31.8.21
The Propcast talks to Jeremy Sicklick, from HouseCanary, about how we can use data to maximise value in real estate. Jeremy chats us through the trends, how HouseCanary keeps their real estate product competitive in the market, predictions from the data that is emerging, and how the role of technology is changing the real estate space.
Jeremy Sicklick
https://www.linkedin.com/in/jeremy-sicklick-216a861/
As co-founder and Chief Executive Officer at HouseCanary, Jeremy drives the company’s vision, strategy, and growth to identify interesting and unique ways to use data to maximise value in real estate. Jeremy was previously a Partner & Managing Director at The Boston Consulting Group, where he helped leading real estate investors to deploy billions of dollars in capital. He lives in the Bay Area with his wife, their three children, and two energetic dogs.
About Our Host
Louisa Dickins
https://www.linkedin.com/in/louisa-dickins-ab065392/?originalSubdomain=uk
Louisa started her career in property working at a well-known estate agency in London. Realising her people skills, she moved over to Lloyd May to pursue a career in recruitment. She now is a Director at LMRE, who are a specialist recruitment firm driven by PropTech and recruitment professionals, and Louisa oversees their 5 core areas. Louisa co-founded LMRE and provides a constructive recruitment platform to the new disruptors in real estate. Louisa is also on the board of Directors at UK PropTech Association (UKPA).
About LMRE
LMRE believe there is a better way to recruit. LMRE focus on a more comprehensive, client led focus delivering exceptional talent to the place at the time. They are passionate about the industry and passionate about people’s careers. LMRE spend time with each client to become and an extension of the business, and their transparency and core values help them grow with the sector. LMRE simplify recruitment and innovate with our clients and evolve the people driven, PropTech community.
LMRE website www.lmre.tech
HouseCanary website www.housecanary.com
Contact Jeremy on LinkedIn: https://www.linkedin.com/in/jeremy-sicklick-216a861/
Louisa
Hi everyone and welcome to The Propcast. My name is Louisa Dickins, host of The Propcast and co-founder of LMRE, the global PropTech recruitment and search consultancy. In this podcast we will explore how the digital evolution of the real estate industry is impacting the property market. The aim of each episode is to introduce you to a PropTech innovator and discuss how their work has created a shift in focus when it comes to digitising the built environment. Today on the podcast we will be talking about how we can use data to maximize value in real estate. And who better to talk about this than with CEO and co-founder from HouseCanary, Jeremy.
Jeremy
Thanks Lu it’s great to be here, great to be on The Propcast.
Louisa
It’s good to have you. Now everyone listening as co-founder and chief executive officer of HouseCanary, Jeremy drives the company’s vision, strategy and growth to identify interesting and unique ways to use data to maximize value in real estate. Jeremy was previously a partner and managing director at the Boston Consulting Group where he helped leading real estate investors to deploy billions of dollars in capital. He lives in the Bay Area with his wife and three children, and two very energetic dogs.
Now, a bit of background about HouseCanary which was found in 2013, a valuation focused real estate brokerage which provides software and services to reshape the real estate marketplace. Financial institutions, investors, lenders, mortgage investors, and consumers you name it, turn to HouseCanary for industry leading valuation forecasts and transaction support tools. These clients trust HouseCanary to fuel acquisition, underwriting, portfolio management, and much more. But that’s a very brief summary are we are going to learn a lot more about this later on in the show, but I think without further ado, we will start with the questions. Jeremy, why don’t you kick us off with a little bit more about, why you started HouseCanary, but also I’d love to know a bit more about what was it like going from Managing Director of Boston Consulting Group as a consultancy, to founding your own tech business?
Jeremy
It was a wild experience, I’ll share a little bit of background on how I got into this. During the depth of the global financial crisis I was doing consulting and we had some large private equity firms that started looking at buying real estate. We didn’t have a real estate focus at the time and so I picked it up as a generalist, looking at the trend trying to figure out like any widget where there were a lot of potential opportunities to buy land at very discount rates, and what it was worth. And from that it felt like a very analog process of trying to take market data and value what the land was worth, what houses on that land could be worth, how many people could buy a home, had jobs and whatnot to buy those homes. And we did it through a smart young analysts, Excel and PowerPoint were our tools. And I did that for a number of years and saw that at the time, residential was about a $25 trillion asset class. And we were really similar to most investment funds or investment banks, all making decisions really by hand with Excel and PowerPoint. And I saw a need to bring it into the modern age, try to do it in a much more digital, faster way to ultimately value what properties are worth and make the decision-making factor.
Louisa
And talk me through a little bit more about who are your main customers, or who maybe was your first customer?
Jeremy
So our main customers are really on the institutional side of the business. What we’ve really been focused on is how do you build a really trusted and reliable property valuation that ultimately gives somebody instant certainty. And so the way that we actually built that trust was we focused on the back end of the market, effectively Wall Street in the capital markets first. Our belief was that if ultimately the people who are buying every mortgage backed security and pull loan trading, the hedge funds, the folks that are funding all the mortgage lenders and the investors at the investment banks, if they trust and use a HouseCanary valuation, everybody else will further up the chain. I like to refer to it as of 4 out of 5 dentists recommend, for us 4 of the top 10 major lenders in the US use and depend on HouseCanary, 6 of the top 10 single family rental investors use HouseCanary. And you can go through the list many of the top buyers and most of the PropTechs who are venture backed use HouseCanary.
