Innovation Hubs with Sivan Blasenheim

In this episode we talk to Sivan Blasenheim from Rentigo about PropTech Innovation Hubs within PropTech.

Today’s topic is on innovation hubs and country launching, which a lot of our audience has asked about.

Listeners, Sivan co-founded Rentigo in 2016 after building his first FinTech payment company, but Rentigo is a PropTech AI start-up, changing the traditional property management ecosystem, which is something like $500 billion industry, am I right in saying that Sivan?

Sivan

Yes, this is a crazy industry, only the rent payments last year in the US only was around $500 billion, and it’s considered to be trillions of dollars all around the world. It’s getting bigger and bigger.

Louisa 

Yes, well, a good industry to get into and also streamline by combining payment expertise with a free end to end tenant facing platform that unites payments, marketing and operational decisions for real estate owners and operators. In the last year Rentigo has experienced hyper growth with more than something like 100,000 rental units, who are under contract to be deployed and expect to process tens of millions of dollars a month, which is just crazy and a huge credit to you Sivan. I think Rentigo’s future is easing some of the biggest property management problems including branding, vacancy rate, turnover rate, tenant engagement, and communication, and like we mentioned earlier streamlining the whole payment terms. The company is backed by well-known investors and its part of Silvertech ventures and affiliate of Silverstein properties.

Not only is Sivan a successful co-founder, Sivan is also a mentor at Wework PropTech labs, and PropTech contributor at Forbes and holds an MBA. He’s also during this podcast interview going to tell us about his latest venture in the Innovation Hub space, which I’m sure we all can’t wait to hear about.

Well, how about we get started? So you’re about to launch one of three innovation centres, innovation hubs, one is in Israel, one is in London and one in New York. Can we just start off from the beginning?  Tell me a little bit about these innovation hubs and centres, what are they and why you launching them, who was involved? So the listeners can get a better understanding.

Sivan

So this is a very interesting industry that only lately is gaining more and more audience and people are starting to look at this as PropTech. The interesting thing is, as you described nicely and thank you for that, in the last five years I was involved in two ventures that I established, one is a FinTech payment company and the second one is Rentigo, which is a PropTech. along the way, and mainly in the last few years I was speaking with many landlords and owners of huge portfolio companies, real estate companies and then few process were coming to me while we’re speaking with these people. Since they know me from Rentigo, and they were considering my opinion and since I was one of the first people getting into this industry, which isa  60 years old industry, even more, and actually the technology there is looking like before 60 years. All these landlords and property owners were calling me along the way and were asking me “Sivan, do you think this technology is better or this technology? I need a virtual domain, I need a technology that will elevate the property management, or I need some robots that will clean my windows. Is this something seen in the PropTech? What do you recommend?” So I always was recommending this start-up or the other start-ups.

Then the second thing that they came to me with was they were complaining about real estate companies and how they don’t understand venture capital, they don’t understand technology, they actually afraid of the technology, they don’t understand this. They understand that something is starting to grow in the industry, they understand there’s a huge scene that is starting now in the industry and they want to be part of it. And so they’re starting to ask me to help them in starting to explore the screen technologies, because they want to know better technology to build things.

They understand that they can improve lower cost, improve their management, improve the way they work within this technology, and they only know some words here, some words there, and then so they’re missing the scene. So they say, okay, come and help us, we haven’t achieved innovation, we are not a technology organisation, we are real estate, we are a very flat organization, come and help us to build something that will help us to have a chief innovation officer.

Third thing that came to me, they said “listen, we help these start-ups. We let them do a pilot in our organisation”, this pilot, this start-up came and learned on our behalf the system, the way the property manager working, the way the real estate speak and work, and all what we are doing, and the start-ups going and doing an exit. And we as a Real Estate Group don’t see from it anything, although we help them. So we won’t ever buy from it. And this is very, very unique to the real estate, the DNA, the real estate people DNA, they want something in favour for the help.  So, this was happening a lot along the last two years, and it’s pushed me and I saw a lot, since I was flying back and forth from Israel to New York, and I was well involved in the PropTech scene and in the start-up scenes, and saw a lot of technology. And this pushed me to understand that there’s no real chief innovation officer for the industry and the industry needs innovation out there that will help from one side to the landlords and the real estate groups who tend to be a big part of the scene, on the other end, there’s a huge need from the start-ups to connect to the real estate, to understand the language and to understand what the real estate is looking for, and to connect between both of the sides. And in the last six months, we were exploring this and I mainly think “look, why not?” and it came out that I find only “Why yes”, because they all this side of the equation, everyone needs this innovation app. So I built this innovation hub.

