 2D video fly-throughs of commercial space for lease. VTS founder Nick Romito is upfront about the simplicity of his business model: "I thought, wouldn't it be great to have video of the space. And it was! So we thought - let's make a $#!%load of videos!" This targeted approach has won VTS massive early-mover advantages and growth through a user base including some of the nation's largest commercial landlords, as well as partnership with 42Floors.
The two solutions are not mutually exclusive. However, in terms of long-term growth and defensible competitive advantage - Floored has created myriad options by doing hard work upfront. Founder Dave Eisenberg is clear on what it takes: nine of his ten-person team are engineers and they had to develop entirely new competencies, teaching themselves as they went. As the resident non-technical, Eisenberg describes his role as handling 'business stuff' and fetching things for his engineers. When asked by Disrupt NY judges "why real estate, why not defense, or any other vertical??", Eisenberg responded that real estate provided immediate traction, but made it clear his sights were set well beyond. Combined with a model that allows Floored to get paid for building (and owning) what could become a significant inventory of 3D data, its easy to see why.
The discussion reminded me of classic Paul Graham - great thinking on solving hard problems:
Use difficulty as a guide not just in selecting the overall aim of your company, but also at decision points along the way. At Viaweb one of our rules of thumb was run upstairs. Suppose you are a little, nimble guy being chased by a big, fat, bully. You open a door and find yourself in a staircase. Do you go up or down? I say up. The bully can probably run downstairs as fast as you can. Going upstairs his bulk will be more of a disadvantage. Running upstairs is hard for you but even harder for him.
What this meant in practice was that we deliberately sought hard problems. If there were two features we could add to our software, both equally valuable in proportion to their difficulty, we'd always take the harder one. Not just because it was more valuable, but because it was harder. We delighted in forcing bigger, slower competitors to follow us over difficult ground. Like guerillas, startups prefer the difficult terrain of the mountains, where the troops of the central government can't follow. I can remember times when we were just exhausted after wrestling all day with some horrible technical problem. And I'd be delighted, because something that was hard for us would be impossible for our competitors.
Process & Pricing
Eisenberg refers to commercial real estate marketing as currently a $30 billion dollar a year market. Most of those expenses go towards static renderings and high-end printed images. A single, static rendering and printed materials can run $5,000 - $20,000 and, as one could imagine, the fancier the space, the more renderings. By enabling users to visualize the space as-is, empty, or built out with custom finishes, Floored offers a better, faster service at what they are referring to as a disruptively low price - roughly $1.00 psf for 3D models and customized, editable renderings. For an 18,000sf floorplate - that's approximately $18,000 for a significantly richer user experience. A breakdown of the process, and pricing below:
1. Capture the existing site with a 3D camera.
Basic scanning runs $.10 - $0.25/ psf
2. Render the site as-is, empty it out, or built out in any condition you'd like to see
To clean out and show the site as an empty floor plate costs $.25 - $.50/ psf
Rending depends on the level of detail, but can run roughly $.50 - $2.00/ psf
3. Edit the data IN in the browser, from mobile
Once the floorplate has been captured, users can edit everything from build-out, furniture, colors, layout and lighting to see what the space COULD look like. As Eisenberg explains, all of the furniture in the world was at one point modeled in CAD, so there are 3D models of every product - which users will ultimately be able to access and play with, in the context of their space. Applications abound for architecture, interior design, and construction.
Software as a Service + Data
Floored is currently a marketing services firm, but ultimately views itself as a software-as-a-service company. Every the team they will automate more and more of the process, enabling them to keep costs low. Floored owns the data themselves and allows users to purchase and manipulate their own information through license agreements.
For hardware, Floored is using Matterport, a 3D device to capture interior spaces, and partnered with it to take advantage of Matterport’s existing hardware solutions. In an interview with TechCrunch earlier this week, Eisenberg said “Matterport is a pretty incredible technology company. They incorporated the Kinect into a device they built.. It’s the first point-and-shoot solution to grab a 3D capture of your environment.” Matterport now works withPrimesense, which manufactures the sensor inside the Kinect. The camera will soon be available for roughly the price of a nice DSLR.
Floored had raised $1 million seed funding from Lerer Ventures, Felicis Ventures, Brooklyn Bridge Ventures, Red Swan Ventures, Two Sigma Ventures, Dave Vivero, founder of Rentjuice, and Thomas Lehrman, co-founder of Gerson Lehrman Group, has a growing stock of users, and plans to reach profitability this year.
Watch the video below for Floored's presentation at Disrupt NY and demo - the founders walk through the top floor of One World Trade Center. Features image stitching for panoramic 360 degrees of the space and live updates of the furniture and layout.