Louisa
That’s pretty impressive Jeremy, congratulations on that. I’m sure lots of people would die to have that track record. You obviously founded it in 2013, this probably leads us quite well into the next question. The market’s coming more saturated, there’s more competitors, you obviously have the market edge you’ve been around for longer, the products more developed. What are your USP’s how do you keep your product competitive to others?
Jeremy
First off my co-founder Chris Strout is a great data scientist. And so we’ve always had this focus on ultimately doing a couple things, one is bringing together and always spending money to clean the data and make our data as good as possible. Number two, we’ve continued to invest around not just having good data, but really driving great insights off of that consistently and continuing to push the extreme of what is possible. So when I’m valuing properties, not just saying, okay we have a value and we’re within two and a half percent, that’s good enough.
We’ve been for the last couple years pushing the extremes of taking, hundreds of millions of photos and training our models in how to do image recognition, to understand the condition of a kitchen and of a bedroom and have a bathroom and take that condition and converted into the value we’ve been taking and leveraging data to figure out up the front and out the back of a property. Does it have views and how much were those views likely worth? And continuing to push the extreme of what is possible and solve to be more accurate and automate. And then the third thing is, I think if you’ve used our products, what you’ll find is we focus on not just having accurate information, but really just building in good modern UX user experience and making it a really good experience to use the product it’s easy to use. We provide a lot of background information and support so that you can make better, faster decisions. I would say those things about better data, more insights, and then ultimately around product innovation are where we focus as a business.
Louisa
That’s your secret sauce. After hearing that your co-founders has a background in data and also your background as a consultancy, often in businesses, I hear this from the VCs, when they look to invest it’s so important having a balance of knowledge and skill set in the founders and the guys leading the business forward. But then also going back to your point of having really good UX/UI, there’s such a skill shortage of people doing that globally. So once you have them, they’re just integral to growing your business in the right way and making it easier for folks like me to use your product.
Jeremy
Absolutely, we’ve been very lucky to have hired great researchers, engineers and product managers that have been with us for many of them since the very early days. Phenomenally talented people that have helped build this business.
Louisa
Yes, now we touched upon cleaning up and all about the importance of good data. Now let’s talk about what market data are you seeing in the housing market, specifically within the US?
Jeremy
What we’ve seen as we went through COVID it is, at the core of it the demand is just outstripping the supply everywhere you look. And demand for real estate is outstripping supply. That’s driving prices up. The demand is really coming from a couple of different areas, obviously with such low interest rates, that’s driving demand. People have more equity in their homes than ever, now I think people have almost $20 trillion of excess equity in their homes and so they’re trading up right in the US and that’s driving demand. We’re seeing we’re at the early stages of millennials and millennial household formation. That’s really driving demand through new first-time buyers, but then also, we’re seeing more demand than ever from institutions that are looking to buy properties and rent them to the growing millennial home ownership as well. So you’re just seeing. Excess demand in the market. That’s what’s I think that’s been the real story here.
Louisa
And what about if you could look at your data and I know you didn’t have a crystal ball Jeremy, but what about any future predictions. Is demand going to go up or anything that you think is going to happen?
Jeremy
When COVID hit early on, everybody thought there was going to be a default tsunami similar to what happened in 2008. And then there was a lot of stimulus and that changed a whole set of behaviors. Boy with the Delta variant and everything else it’s pretty hard to forecast what is going to happen. But my sense is ultimately there’s going to be strong demand. I would expect for quite a while, that there’s more and more demand coming on the institutional side because real estate is a great inflation and it delivers a great yield in a yield starved market, all those things that’s going to drive a continued demand. Interest rates really can’t go any lower so if interest rates rise, we’ll see a decline in demand. But I think the government will be extremely careful about raising interest rates and when people feel wealthy in their home, that obviously helps consumer. So it’s too early to be raising interest rates or even thinking about it. And so my sense is we’re going to see a pretty strong roaring twenties for quite a while, especially with strong job market, jobs drive households, people need somewhere to live.
Louisa
Okay. You went into this a bit earlier, but I’d love for you to expand a bit more. How do you see the role of technology in the real estate space changing? And you can maybe look at it from, you have all of these major institutions as your customers, how has that changed? Is more adoption happening? You’ve already got your case studies, your product works, but how do you see it changing from now in 5 to 10 years?
Jeremy
I think real estate has been in the slower technology adoption curve of many other industries. So you can look at what’s happened with other industries, I think at the core of it we’re going to see really two things that we’re already seeing. Number one, you’re just going to see automate everything. We’re seeing that right now. There’s just more and more focused on how to take and leverage information to better automate decision-making. And that doesn’t mean you’re not going to have any people left to do this work, but a lot of the repetitive tasks around underwriting a loan, or having information about a property or doing an initial underwrite, those things, I think every business that we see and work with is continuing to infuse more and more information into automating a set of processes that drive more productivity.