Louisa 

It’s interesting what you’re saying, so in the interview before this I was interviewing the real estate professionals Naqash and Imran, and they were saying that they’re all looking for certain products, but they’re finding it hard to find time to filter through them and to understand what problems they can solve for the real estate world, so something like this is exactly what they  need and I’m sure you guys will connect at some point as well. So if I’m a PropTech start-up, how would I get involved in this? What’s the next step to me?

Sivan

So one of the unique things that we created this innovation hub is that we took our experience what we bring this into the innovation hub, we were a few start-ups, so we know exactly how to build the start-up. We know how to take start-ups from A to Z, to even take them to the US and take them to Europe and to the UK, and we know all the process, we know exactly what the start-ups in the PropTech need. We know how to teach them about the language of the PropTech, what is the system that exists in the industry, what are the obstacles that will meet when they interface the property managers or the real estate players. Actually there are 12 verticals, but we’ll touch on them later. Then we come again connecting them to the real estate, and one of our big, big advantages here is that we are not just another accelerator hub, I will touch immediately on how they can approach us and what is the program, we’re promising them a pilot with one of the real estate partners that we have. And this is like gold for the start-ups because you kind of can learn a lot about your system, you can verify products, and then you can go and raise money on top of these pilots because this is what the VCs today look for.

One of the big obstacles for a new start-ups and new technology is to gather a few first pilots, especially if it’s a with large portfolio groups, really, really big assets. And also, of course, one of the things in the program is that the start-ups and one of our partners in this innovation is all the real estate groups. And they are bringing their CTO, their teams of management, from the bottom to the top management, all of them coming to one table to come to meet with their technology and start-ups, to listen to the start-ups and to give their feedbacks and persevere to listen what the start-up I have to offer them because they also want to be here and be part of the technology. So we created a big asset, a big synchronisation, which gives all the sides of the equation big value. The start-ups that want to join it just send me an email and we’ll start to screen them. Usually what we are doing is that we screen them together with our partners which is the real estate groups, and then in the end the end of the day, we choose between around 6 per program and then it’s a program of six months, and then another six. And if we’re close to six, and still we see a good technology, the door is always open.

Louisa 

Yes, but this all sounds like fantastic exposure for the start-ups to have all these connections as well, and the support along the way.

Sivan

By the way the real estate groups are really, really excited also, they understand something is happening here and they want to be part of the tech. For them it’s cool and it’s cool to be part of it, the owners of these groups want to be part of it, to listen to the start-ups to help them to grow because for them they’ve never been a start-ups guy so there’s a chance for them to be involved in creating new companies.

Louisa 

And your focusing in three cities, you said London, New York, why those three cities?

Sivan

I think this is the main three areas that the real estate and technology are focusing in, Tel Aviv’s a huge hub for technology and New York and London are the big base for the all the Real Estate Group all the biggest portfolio groups are based in New York and in London. It’s good to start there to be close to them, to bring the technology to them. From my experience, New York is now is bigger, Tel Aviv everyone knows there is a huge technology IP here. And I think I’m running also on the community of the project. We didn’t touch on this, but we have around I think more than 300 start-ups and more than two third of them are based in Tel Aviv. It’s a nice environment to support the technology itself and the flight especially in the quarantine days, which is very, very challenging for everyone. It’s better to be close to all these main hubs.

Louisa

And what do you say, as you mentioned, the real estate players that they’re getting excited about it, they want to be involved in tech, we may also recognise the need to adapt and maybe take a bit of risk, but operate their buildings slightly differently. Everyone’s saying COVID is pushing for digitalisation, would you agree with that statement?

Sivan

Yes, I totally agree with this, I think the real estate environment won’t be able to avoid adopting technology, although one of the big struggles for the real estate players is that it’s very challenging for them to adopt technology and they are afraid of the technology. It’s taking them a lot of time. One of the things that I see many, many times with many, many start-ups, even with my start-ups is that adopting the new technology in a very old environment and with an environment that afraid of the technology is very, very challenging and most of the start-ups that we see, this is kind of a gold advice for the start-up – patience, patience, patience, patience and also for investor it’s not the only industry , it’s not out of tech industry, the real estate the environment of its own timing.

And it’s taken them a lot like many, many months and I see average between six to 12 months to implement a project here. But in the long run, the real estate players understand that technology is the tool to profit the revenues, and to help them to grow and to lower costs. And although they are afraid I understand that, and we are able to implement. A lot of days there are a lot of property managers struggling to show their apartments and to get people to come because of the distancing issues, people are afraid to come and see the apartment they want to build. This is kind of a virtual tour that you can come and see the building, the apartment, with the dimensions and you see all the aspect of the of the building, everyone’s using it before they are building something so all the property managers are starting to implement this tech

Louisa

Yes, the virtual side of PropTech is definitely kicking off. There’s a business called OnSiteIQ in the US, which is kind like Zoom for construction sites and there’s far more to it but I think they’ve seen obviously a surge of sales because everyone continues to developing no matter where you are in the world, but it’s like, how do you go about it? How do you keep on track? But the products which are coming to market, it’s just crazy to think that we haven’t actually seen this until really the past five years, obviously you have all the software development over the last few decades, but it’ll be interesting to see what newer products come to market and how they develop. Sivan, you’ve raised money, you’ve had your FinTech companies and now got Rentigo, oyu’ve launched in the US, what can you tell us? How did you go about your way into the launch? Are there any tips for the audience who are looking to go into the US market, which I know a lot of start-ups are quite afraid of? What tips can you give?

Sivan

So I think there’s a lot of tips! It’s a process. I think one of the basic tips that I usually give to friends and to entrepreneurs that they see along the way, is that in order to be entrepreneur, you need to have the mental strength. It’s not the financial strength, but the mental stress and the mental pressure that the entrepreneur is going along the way, ability to resist it is the key success because it’s all a cost to be an entrepreneur. And it’s not a short run, it’s a marathon. Yes, and you need to understand its things take time there’s a success, there’s some losers and there’s a big win, but it’s a long process. And what you’re going to do is first of all, come with at least a product that is ready for beta test. The market is more mature today and so come with a product that is at least working. Second of all, the VCs and the investors in the US are sophisticated investors and they are coming prepared to meetings, and when you come into meetings to need to learn the market and come stand with your competitors, understand what is your added value. Don’t come to the meeting and say it would be okay I will be able to manage, they are very professional, they know what they’re doing, they’re learning and researching the market before the meetings. So come and be prepared for this. And third thing that I can advise to everyone is that US investors is looking for a local base, you cannot be only Tel Aviv or be in the UK. You need to have a small office or at least a small presence in the US in order to be part of it. And then the last advice that I can give you his take a local manager, a local high management, because the local VCs and the local business, even the real estate are closed networks and it makes your life easier when you have somebody to come in from this network. And it really opens the doors, it really makes life easier. And for us it really helped, even with closing sales with the real estate, because they usually know each other in their small neighbourhood. And the same, try to do it with the VC industry.

Louisa

Yes, I can actually relate to that, I do PropTech recruitment but when we were launching in North America, I was flying back not as much you Sivan man but basically every couple of weeks and we were about to sign a lot of clients, and the clients said “Lu until you have an office setup here and someone based in – New York was where we were going to base it – you’re not going to get the complete buy in from us.”  The first set was going to all the events, roundtables, doing blogging, showing your interest and commitment to the market, but it really was having some team full time base that says hey, I’m here to say I’m committed and then people started taking us seriously. But to get to that point is, you’ve got to do your research, like you said, you’ve got to have those connections, but it’s also a lot of investment and proof of the product. But I completely agree with what you said.