And I think that trend is happening. It’s going to continue to accelerate and we’ll just see more and more efficiency and productivity. I think the second big area that you’re going to see is just continue increase in digitization of the experience itself, buying a home, getting a mortgage. You’re seeing that now increasingly, and everybody that’s using Amazon and every other service in their life is basically demanding that. And those two mega trends will be quite pervasive. I think we’re in the early innings of both of those.
Louisa
I recently spoke with, and you might’ve heard of this PropTech before, it’s called BuildAtmos, I’m hoping I’m pronouncing it right because I’m being recorded. But their product is all about how to customize your own home, from literally choosing the land, every single part of the house, putting everything together and it doesn’t cost you more, just putting your own statement on it, which I was fascinated by. And I thought if I want to change that door, put that floor in on this app that actually that would cost me so much more, but it doesn’t. They’ve made it less fragmented, put it all together and have their suppliers, so I’m super excited to see what other technologies in the space will come about. And obviously in the UK, where all my UK listeners listening to this, we are behind the US in a lot of technology not only adoption, but just development of new products. And so I’m quite excited for some of the US funds to come over here and in Europe, we’re already seeing that I’m expansion and also what’s coming from APAC way. Now Jeremy you’ve impressively raised your Series C am I correct in saying, what are the big plans, have you got any targets or growth plans once we get through this year, in the next two to three years to come?
Jeremy
We’re looking at all options, but we’re continuing to grow at triple digits and growing a couple 100% a year still, which is phenomenal. I’m thankful to our clients that we have that opportunity and I think there’s some good market tailwinds that have supported us. And we’re happy being a private company, but looking at various next steps that many people will go down and figure out what the right next path is for us as a company.
Louisa
I guess watch this space. Now, Jeremy we’re coming to the final part and all the listeners know is the LMRE part. So L is touch on the main lesson you’ve learned throughout your career, M is give a mention to anyone, a product or service whatever you would like, R is what is the most rewarding aspect of working within PropTech, other than obviously being a founder of new amazing teams, and then E is what are you most excited about for the future PropTech? If we could start with our lessons learned?
Jeremy
Lessons learnt, a sense of urgency matters in life and I have approached a lot of things with a sense of urgency and a sense of impatience, but I think one of the things that I’ve learned is it generally takes a decade to build an overnight success. And so actually having some patience and my COO and I often talk at the end of the day about like did we make a 1% improvement? And if you can keep making these little 1% improvements every day, they start really stacking up and compounding. And if you’re patient about making those 1% improvements every day, you look back in and you think I’ve been helpful. But it doesn’t always feel that way, you got to be patient, 1% every day adds up.
Louisa
1% every day since 2013, the proof is in the pudding. Okay give a mention of shout out to someone or product?
Jeremy
I’ll give a shout out, as really I wouldn’t be here having this conversation and able to share all these things without our team who’s really helping build. And really behind every team, there’s a family who’s supporting them in being able to build and everything that goes behind it, and so our team and their families and the clients that make this all possible.
Louisa
Okay sounds like your team’s probably the most rewarding part of it. Is there anything else that’s been rewarding part of working in this space?
Jeremy
What’s really rewarding for me is when I hear from customers who are using our product and say, Hey I was using a HouseCanary property explorer that I pulled off the website to buy a property. And I was getting other advice and I looked and I provided the comps that I was able to save $20,000 on my home. When I hear stories like that of having real impact for people, those are the best I love those. And so when I get them on LinkedIn or through an email those are such a feel good thing.
Louisa
Yes it’s personal. Okay final question Jeremy, what are you most excited about for the future of PropTech?
Jeremy
I think I’m excited about what a lot of others are. Ultimately I think people will be able to get into the home of their dreams in a much easier and a better way and sell that home in a more efficient way. Think of when you used to go buy a car, it would take a day of sitting there and grinding it out with somebody. Now it’s a pretty effortless experience. And if you want to get a Tesla, you can do it in two minutes online. I don’t know if we’ll get there in housing, but it should be a lot less painful than it is today and I think that’s what we’re all working towards.
Louisa
Hell of a lot less fragmented, less painful and stressful for those fortunate enough obviously being in the whole process of buying it, but then also selling it as well. Can we just make everything easier for everyone?
Jeremy
We’re focused on getting more to instant certainty.
Louisa
Exactly. Look unfortunately we’re coming to the end of the show Jeremy, but is there any parting bit of information you want to leave with our audience.
Jeremy
I appreciate you listening and please reach out to if we can be helpful reach out to me online or on LinkedIn and I’d love to connect.
Louisa
Awesome. Thank you so much for joining men Jeremy, and I’ll catch up with you after the show. Thank you for joining us this week on the podcast and a big thanks to our guests and our sponsors CREtech and Reimtech. Make sure you visit our website www.lmre.tech where you can subscribe to our newsletter, keep up with our industry news and events or if you’re looking for your next career move it’s all on there. The Propcast can be found on iTunes, Spotify and YouTube where all good content is found. Whilst you’re at it, if you found value in the show, we’d appreciate if you could spread the word and tell and friend about it or even write us a review, and I’ll catch you next week.
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