Sivan

And it’s also something that you need to do and I totally agree with the commitment to what you say, is that something that there’s always something happening in New York, there’s a networking event, there’s a roundtable, there’s always something happening in the industry and specifically in the PropTech. And this is the where you learn about the market, where you need the property managers and you need to be there. You can’t live outside and come for a week that’s very, very tiring, then they know you’re running from meeting to meetings. You need to let the things happen and it’s usually one week and then there’s a meeting next week and again, so you need to be there you need to spend time there. And yes, it’s takes time and again, it’s a small recommendation you don’t have to start with a huge office or to leave a place. There’s so many nice solutions today from Wework, to ads or accelerators that are great, great for early stage start-ups that you can come and they will always accept you and they will help you with the networking and you will have an environment that will support you.

And I don’t remember if I shared it with you and it was a nice story, we started with the Silvertech venture which was one of our investors for Silverstein properties today, and an older building in the financial district, and they invited us to join their Silvertech venture office and just sit there with other start-ups, other founders was the goal for us because there I understood as a founder, these are the obstacles that you meet or the networking that they can give you really, really helps you, and it’s not something that for example the obstacle that I see it’s not unique only to me, it’s not something that I’m more weak mentally, it’s that all the other founders are facing the same issues. So everything is okay, this is the way that you need to go through. Also, always sharing all the founders, the CEOs sharing information we teach each other. And again for early stage start-ups, this is a great place to start.

Louisa

Obviously the space is coming more saturated. I mean, there’s plenty of room for growth in every vertical PropTech, what would you say? What do you think the future of this space looks like? What can you predict the next five years across the verticals? Are they going to be some more m&a’s? What do you thinks going to happen?

Sivan

Yes, so it’s very, very interesting. It’s a very, very good point to mention about m&a’s. So I think first of all, the industry is only in its early stage, it’s only the beginning and is very, very few start-ups, a few hundreds of start-ups, it’s not a lot. And I think we’ll start to see more and more start-ups that will be booming in this industry in the coming two to three years because a lot of tech guys and founders, even the real estate guy will understand this kind is the only industry that still didn’t run through a change. And the change is only waiting. There are around think 12 verticals from architects, to finance, to cranes, to materials, to property management, there are so many verticals here, that are only waiting for a change.  I think you’ll see a big growth in the amount of start-ups that will start to build, and we’ll see more and more innovation in this area.

As for the m&a and this is what I saw in the US in the last three years, there’s a few masters in a few areas of the real estate. There are all these masters some of them are public, and this real estate masters understand that innovation is very tough for them. So we already started to see that there will be a lot of a merger, they will start to go and buy. They already started in shops, a lot of a small start-ups with new technologies. And this will only start to grow and they will every start-up with a nice technology and it will be valuable technology, this master will start to buy them and you can see it for example with Realpage or a MRI or Yardi. This is a huge tech player that control most of the market, and they already combined payments companies or insurance companies, and their vision is to have a one stop shop for technology for the property managers. So they will go and buy, and a lot are looking for virtual doorman. There are so many places that I saw that they have started to build and shop for technology, and also the focus of the VCs, a lot of the venture capital industry is starting to look on the PropTech industry. And they’re starting to understand that there’s a lot of money here. And there’s a lot of interest here. So I see a lot of emails that come in to me a lot of VC starting to speak with me about the industry.

Louisa

They’re just curious. Awesome well, Sivan it sounds like things are going extremely well for you. It sounds like you’ve got a lot on your plate at the moment. And this brings us the end of the show, but it’s been an absolute pleasure speaking to you and learning about innovation hubs. I can’t wait to hear more about it as well. And congrats, again on your success of Rentigo and long may it continue. Before we go, is there anything you’d like to share with our audience and listeners about what’s the best way for them to connect with you?

Sivan

So if somebody thinks that I can contribute to them, they want to speak with me they can just shoot me an email on my email Sivan@blasenheim.com and we’ll be glad to speak and help and to add you to the our community. And, and for you, Louisa thank you very much. It’s very exciting what you’re doing with the PropTech podcast, this is a great start, and this is very valuable for the entrepreneur and the real estate groups.

Louisa

Yes, well, the whole point is connect start-ups, real estate investments, investors, real estate, property people to individuals like you. So anyone who’s listening and wants to get in touch with Sivan I will be sharing all the details as well in the below link. And yes, thank you so much for coming on the show and I hope everyone has a great day.